Indie labels say there’s little equity in dealings with MySpace

Times Staff Writers

If MySpace Music represents a hopeful marriage between major record companies and Web 2.0, consider independent labels the jilted first wives.

Artists on indie labels flocked to MySpace early on because it offered an easy and free alternative to slick personal websites built by major label Internet whizzes. Their participation made MySpace a destination for music lovers, who could listen to songs and check tour dates even if they didn’t have a MySpace profile.

The new MySpace Music offers a far larger collection of songs for streaming and slapping on personalized playlists. The site, controlled by News Corp., is banking on that collection to draw more users and plays. In exchange for ponying up their stars’ oeuvres, major record labels received ad-revenue sharing deals and equity stakes amounting to 40% of the MySpace venture.

But indies -- whose artists are still attracting traffic to MySpace with their profiles and selection of streaming and embeddable songs -- received no equity. And, indies say, major labels will recoup the benefits of MySpace’s growth, even if it’s driven in part by independents.

“Our lovers were cheating on us,” says Tom Silverman, founder and CEO of Tommy Boy Records. “Now we need to hire a great divorce lawyer.”


In other words, negotiations to get indies their share are ongoing.

Some independent distributors like the Orchard already have deals to share ad revenue with MySpace Music. Merlin, which negotiates on behalf of thousands of independent labels and has a market share that rivals EMI, has no deal but is in talks.

Ioda, a San Francisco-based digital distributor and content aggregator of independent music, is also in talks. The company’s founder and chief executive, Kevin Arnold, did not go into specifics, but says that “the major recording companies may have set a precedent that is right for them because of the equity they have in the business. They are owners of the company.”

When asked if an ad-revenue sharing deal like the Orchard’s made sense for his label, Koch Records, Bob Frank, a Merlin board member, says: “For the larger independents who have a real presence on the charts, it makes no business sense.”

Silverman warns that MySpace’s power may wane because it jilted indies and so many other social networking sites with streaming music are already up and running.

“MySpace has been floundering lately already, and people have been moving toward Facebook and so on. This is going to accelerate that exodus,” he says. “We can make a decision where we promote an artist, and we don’t have to do it with MySpace. We’ve had a great relationship for a long time, but times change, and new technology comes along.”




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