MySpace and independent labels: a messy divorce?

If MySpace Music represents a hopeful new 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 for artists even if they didn't have a MySpace profile.

The new MySpace Music offers a far vaster 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, as The Times reported.

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 reap 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 chief executive of Tommy Boy Records. "Now we need to hire a great divorce lawyer."

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

Some independent distributors such as Orchard already have deals to share ad revenue with MySpace Music. Merlin, which negotiates on behalf of thousands of independent labels and which has a combined market share that rivals major label EMI, currently has no deal but is in talks. And although Merlin could not be reached for comment at blog time, Silverman, who is a board member with Merlin, described the talks as "a lot of tap-dancing around."

Ioda, a San Francisco based digital distributor and content aggregator of independent music, is also in talks. The company's founder and CEO, 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 whether an ad-revenue sharing deal such as Orchard's made sense for his label, Koch Records, Bob Frank, also a Merlin board member, said that "for the larger independents who have a real presence on the charts, it makes no business sense." Koch Records is the largest independent label and has the No. 1 independent album this week, DJ Khaled's "We Global."

"Right now, having equity in MySpace may not mean much. But it may mean a lot two or three years down the road," Frank said.

But Silverman warns that MySpace's power may wane because it jilted indies, and because so many other social networking sites with streaming music are 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 said. "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 all the time."

-- Swati Pandey and Michelle Quinn

Photo: Spoon frontman Britt Daniel. Credit: Lawrence K. Ho, Los Angeles Times

Comments

[Katie]

One of my clients has been quietly building out a platform specifically for independent artists, labels and fans. Babulous (www.babulous.com) currently has a community of about 760,000 members and is *completely* independent-focused. Any artists/labels who got sent off to the little kids' table in the MySpace deal should check it out.

[Nicole]

Everyone has two vocal cords. Anyone at any age can get a paralyzed vocal cord if the nerve to the vocal cord get injured or damaged. A paralyzed vocal cord is one of the problems in this world that can cause slower speech. It takes two paralyzed vocal cords for a person to not be able to talk.