Q&A: IODA's Kevin Arnold

RedHerring: NoisePop's Kevin Arnold brings indie music into the digital age via the Independent Online Distribution Association.

Audio Lunchbox Announces Seven New Music Stores

Press Release: In a growing trend to sell music downloads without DRM (especially popular with the independent bands and labels)  California-based Audio Lunchbox has announced they will be launching seven brand-new, genre-specific digital music stores by the end of this summer...The new destinations will include: CountryTracks.com, TheLoveOfMetal.com, DownloadPop.com, PunkTracks.com, PureClassical.com, ThemDirtyBlues.com, and AudioFader.com

By offering music without restrictions - which is what most people expect after being able to do so for years with CD's - Audio Lunchbox is filling a niche; allowing customers to easily download music and copy to their hard drives, burn to audio CDs and copy to portable players as much as they want - but for personal use...The company is boasting the largest collection of independent digital music in the world - a licensed catalogue of approximately 1 million tracks from over 4,000 independent labels...

New Indie Latin Music Site

Playlist: A new digital music company called Musica360 has announced plans to launch its service this September, but unlike other services who target a broad market and try to encompass every genre, Musica360's focus will be strictly on independent latin music artists. "Musica360 sees a way to compete by offering a specialized service focusing on areas where the major players aren’t competitive." Although the site will have both major label and independent music, the focus will be on smaller U.S. acts initially, including interviews, soundclips and videos.

As a legitimate service, Musica360 will only sell downloads that are legally licensed for distribution from the copyright holders, but in a bold move, none of the tracks will use DRM...The files will be MP3's. Christopher English, founder and former CEO of the upstart hip hop magazine, Hood Grown says, "He looked into DRM, but for a small independent music service, there’s no good alternative to both protect songs, and still reach a wide audience." He argues, convincingly, "that the lack of a DRM doesn’t leave artists any more exposed than they already are with compact discs...What we tell the artists is that if you’re selling the CD, it is the same risk as selling the MP3. A person can take the CD and do what they want with it anyway, no different than an MP3." It looks like they've found an interesting niche with a huge potential audience, but only time will tell if the public will support yet another online store...

No Big Labels Allowed

Boston.com:  As downloading music begins to gain momentum as "the most efficient way" to distribute, promote and share music - more and more Indie-only sites (i.e., AudiolunchBox, Magnatune, Indieburn, downloadmusicmart.com) are starting to pop up in the industry offering unsigned musicians a way to gain recognition and make more money. This is primarily because there's always been an economic imabalance in the traditional artist/label relationship. (For example, on popular legal music sites like iTunes and Napster - artists only receive $.08 to $.14 cents per song from a $.99 sale...Pretty big markup to swallow!)

Anyway, as more online businesses begin to pop up in support of independent music, it's clear that musicians can get 50% or more of the profits, more direct revenue, and nonexclusive deals allowing them to distribute their music anywhere in the world. The article points out that, "Independent online stores don't usually impose digital rights management (DRM) schemes on the music, allowing customers to do what they please with the music as long as it is for personal use...The bottom line is that there are ways around digital rights management," said Morgan Harris, cofounder and chief executive of AudioLunchBox.com. Harris said people won't use his site to steal but will use other illegal measures like P2P file-sharing where downloads are free. ''If people want to steal, they're going to steal."

So, there's a whole generation of music fans who believe that the major record labels are not fairly paying the artists -  which in addition to inflated prices and lack of choice in online catalogues - is what led to all the illegal downloading in the first place..."While the larger digital music stores provide strong competition, the independents are betting that the combination of no or more lenient DRM, more direct revenue to the artists, and fresh new music will keep them afloat..."

Independent Music Clout Growing

CNET: Here's a link to an excellent interview with Kevin Arnold, CEO of the Independent Online Distribution Alliance (IODA), which is the industry-leading digital distribution company for the global independent music community that distributes thousands of releases from independent labels to digital music outlets around the world. Surprisingly though, independent labels still don't receive the same royalty percentages for online sales as major labels do - even when working with an aggregator like IODA. Hopefully that will change with time as the sector's marketshare increases. (Some estimates put independent music comprising almost a quarter of the U.S. music market - nearly $3 billion.)

Overall, Arnold seemed to support the subscription model, where returns tend to come as a percentage of subscription revenues, instead of a set amount per download and the "barrier to experimentation is pretty much nonexistent." He points out that songs licensed for subscription services can essentially earn indefinitely and the model is a little more of an open ended platform and also predicts that eventually, monthly music subscription prices will rise once enough people sign up - just like cable tv has..."Basically, any indie label that's not participating in digital music is leaving money on the table and the main thing to realize is that, "It's still very young, and the rules of the game haven't changed such that this is some magic elixir. It's still a rough game." I was a little surprised to hear him claim that the current digital market is 5 percent of the overall market, but he may have access to proprietary research.  As the rules change and mountains are moved - it's too soon in the game to tell whether the indies will ever get the equal respect that they deserve at the bargaining table, but I for one am glad there are organizations like the American Association of Independent Music (A2IM) and IODA out there fighting for our rights....

Snocap Opens Up To Independent Artist

Reuters: The P2p music registry service Snocap will allow independent artists and small record labels to register their songs to receive payment when they are traded over the P2P networks.
Three out of the four major labels -- Universal Music Group, Sony BMG and EMI Group -- have registered their songs with Snocap, as have larger independent labels like TVT and Rykodisc. Snocap said it is in talks with the fourth major label, Warner Music Group.

Indie Labels Form New Trade Group

CNET: A group of 125 independent record labels initiated a new trade group Monday night called the American Association of Independent Music (A2IM) and members are seeking to merge their fragmented market power, ultimately hoping the union will give them more equality with the four majors. The new group will be focused primarily on the transformation of the music market online and in other digital distribution mediums. Steve Gottlieb, chief executive officer of TVT Records and a member of the group's board of directors noted that "more than 30 percent of Internet radio play is drawn from independent artists and labels" so the collective power and subsequent leverage should prove to be a useful in negotiations. The group will be based in New York and plans to have a presence in Washington focused on legislation...

Related:

--Indies Gather for Official AAIM Meet  (Subscription needed...)

A Refreshing Alternative for Online Music

ABCNews:  Michael Kobrin from PC Magazine reviews Audio Lunchbox 2.0, which is a cross-platform, browser-based online music store specializing in indie acts that doesn't require special software to use...The best part for many users is the fact that there is no DRM - so do with it as you please, as long as it's for personal use....But beyond that, I like the fact that you get the album cover art for most selections and in many cases you can also get the liner notes and song lyrics too - which for many is the missing experiential value link to renting or owning a soundfile compared to physical discs...

The company claims to have 350,000 tracks currently available for download (with another 650,000 licensed tracks queued up for in-house encoding) from around 4,000 independent labels. Most songs are $.99 cents and most full-length albums are $9.99. However, they also offer "lunch cards" in $25, $50 and $100 amounts - which give you a price break on bulk purchases. Very cool...