Independent record companies are committed to innovation

February 6th, 2012

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A study carried out by researchers at Universidad Carlos III of Madrid analyzes, for the first time, the independent label sector in Spain. It describes both the wide range of activities and strategies that these firms use, and their presence in new networks and digital services. Credit: UC3M

A study carried out by researchers at Universidad Carlos III of Madrid analyzes, for the first time, the independent label sector in Spain. It describes both the wide range of activities and strategies that these firms use, and their presence in new networks and digital services.

This report presents the results of a survey given to companies that make up the "independent" sector of popular music in Spain, in order to obtain a "picture" of the situation in which the sector finds itself and to analyze its trends. "We have to consider that, by the numbers, they are the biggest producers and distributors of recorded music and, together with the self-published artists, they are responsible for 80% of the new recordings that are currently released in the Spanish market", state the researchers, Luis A. Albornoz and J. Ignacio Gallego, of the Journalism and Audiovisual Communication Department of the UC3M, who presented the results of this study at the III Congreso Internacional de la Asociación Española de Investigación de la Comunicación (AE-IC) (Third International Congress of the Spanish Association of Communication Research), held recently Tarragona. Nevertheless, as the study indicates, the independent firms have only a marginal economic weight in the highly transnationalized local market, as it is dominated by the major labels, which generate the greatest volume of sales. For example, in 2011, the share captured by the big multinational music labels (Universal, Sony, Warner y EMI) reached 88% of physical record sales in Spain and 97% of digital sales, according to the sector's association, Promusicae.

According to the results of the research, most of the country's independent record companies are very small companies, with one to three employees, who perform a variety of tasks, from recording music to managing artists' careers. "One of the main changes we have seen is that these companies have become publishing houses, that is, they manage the intellectual property rights of many of their composers and performers", says Professor Albornoz. In short, through the so-called "360 degree" contracts, they try to add together the income generated by the sale of phonograms, their artists' music sales and image rights and the organization of live performances.

Innovation and the return to vinyl

In the context of the free-fall seen in the sales of CDs, all of the labels continue producing work in this format, while also publishing digital archives; the vinyl LP format is making a comeback. "The current situation is extremely complex for the independent labels, but they are companies that are clearly committed to innovation and the new musical trends", points out Professor Gallego. "Working with low operating costs and minimal personnel structures makes them more flexible in the face of the ups and downs of the economic crisis and leads them to work in specialized market niches, where having a deep knowledge of the latest youth trends is a requirement", he explains. These companies, for example, have a clear presence in the new networks and digital platforms, through which they promote their respective catalogues and feed contents to services like Spotify. "Through the new platforms and digital networks, the indies have expanded markets and experimented with new forms of commercialization", the researchers state.

To prepare this report, which was supported by the Unión Fonográfica Independiente (UFI) (the Independent Phonographic Union), the researchers from UC3M drew up an on-line survey, which they complemented with follow-up phone calls, to inquire about a variety of basic data about these firms (location, number of employees, billing, etc.), their activities, sources of income, marketing strategies and their relationship with traditional media and, finally, their presence in Internet and digital platforms. The survey was sent to a total of 83 companies in the music sector (record labels, mainly), of which approximately half agreed to participate in the study. "We found a lack of collaboration on the part of many labels, either due to their managers not having time to respond to our survey or due to their resistance to giving out some of the information ", the authors comment; they also faced another difficulty in carrying out their study: the high "birth" and "death" rate of companies in this sector makes it difficult to fix a study "universe".

Provided by Carlos III University of Madrid