This is Celia Hirschman for On the Beat, on KCRW.
This week, the German publishing company, BMG, and the Japanese electronics giant, Sony, announce they've agreed on a music merger, awaiting regulatory approvals. And just last month, Edgar Bronfman, the previous owner of Universal Music, announced his plan to buy Time Warner Music, knocking EMI Music out of the race of Time Warner ownership. I guess you could say the record business has been busy the last couple of weeks! If BMG and Sony merge, and Bronfman buys Time Warner, the US label conglomerates will number four - BMG/Sony, Bronfman/Time Warner, EMI, and Universal.
Now, as the mainstream record giants continue to absorb each other in a frenzied game of Corporate Pacman, how does the little label survive?
All independent labels are not created equal. There are many different kinds of indies and some of them are doing just fine right now.
Recently, I had a chance to speak with one of the owners of BYO Records, or The Better Youth Organization, an LA based punk rock label. Like so many indy labels, BYO Records was founded out of necessity. In the early 80's, when the punk rock band Youth Brigade couldn't get their records in the stores fast enough, Shawn & Mark Stern, brothers and members of the band, decided to open their own label. Now, 20 years later, BYO Records has just celebrated their most successful year yet, in spite of the record industry's widespread panic about business.
Like all small business owners, the Brothers Stern have gotten a first class education in label ownership, and perhaps because they're artists themselves, they've built a very lean but successful business model where many others have failed. Their record prices are lower than almost everyone else in the game, and their agreements split the profits 50/50 with the bands. Though these past 20 years have not earned them club rooms at the Four Seasons or private jets for their entourage, the Brothers Stern seem content to be releasing 10 - 14 records a year, to their very loyal and active fan base.
Most strong indy labels have financial deals intertwined with their distributor, or with a larger label. BYO Records is a true independent label, as they finance their endeavors privately, and don't take money from either distribution companies or other labels. In that way, they are free to negotiate the best terms for their business. For instance, instead of having one distributor sell all of their records to retail, as most major labels do, BYO Records has negotiated non-exclusive deals, with some of the best niche distributors who specialize in punk rock music. They also work with a mainstream distributor who focus the sales of their catalog at traditional retail stores.
Another way BYO Records controls their business is by overseeing the manufacturing of CDs themselves. Most labels have manufacturing deals with their distribution company, who offer very competitive rates. As distribution companies pay labels on the number of goods sold to retail, labels must trust that their distribution company is providing them with accurate counts of production.
Over the course of history, several distribution companies have been accused of manufacturing more records than they've reported to the labels, and pocketing the difference, so if you control your own production, you can be sure of exactly how many CDs are being made. A lot of indy labels follow this course of business.
Now chances are, you won't know most of the bands on the roster of BYO Records, unless you listen to a lot of punk rock music. But don't let that dampen your enthusiasm for what they're doing. There are thousands of people who do, and they'll go to any lengths to find the their music.
In an industry where everyone seems to feel we're simply hanging deck chairs on the Titanic, it's comforting to know that companies like BYO Records are out there, year after year, growing stronger.
This is Celia Hirschman for On the Beat for KCRW.