Indie Labels Raked in $6 Billion Last Year, Accounting for 38 Percent of Global Market: New Study

Independent labels generated over $6 billion in sales in 2016, accounting for 38 percent of the global recorded music market, according to a new report from Worldwide Independent Network (WIN).

A key distinction of the study -- which was compiled by Mark Mulligan of MIDiA Research using data from 660 respondents, including labels and distributors across 26 countries -- is that its findings are based on rights ownership, not distribution as per IFPI's annual "Global Music Report.

WIN, an umbrella organization for various independent label bodies around the world, calls the report "the most comprehensive assessment of the global independent record label sector ever compiled."

"It is important when making sense of the global market for independent music that we continue to use ownership rather than distribution as the method of calculation," said WIN CEO Alison Wenham in a statement accompanying the market study.

She goes on to day that when major labels include revenues derived from distribution of independently owned rights into their own assessments of market share it "distorts the true value of the independent market and creates a false picture of the amazing growth and vitality of our sector."

According to WIN, around $1.2 billion of independent label revenue was distributed by majors or major-owned distributors in 2016, which WIN says should be attributed to the independent sector. This is especially important in the streaming age as market share is used by digital music companies like Apple, Google and Spotify when negotiating royalty rates, says the indie organization.

Key findings from its research include a 6.9 percent increase in independent labels' global sales (rising to $6 billion) and a 0.9 percent rise in independent market share, climbing to 38.4 percent.

In terms of individual markets, the U.S. saw the biggest swing in favor of independents with market share growing by 1.7 percent to 37 percent. In South Korea, independents now account for 89 percent of the local music market, while Japan saw the sector slide 0.3 percent to just over 63 percent of the market. In contrast, independents represent just 15 percent of the market in Spain.

Many European markets, including the U.K. and Germany, saw independent market share fall slightly, despite overall revenue growth. The report also states that in virtually every country, indie labels continue to record higher market share in streaming than they do in physical formats, with independent label streaming revenues growing by 80 percent in 2016, to total $2.1 billion (up from $1.2 billion the previous year).

"It speaks volumes for the tenacity, passion and entrepreneurship of independent labels, and the public's desire for musical diversity, that even in these times of global dominance by major corporations, almost 4 out of every 10 dollars spent on music goes to the independent sector," said Beggars Group founder and WIN vice president Martin Mills in a statement.

"It is truly gratifying to see both U.S. and global independent market share increase again," added Richard James Burgess, fellow WIN vice president and CEO of indie organization A2IM.

"We must continue to strive for a level playing field where the best releases rise to the top and where the digital services that respect copyright do not suffer unfair competition from those that co-opt our rights," he went on to say, warning that independent labels and representatives "must remain vigilant.

"We are fighting our way out of a deep hole created by copyright abusers," he continued. "And we have a long climb to get revenues for creators and producers back to where they should be."

Three Major Label Digital Marketing Tips For Independent Musicians

In recent years, artists like Chance the Rapper have glorified the idea of abstaining from affiliating their brand with a major record company. But musicians, managers, or independent labels without a substantial financial backing face an uphill battle that doesn't get easier over time.

When it comes to marketing oneself, the thought can be daunting. How to take advantage of all of the opportunities that social media and streaming services offer is a question that discourages many, and baffles more.

As the digital marketing director at Republic Records, Alex Ciccimarro works with companies such as Cash Money, XO Records (The Weeknd) and more to ensure that his roster's brand is seen and voices are heard above all others in the digital media landscape. He previously assisted in the digital marketing initiatives at Atlantic Records, assisting in breaking acts such as Kodak Black, Cardi B, as well as spearheading the digital charge for Hamilton, the Musical.

The list below are a list of time-tested tactics that Ciccimarro has used to break new artists.

Understand the purpose of digital marketing

Before diving into a digital marketing rollout, one must understand what they want their initiatives to accomplish.

“People think digital marketing is blasting music out in an email, maybe pitching to get some placements from influencers, or pitching to [Spotify’s] Rap Caviar [playlists]," Ciccimarro explains. “That’s not digital marketing.”

He continues, “It’s creating awareness and then bringing that audience into your network, which is your website and your social media platform. Then find out how to the most amount of those people to buy into you so you can talk to them on a regular basis...If you’re not doing that, you’re not doing the work.”

Influencer marketing

According to ION, via FORBES, 71% of consumers are more likely to make a purchase based on a social media reference. With that being said, adding a budget to get your music talked about by an influencer and/or placed in their videos is vital is vital for raising awareness.

Ciccimarro suggests targeting accounts with 5,000-10,000 followers or less. Though approaching smaller accounts may not reach a large amount of people initially, implementing a targeted focus increases engagement and fan acquisition over time without breaking the budget in the process.

“If I’m a new artist I’m probably not going to get Cardi B to post my [music] unless she really loves it,” Ciccimarro explains. “But, you might be able to get the influencer from the town you’re from.”

Owned audiences

“The idea behind this is simple: Get your fan's information and talk to them,” Ciccimarro says.

Whether it’s an email address or a phone number, content creators must learn how to get ahold of their fan’s information beyond a social media handle.

Let’s suppose you have a total of 7,000 followers across your social media accounts - Facebook, Twitter, Instagram and Snapchat - but no way to contact them outside of your accounts. If, for some reason, any, or all, of the aforementioned platforms disappear tomorrow, how would you keep in contact with the follower base you worked so hard to obtain?

Apps like SuperPhone exist to stand in the gap. The app, created by songwriter and producer Ryan Leslie, generates a new phone number for its users, and allows them to obtain a contact list that can be texted or called at any time.

Ciccimarro suggests that the best way to grow an audience is to provide more value to the fans/consumers than you ask for in return, crediting Gary Vaynerchuk and his “Thank You Economy” philosophy as the basis of his tactics.

“If you’re the mom and pop hardware store, how do you get repeat business? Your job is to know everybody who comes in and out of your store…[you] stay afloat by knowing all [your] customers.”

5 Steps To A Successful Content Marketing Campaign For Record Labels

With the evolution of streaming platforms, the music industry landscape is in a constant state of flux and the role of record labels has been questioned. With a heritage in producing records, it’s been hard for labels to adapt to the issues of diminishing production costs and recorded music revenues. In my opinion, the solution here lies in marketing.

The old ways of marketing an album release no longer apply. Most labels are forced to double down on their existing big hitters, or new musicians who have already marketed themselves through a DIY approach. As the scene continues to shift, music marketers are constantly being forced to re-adjust their campaign plans to make sure that they are reaching the right audience and creating a high level of buzz.

Marketing plans used to be a combined creation of manager, label A&R and marketing team, booking agent, and publisher who would be responsible for coming up with a big picture strategy and implementing a plan for each domain that he or she was responsible for.  Today, most labels tackle what needs to be done right now and team members handle only their responsibilities without taking a step back and looking at the wider goals.

Below are the 5 steps record labels can implement to create a successful content marketing campaign.

Step 1: Identify the Target Audience

First off, it is VITAL to understand the music market demographic you’re targeting. In order to do this, you need to research and develop statistics about your audience. You’ll need to be able to create a unique profile of your “typical” buyer from this research, which will help you figure out your focus in terms of where they are consuming music and how they are listening. Once you can pinpoint the outlets to focus on you’ll be able to narrow down your target audience and create a content strategy based on your targeted profile.

Step 2: Create a Profile of Your “Ideal” Buyer

You’ll need to create a well-rounded profile of your customer. Only after compiling their general preferences and habits, can you really get an idea for who they are and how to cater to them. Some labels hire outsourced research agencies to compile research on a targeted demographic, or alternatively, you can create a questionnaire in-house to help identify your buyer.

Here’s an idea of some of the information you’ll want to know:

Where do they live, shop, eat?

Are they married or single?

How old are they?

How often do they buy music?

What service device do they use to stream?

How often do they go to shows?

Are they brand/label loyalists or first-time buyers?

Step 3: Build a Content Strategy Based on this User/Buyer Profile

Once you’ve figured out your audience, you can start to create a strategy and budget for targeting that audience. Figure out what platforms you’ll need to reach them on (i.e. social media, a grassroots campaign), what kind of content you’ll need to create to attract them (i.e. video, images, copy, or maybe even virtual reality). Check your resources to see if you have the capability to create a DIY approach and maintain this kind of campaign or if you’ll need to hire some outside support from an agency.

When creating your budget, get as specific as possible, it’s dangerous to assume that having one pot of “marketing spend” will cover all your resources. Consider creating a separate budget for promotions vs. content marketing. Then within that determine your spend on each content type.

Step 4: Find Partners to Help Execute Your Strategy

Now that you’ve got your budget and a content strategy in place, it’s time to look at all your potential partners to help get your messaging out and how to help them deliver it. 

Assuming your band or musician already has a core fan base, you can use social media as a resource for organic promotion. You can offer key followers exclusive content or opportunities to interact with the band based off of their follower counts to ensure maximum exposure.

Venues and retailers can also act as promotional partners as it’s in their best interest to promote the band/musician and the album release. As these are physical locations to attract your audience, there are a lot of cross- promotional opportunities that can be created to support your campaign, involving on-site giveaways or mobile marketing campaigns using beacon technology to target and attract new customers.

 Step 5: Create an Editorial Calendar and Execute Content Delivery to Schedule

Now the final piece of the plan is to create an actionable editorial calendar to clearly map out the campaign in its entirety. Build in key events and happenings that are taking place during your projected timeline that can be used as content opportunities. Identify key staff who are going to promote and manage the content, keep in mind that this is highly important, and can really make or break the success of a campaign. Therefore, it’s important that you enlist members of staff with experience and the ability to act quickly, and don’t assume an intern can manage it.

Make sure you figure out now what your key results and key performance indicators (KPI’s) will be and make sure to track them as your campaign begins to take action. This is how you will know if you are reaching the audience you had planned and can pivot your strategy if necessary.

There is no single right answer for what artists or labels should do right now. A lot of them are being forced to sink or swim, but following these 5 steps will help build a solid marketing campaign plan to help promote a release. Or if you just wanted to remind the audience that you, your band or musician is out there, you can adapt based off these insights as well. The important thing to remember is to not cut corners. Having a well thought out strategy will help create a solid promotion plan that will make sure that every possible outlet has been considered and approached. And then next time, when you’re ready for your next 5 releases, you’ll already have a base to build from.