Global Report: Indie labels have 35% share in Australia

The global independent record label market is worth US$5.6 billion (A$7.6 billion), with a 37.6% label share based on rights ownership rather than distribution.

This is according to The Worldwide Independent Market Report, launched last Friday by the Worldwide Independent Network (WIN) at the MIDEM conference in the south of France. WIN is an umbrella organisation of labels across the world, of which Australia is a member through the Australian Independent Record Labels Association (AIR).

Australia has one of the healthiest independent sectors, with a 35% share held by its labels of the local market. Among those listed as the most successful indie acts in the world at the moment are Courtney Barnett and Chet Faker, as well as New Zealand’s Fat Freddy’s Drop and Devilskin.

The report is here.It is authored by Mark Mulligan of MIDiA Research with Dr. Chris Bilton from Warwick University’s Centre for Cultural Policy.

“Market share figures are becoming less accurate and that’s why we felt driven to come up with our own,” said WIN CEO Alison Wenham during her presentation at Cannes.

The issue is that while 72% of indie labels use indie distributors, 52% go through major or major-owned distributors. As a result, indie sales can often be attributed to sales by majors.

Hence the use by The Worldwide Independent Market Report of value “based on rights ownership” when analysing market share. This is an important distinction because where independent companies use major labels in various territories around the world to distribute their music, the major labels include the value of revenues derived from the distribution of independently owned rights into the label’s assessment of the majors’ own market share.

Most independent labels do not have the international infrastructure needed to compete globally.

It also makes the point, “History has shown that controlling your own destiny with an independent distributor ensures that secondary income such as neighbouring rights income is traceable — and this is vital.”

The report maintains that that indie labels have the jump on the majors in some instances, in that with a lower turnover and profit threshold, they can sign up more adventurous usually un known acts. Some like Taylor Swift and Adele have, of course, gone on to massive success. “Independent labels play a vital role, globally, in discovering and nurturing new talent,” it emphasises.

What’s helping the growth of independent label muscle is streaming. But the report cautions that the gains from this might not be long-lasting.

It accepts: “It is perhaps unrealistic to expect a complete rebalancing of label market shares because of streaming services, especially as the next wave of streaming users – especially free ones – will come from the more mainstream parts of the population. However, the better that discovery and recommendation tools become on streaming services, the more that independent labels are likely to benefit.”

The global market provides 37% of independents’ revenues. The extent of market share in different countries range from 88% in South Korea and 66% in Japan to 16% in Finland and 18% in Spain. The figure is a 36% share in the US and 23% in the UK. Seven of the world’s larger indie labels generate $100 million ($135.8 million) a year.

According to 2015 figures, the global indie sector’s sales in traditional and new formats are equal: both digital and physical provided $2.6 billion ($3.5 billion) in generated revenues. $700 million ($950.5 million) came from “other revenue”. Downloads and streaming also provided equal monies: $1.1 billion ($1.49 billion) each. An extra $400 million ($543. 1 billion) came from “other digital revenue”.

The report’s estimate puts Australian indies’ share of physical sales at 35% compared to the 65% held by majors, 36% in downloads compared to 64% and 39% in streaming compared to 61%.

WIN’s Alison Wenham observed, “This is an important report, giving us the first truly global overview of the economic and cultural value of independent music. With a 37.6% market share based on rights ownership, and a contribution of $5.6bn it is clear that the independent music community is playing an increasingly important part within the global music industry.

“Quite apart from the significance of the independent sector’s real market share, the vital contribution to the creation of local music in countries around the world assures that the cultural value and contribution of music is in very good hands with the independent sector.”