The litany is by now familiar. Album sales are down the last couple years -- off almost 11 percent from 2001, which itself was off 5 percent from 2000 -- and file-sharing is to blame. To hear the RIAA tell it, if something isn't done, the entire music industry is in jeopardy.
But as usual, the RIAA and the five major labels it represents aren't telling the whole story. The problem is largely their own, because falling sales are hitting the majors much harder than independent labels.
This isn't surprising. Gold records (those selling 500,00-plus copies) accounted for more than 45 percent of total sales in 2002, but they made up less than 1 percent of the total number of releases. And the number of albums that went gold, or better, has dropped 15 percent each of the last two years. The result is that major-label blockbusters pay for the 80 percent of major-label releases that don't even crack the 10,000-sales mark.
Indies are succeeding by doing more with less, focusing on the quality of their releases and how they fit with the label's musical philosophy.
"People have become a lot more adept at releasing music. I see a lot of quality out there in terms of people being able to identify music that they want to release, the reasons they want to release it, and packaging it well," says Jimmy Johnson, owner of indie-distributor Forced Exposure.
The success comes despite the fact that it's next-to-impossible for independents to get on the radio, thanks to promoters whose exclusive contracts with radio groups like Clear Channel allow them to demand payment anytime a song is added to a station's play list. These charges -- under consideration by Congress as a latter-day form of payola -- often exceed $500,000 a song, which indies simply can't afford. Last year, not a single independent-label album went gold.
"There used to always be a record off an independent that sold gold," says Tommy Boy president Tommy Silverman. "Each year, you'd get airplay on records like Ã?Whoomp! There It Is,' and all these little labels that sprang up around one single. There hasn't been one for the last few years."
Independent labels have learned to thrive with artists selling 10,000-100,000 records. The number of releases selling in that range is up the last two years, including an increase of almost 5 percent in 2002 over the previous year. They've done this while dealing with a shrinking number of independent distributors struggling to get their releases into fewer and fewer independent, mom-and-pop stores, and onto the ever-shrinking shelf space of the major chains.
It's a matter of selling music to the smaller niche of true music fans rather than concentrating on the casual listener, says Silverman. "The majors for the last 10 years have moved toward trying to sell music to the people who are either passive or don't care about music."
"When you strip away hundreds of thousands of consumers, those people you're stripping away are casual music fans, not people for whom it's a necessary part of their life," says Mac McCaughan of Merge Records. "Someone who is going to buy a Spoon, a Pram, or a Destroyer album, those are people who pay attention to music, who love music."
With their lower overhead, labels can make good money in this segment of the market, says Jade Tree co-owner Darren Walters: "If there are a million people who love music, and I can get 20,000 of them to be interested in what we put out, that can provide me and my bands with enough -- certainly not for security -- but it keeps me running an office, my employees happy and my bands happy."
Hitting that mark isn't easy, but with smaller stables of artists and less releases, indies can work their records long after a major's publicity department would've moved on. That tactic worked for Ron Sexsmith, who sold more of "Blue Boy," his album for SpinArt Records, than he did for any of his three prior Interscope releases.
"We worked that album for a long time," says SpinArt co-owner Joel Morowitz. "I think that's what did it more than any money that we spent. Certainly we did a lot of co-ops `co-operative ad buys with record stores` with it and a lot of listening stations, but we just stuck by it, and it seems like the records that we've usually done that on, are the ones that have had really good success, like Clem Snide."
Polyvinyl Records co-owner Matt Lunsford attributes his label's success to low ($9.98-$12.98) list prices. "The records are doing better and better," says Lunsford. "I think that for us, price plays into it more than anything at all. The best way to combat people burning CDs is to make sure that the price isn't so exorbitant that they start to consider the option of burning it."
McCaughan laughs off major label complaints about file-sharing. "They really put themselves in the terrible position they're in by continually raising the prices of CDs as sales go down and quality gets worse," he says. "Not only are they putting out albums where the list price is like $18.99 and up, but they're expecting people to spend that based on one good song that's on a given record. On one hit single. The fact that anyone's surprised `by the downturn` is hilarious."
Still, as independent records account for only 15 percent of yearly sales, the relative health of the indies offers little comfort for most retailers, who are still hooked on major-label releases. "I hate to hear that record stores are suffering, but I certainly don't think it's the indie releases that are causing the problem. I think indie releases are the ray of light for them," says Lunsford.