Music sales: Indie labels’ market share '57% higher online'


Music artists on independent record labels are enjoying a far greater proportion of online sales than physical sales, according to new data. The figures, from Merlin, the global licensing agency for independent labels (the “virtual fifth major” on account of the slice of the market it represents), demonstrate the growing significance of the independent label sector in the new music industry.

Data reveals that 22 artists represented by Merlin members score number 1s in at least one major territory, while more than 50 Merlin member artists bagged top 5 albums in 2010/2011. In addition, the US album market share for independents is 57% greater for digital than physical sales, while paid tier usage of Merlin repertoire on streaming services (such as Spotify Premium) outstrips free tier use (Such as Spotify's ad funded service) by 20%.



Four "major corporate labels" dominate recorded music — Universal Music Group, Sony Music Entertainment Warner Music Group and EMI — each of which consists of many smaller companies and labels serving different regions and markets. Labels that fall outside of these firms are classed as 'independent'.

The survey reflects a year which saw #1 US chart success and a Best Album Grammy win for Arcade Fire, Adele’s record breaking UK run and worldwide success, and chart topping performances by independent artists in Australia, Belgium, Canada, France, and Norway.

Chart successes

In the period from January 2010 to March 2011, over 50 albums released on Merlin member labels reached top 5 chart positions (18 of those at #1) in charts1 across the world including in the USA, France, Germany, the UK, Canada, Australia, Norway, Spain, and Belgium.
In all, more than 65 independent artists, including Adele, Arcade Fire, The National, Spoon, The Strokes, Social Distortion, and Vampire Weekend reached the top 5 in national album and single charts across the territories surveyed.

These figures shatter the myth that the independent sector represents “long-tail”, specialist repertoire that is somehow of inferior value in the market.

Digital market share

Nielsen statistics for both 2009 and 2010 reveal that the US album market share for independents is 57% greater for digital as compared to physical sales - underlining the fact that in a market with limitless shelf space and freedom of choice, and free of the tightly controlled store fronts of physical retail, mainstream music consumers are increasingly discovering and purchasing independent music. Merlin is seeing usage shares for its members’ repertoire on licensed streaming and subscription services at levels that reflect, at least, those reported in the Nielsen report.

Over-indexing on premium streams

Furthermore, on streaming and subscription services, Merlin members’ usage shares are significantly higher on paid for tiers than on free or ad-funded tiers. Specifically, in Q1 2011, Merlin members’ tracks were streamed over 750 million times across Rdio, Spotify, MySpace Music, Simfy, Eircom, and (all services with which Merlin has concluded deals).

Merlin members’ combined share of streams on free/limited tiers on these services was 10.5% of all streams. However, moving to premium tiers, Merlin’s share rose from 10.5% to 12.25% - higher by 17% than on free/limited tiers.

In some territories, the increase seen in Merlin member usage from free to premium tiers was as high as 27%. This illustrates that users who pay for subscription services – serious music fans by definition – are even more likely to be found listening to independent music.

Charles Caldas, CEO of Merlin, said: “This survey once again highlights the value of Merlin members’ repertoire. The chart success of our members in these major markets underlines the fact that independent repertoire is absolutely as valuable to consumers as that of our major label competitors.

"Our data clearly indicates that consumers demonstrate higher levels of demand for this repertoire on digital services than in the physical world and higher levels of demand on paid for-tiers than on free. More than ever, these facts emphasize the vital importance of this repertoire to any service with serious ambitions in the digital realm.

"Services that are serious about providing their customers a compelling product that encourages them to pay, and stick around, would do well to take the time to understand the new dynamic for indies in the digital market, and analyze carefully what their customers are demanding."

Merlin member official chart number 1s – Highlights:

USA – Arcade Fire (also Canada), Vampire Weekend

Germany – Martin Solveig & Dragonette, Die Atzen Frauenarzt & Manny Marc

UK – Adele (Also USA, 15 other countries)

Australia – Bliss N Eso

Norway – Stella Mwangi, Kalzers Orchestra, Bjørn Eidsvåg, Vamp, Motorpsycho, John Olav Nilsen & Gjengen, Gitarkameratene

Spain – Alexandra Stan, Yolanda Be Cool, Elena, Edward Maya

Belgium – Regi, Tom Dice, Tim Berg


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