The American Association of Independent Music (A2IM) is a non-profit trade organization that represents the interests of the Independent music label community. The organization has been closely involved in a number of issues currently affecting the music industry. As channels of music distribution continue to open up online, A2IM has been at the forefront, making sure independent labels aren’t left behind. A2IM President Rich Bengloff recently spoke to FMQB about what the organization does for its members and some of the current issues facing independent labels.

How does the A2IM differ from the RIAA? From what I understand, it is similar in many ways, just on a smaller scale…
And with a slightly different structure. We do a lot of advocacy on issues, which is similar to the RIAA, and I’d say about 60 percent of the time we agree on issues. We’re very friendly with the RIAA, but we also have a lot of the same concerns as artists’ groups. I’d say about 40 percent of the time we’re on their side on issues. RIAA doesn’t provide member services, which is a big part of our mission in terms of educating our members, creating networking connections, providing services, etc.

Commerce is also one of the fundamentals of our organization. One of our issues has always been that there was never enough shelf space at retail; it was finite. The great thing about the new world is you only deliver one copy to iTunes. They actually have a separate section where they highlight independent releases.
There’s only 168 hours in a week at your traditional AM/FM radio, and we often don’t get much airplay there either because we aren’t able to afford a lot of promotion. When I worked for Elektra Records, we had roughly 32 independents supporting the nationals out in the field working supporting radio. Even our largest members, such as Wind-up Records or Curb Records, don’t have staffs that large.  Now, due to the fragmentation of the marketplace you can get your music played on all sorts of different services, and people who are looking for Bluegrass or Jazz or whatever genre can access it on a service like Pandora. Pandora is almost like a panacea to us in terms of exposing new music. It’s a good deal for the independent labels.

How did the A2IM get started?
A2IM got started four-and-a-half years ago (it’ll be five years this June) because the new economy was developing.  There was a period of exclusion for independent music labels because they didn’t have clout within the marketplace. The hope was (and we believe we have delivered to a large extent) to give the independent community a central voice to say, “This is what we need. As the new economy develops, we want to be included.” Going the other way, it also provides people a portal to reach the independent community. It’s impossible to call 100 different independent labels, but we message through newsletters and emails. We have a number of networking events at different conventions throughout the year, so it gives people who want to reach the independent community one central place to reach them that wasn’t available before.

What are some of the goals for A2IM in 2010 and going forward?
Our main goals are to help educate our members in terms of what the structure of an independent music label should be, and how to get commerce during the coming year. A lot of them were using old school ways of running their businesses.  Given the change of the consumer model from being a purchase model to more of a consumption model, they have to change their business models accordingly. That’s our biggest thrust of the year, the rest is our ongoing lobbying for or against legislation that wouldn’t be good for the independent community.
For example, the Orphan Works Law; something that’s really been generated by Google. You may have heard about it related to books. There was legislation pending over a year ago now, but we hear it’s coming back again, where if you can’t find the owner of the copyright, you’re allowed to use it. If at a later date the owner comes forward and says, “Hey, excuse me, but that song recording is mine,” you can’t get payment retroactively. If you end up having to sue, your legal fees aren’t covered. It’s a law that if you’re resource-challenged, which all labels I’d say are nowadays, you’re going to have a problem because it’s going to be hard for you to get paid.
We’re in favor of Orphan Works being shared with the community whether it be a museum or a non-profit organization. But if it’s a for-profit organization like Google, we feel this shouldn’t be a way for them to use it without compensating us. That would be just one example of some of the advocacy we’re doing.
Also on A2IM’s agenda is the “Independent Music Label Roadmap,” where a group of over 60 independent music label colleagues from around the world met in New York City last June to share ideas, brainstorm our community’s challenges, and create a generic “Roadmap for Independent Music Labels” to use during this period of transformation in the music industry.

Where does A2IM stand on the Performance Royalty issue?
We’re in favor of it, but we have a different need in some ways than the major labels and that’s the issue of foreign reciprocity. Because we don’t have a performance right legislation to pay the sound recording holders for AM & FM radio, we don’t receive money from foreign countries because we have no domiciles there. For example, when  I worked for Elektra, AC/DC would get paid because we had domiciles in Germany, England, Italy, France, etc. We got paid because we had a business there and they were able to collect the money for us for the performer.  Most countries have this performance right.
Most independents either are only domiciled here in the U.S. or they’re domiciled in a few territories around the world.  As a result, we don’t get paid for overseas airplay. For example, the electronic act Thievery Corporation is on a label they co-own called Eighteenth Street Lounge down in Washington, DC. They probably get five times the radio play in Europe that they get in the U.S., but they don’t get any of the money for that radio play overseas because there’s no reciprocity. We estimate by talking to the organizations overseas that administer these rights we’re losing somewhere between $50 and $75 million dollars by not having a right in this country – irrespective of whatever we could receive domestically for our radio play. That’s a loss to the country at large so to speak, right?
Another example: You go to a music convention, such as South By Southwest, and there are stands for New Zealand, Australia and Great Britain, and if you notice there’s no stand for America. You’d see the same thing at all these conferences. Those are paid for by the government. Even though music is one of our biggest exports, we get no support. I’m not just talking about independent labels; I’m talking about independent artists as well. Many of the people we represent are on their own, personal labels, such as Hanson or Joan Jett or Ani DiFranco. Earlier I said that often we’re with the artists on certain issues, because probably about 20 percent of our members are artists on their own labels. So we’re looking out for both artists and labels. I know this is the wrong time to ask given the state of our economy, but in the long run we’d like some support for the creation community in terms of helping us out with funding, just like the other countries.

What happened with the commitment terrestrial radio made to play more independent music and artists? A big deal was made out of it a few years ago, but nothing ever seemed to really come of it.  Was it enforced?
The concept of the “Rules of Engagement” and the related FCC Consent decree setting rules for four of the major radio station groups was good in concept but in practice little has changed. See a follow-up study we did called “More Static”  and if you want more on the issue, go to the website for the Future of Music Coalition where there is a study called “Same Old Song.”

You were talking about technology’s effects on the music industry earlier. What specifically are you asking labels to do in embracing new technology?
Basically working smart and retooling your business. People were accumulating email marketing lists, so they were hitting 10,000 names and nothing was happening because it really wasn’t a good list. Someone gets on the list and then they just get spam like crazy. It’s better to have a focused list, so we discuss email marketing with our members. We discuss going direct to fan. We have a lot of associate members in addition to our label members, like Ian Rogers with his company Topspin.

I know Topspin well; a lot of my favorite artists have used it in the past few years, like David Byrne and Metric.
What Topspin is good at is not just for David Byrne, but for new artists as well. Metric had a fan base already, but even bands with no base at all. The new economy is not only about going direct to fan, but knowing you have your casual fan that is going to spend 49 cents and 99 cents, and then you have the über-fan who may spend $44.99 or $99.99. So you want to have options for all these different people.
Basically, you have to change your staffing. What you need is a good media marketing person, so you have to restructure the way you do your business. That’s some of the things that are going to be emphasized by us in the coming year, in addition to the advocacy issues: the performance right, the funding. Obviously a huge issue is fighting piracy. All of us in the industry are working together to fight piracy in terms of getting help from the Internet service providers.

That’s a big issue that’s really ramping up now, placing the emphasis on the ISPs instead of blaming the individuals.
We need to go in as a group, whether it be to Washington or to the ISPs, saying, “Listen!” Also, there’s a payback for the ISPs to a certain extent. They still don’t want their bandwidth being choked up by these people who aren’t paying anything. So there’s a win for both sides on this.

Bono wrote an editorial recently on this topic in the New York Times…
Yeah, it was a great editorial and it’s almost embarrassing to tell you this. I read the editorial in the Times that Sunday and I didn’t see who wrote it. People asked me, “Oh, did you read Bono’s editorial?” “No I missed it!” No…I did read it and I just didn’t know it was Bono! I just didn’t focus on who the writer was.

What are some other notable causes that A2IM is active about right now?
In terms of the advocacy, we discussed funding, piracy, the performance right, making sure that the Orphan Works law doesn’t pass. But things always come up…there’s sales tax legislation. On the Internet, this is a big issue of whether or not there should be a sales tax on additional transmission. Overall, it is us going to all the different services and saying, “Listen, we saw that you did a deal with the four major labels, please don’t forget us.”
More often than not most people have been amenable because we give them a portal to reach our members which saves them a lot of time working with us to make a reasonable and fair offer to our members to include them in the their new commerce – whether it be the ‘cloud in the sky’ or a streaming service or a download service or whatever.

Nielsen just released their 2009 sales data for the past year. The indie labels are lumped together under “other,” and made up 11.5 percent of all music sold last year, which is down a little over one percent from the year before. What’s your organization’s take on the state of their share of the pie?
We don’t agree with the way Nielsen does it, even thought a good friend of mine devised their system back in 1993. That chart is by distributor, not by master owner. So Wind-up Records is owned by Alan Meltzer, but it’s included in Sony’s market share, and all they are is the distributor of Wind-up. As a matter of fact, in the digital world, Wind-up does a lot of its own deals. Razor and Tie is included in the number for Warner, and Sub Pop goes through ADA which goes through Warner. Warner has Curb Records included in their market share, and Curb is one of the largest independents in the country and one of our members. But Mike Curb owns that label. Concord Music goes through Universal distribution. That’s owned by Norman Lear the TV legend who is also in the music industry. Our market share has actually been over 30 percent for the last six years, by owner of masters. All those people I just mentioned are members of our organization and pay annual dues, so they certainly see themselves as independents.
What I also found interesting was our physical share declined this year. It was the first time our physical share declined in about four years. Not by much, by less than a point, and the reason is because of shelf space. Stores who carried a wide selection went away. Borders cut back their space, Virgin went out of business. A lot of people that carried a large breadth of selection have gone out of business, while our larger members like the Curbs, the Concords and the Wind-ups still have their business within the stores, a lot of our members have been somewhat displaced, which is a problem. That’s the bad news.
The good news is, our digital share of the marketplace, again by master owner, went up over 38 percent, and if that’s what the future is going to be, there’s no shelf limitations. Pandora has almost been like the evangelist for us. They became the most popular service and they played the most independent music. So that was validation for us. People want the option of not hearing Beyoncé 30 times. She’s wonderful, don’t get me wrong.  But instead of hearing her 40 times when you go on the Internet, you get a lot more variety of music and it also exposes people to music which they turn around and buy.

[eQB Content by Joey Odorisio]