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Last Updated: Thursday, 22 September 2005, 14:48 GMT 15:48 UK
Net takes power from music's Big Four
Editors established their fanbase through the internet
The internet has fundamentally changed the relationship between music's so-called "big four" labels, independents and consumers, industry analysts have said.

Seventy per cent of the world's music market is controlled by four companies - EMI, Warner, SonyBMG and Universal.

The labels not only control what is released, but also influence radio and TV airplay, as well as urban and street culture.

But many in the industry - including the big four themselves - believe that the power balance is changing, due in particular to the internet.

Downloads, peer-to-peer (P2P) file-sharing, piracy, podcasting and online ad hoc radio stations - as well as a rejuvenated independent label sector and a new generation of music entrepreneurs - are shifting the power balance.

"It's rapidly changing and different to how it was 10 years ago, five years ago, three years ago, two years ago," Tom Smith, lead singer of British group Editors, told BBC World Service's The Music Biz.

The group reaped success with indie label Kitchenware after making their music available online.

"It seems to me that it means people can listen to more music, they can decide for themselves early on if they like or don't like something.

"So they can actually listen to more than they ever would listen to and then go out and buy the record."

Helping indies

Under an earlier name, Snowfield, Editors had been unsuccessful in getting a deal from a major label.

However, they began to build a fanbase through the internet, and attracting people to gigs as more people discovered the band online. Major labels then became interested, but, now in a stronger position, Editors rejected them to go with Kitchenware.

EMI headquarters
There was the file-sharing, peer-to-peer services, illegal downloads, and they'd completely and utterly taken over what we were meant to be doing as a record industry
Rob Owen, EMI
"The first record was very limited edition, and not many people could get their hands on it - but you could obviously get the songs and hear the B-sides on the internet and from various places," Smith said.

"I think that's healthy and people sharing music is healthy."

The story is similar for some small independent record labels.

In November last year, Saddle Creek become one of the most talked about and respected independent rock enterprises in the US when their act Bright Eyes - one of only 12 bands on their books - secured the top two slots in the US singles chart.

Then in January, Saddle Creek released two Bright Eyes albums simultaneously. Both were well-received critically and went on to break 100,000 sales mark.

Saddle Creek's Matt McGinn, who was part of the small group that established the label as young teenagers, said that the internet had "really helped independent music."

"I think all of our bands have seen growth due to people being able to share bands that they find and love with other people, who are then turned on to the music too," he added.

"We've put up a couple of downloads for every record we release, and that, you know, shows that we want to share some of the music just for free, just to check it out, and I think that's definitely helped."

'Out of our hands'

And Keith Jopling of the International Federation of the Phonographic Industry said digital market is very good news for independent music labels.

He explained that traditionally, it has been difficult for independents to get high marketing budgets and exposure for their artists

But he said that online, they can "have more innovative marketing concepts," as well as allowing consumers to listen to the music before they decide to buy it".

"In theory, the whole development of the market digitally should be to the benefit of independents," he added, also explaining that new consumption patterns are emerging, with music fans buying in many different ways.

Apple's iTunes website
Internet music sales are growing by 200% a year
"Online, people are more likely to download catalogue, they're more likely to download lesser-known bands - and that's good for independents," he said.

"What we're seeing is that for independent rock artists - indie-type bands that don't have the marketing exposure of those acts on the major labels - a higher proportion of their sales is now taken up by digital."

Rob Owen of EMI admitted that the majors were playing "catch-up," but added they were now dramatically improving.

"We didn't really know where it had come from, and I think over the past couple of years great inroads have been made by all the record companies - not just the majors but the indies as well," he said.

"Learning daily I think is the case, really. We're kind of catching up, but we're getting there."

He also defended the major label's initial fears that technology could bring them down - which made them slow to react.

"It was out of our hands," he said.

"There was the file-sharing, peer-to-peer services, illegal downloads, and they'd completely and utterly taken over what we were meant to be doing as a record industry.

"We have caught up now, and I think people are sitting up and taking notice. They know where they can get things legally."

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