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Friday, April 3, 2009

Indie Labels Suffering Too

When it comes to CDs, the entire industry is hurting, not only the major labels. Indie labels, who've always had a real struggle even in the best of times, find it more and more difficult to keep the doors open these days as not only sales decrease but margins as well.

Indies still rely principally on CD sales for the bulk of their income, but thanks to the music retail sector drying up, there are fewer and fewer stores to sell their product. Now those last existing stores have become increasingly reluctant to accept indie product, some even requiring a 5,000 unit guarantee, a level that's unreachable for just about any indie record. In better times this amount wasn't a problem for a hot act, but given the fact that a major label number #1 record might only sell 50k in a given week, this figure is tougher to hit all the time.

There's as much music consumed as ever but the margins are now so razor thin that few labels are able to exist. There used to be a few buck margin in a CD, but with an iTunes download leaving only 65 cents which still has to be split with the artist and writer, the business model has been turned on its head.

Record labels large or small cannot exist with the music industry as it is today. Look for something new to come along soon to take the labels place, or the labels to completely change their business model. There's no other way to survive.

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