Quotas for Indies?

Eric de Fontenay from MusicDish has posted a compelling editorial, inspired by the Supreme Court’s opinion on Affirmative Action. Although Eric and I agree on many things, I’m not sure I believe that establishing airplay and store space quotas for independent artists is the right direction to move in.

First of all, look at France, where state-imposed quotas on airplay result in charts that are wildly different than what store sales indicate. Music buyers there have developed a sixth sense to determine what’s getting played because listeners want it and what’s getting played because government wants it. In a free market, the wallet decides.

Second, the idea of “independent” has such a different meaning in today’s economy and with today’s technology. There are many independent labels that, at the end of the year, are far more profitable for their owners than major labels are for their shareholders.

As someone who happens to own stock in more than a few record labels, I would reframe Eric’s stated goals this way:

1. Record labels have a fiduciary responsiblity to their shareholders to develop a pipeline of strong artists, in the same way that drug companies invest heavily in medicine that won’t be approved for use for years. The focus on quarter-to-quarter results is what has put such a strain on musicians and label staffs — thinking along a seven or ten year strategic plan (and developing artists accordingly) will benefit our culture and our wallets.

2. It’s time for a smart retailer to step up and take responsibility for educating audiences. Is it any wonder that music sales are dropping — it’s no longer fun to shop in most record stores. Independent stores have as much responsibility as the big boxes — many mom and pops have become downright initimidating to shop in. Believe it or not, people are more than willing to try out new things if they have a trusted voice to guide them. A smart retailer who can hire and develop good floor staff — giving them the tools and the time they need to be able to make connections for customers — can regain ground in this otherwise losing battle. A knowledgeable record store staffer who can say, “if you like [this artist], you’ll really like [this artist] and we’ll let you sample this right here in the store” does more for sales than any label advertising can.


One response

  1. In the continuing discussion around my ‘Affirmative Action Plan For Indies’ editorial last week, IndieMusicClub founder Joe Taylor recommended ‘rephrasing’ my proposal to (i) address the labels fiduciary responsibility to their shareholders that has resulted in a “focus on quarter-to-quarter results [that] has put such a strain on musicians and label staffs,” and (ii) that retailers live up to their responsibility to educate their audiences, much as was done in the old record shops of the ’70s. You can read his full commentary at http://www.indiemusicclub.com/blog/

    While I agree with the spirit of Joe’s comments, I unfortunately feel it is more a nostalgic call for the past that clashes with the realities of today’s world. The major labels are owned by mega-media conglomerates financed by global capital markets. So the problem is not simply the labels fiduciary responsibility, but the conglomerates responsibility while controlling a significant stake of our culture heritage and the means to deliver it to society. Those are today’s facts and I know of no way they can be undone unless those conglomerates were to be ‘nationalized.’ In addition, there is little evidence that Bertelsmann, a family-owned conglomerate, acts any differently than AOL/TW or Vivendi. The most effective remedy in fact is to bring balance to the labels fiduciary responsibilities through legislation such as in California that clarifying the labels responsibility to their signed artists.

    Regarding retailers’ responsibilities, let’s take a look at today’s retailers: WalMart, Target, mail-order, TV ads, … How can we expect mass retail companies to educate consumers on something they know nothing about? Just look at the list of CDs banned from WalMart’s shelves. In any case, retailers don’t influence our purchasing decisions, TV, radio, magazines and the Net (ie., Big Media) do. They are the only ones in a position to be able to educate the masses and there was a time not so long ago when they were expected to. Unfortunately, corporate responsibility seems to have gone out the window with accurate accounting and corporate taxation.

    I’d first like to make clear, for the record, that my suggestion of establishing an indie quota on major media outlets was more to stir discussion over a subject I feel the industry remains largely mute than any serious or even practical attempt at a solution. What I do believe is a serious and viable alternative to quotas and media review lobbyfests is structural separation: strict and clear rules that would (i) prevent a conglomerates affiliate from discriminating in favor of the parent’s other affiliates (ex. MTV/Famous Music Publishing/Viacom), (ii) reinforce point (i) in the case where the conglomerate owns major stakes both in content and distribution, (iii) retain day-to-day operational management/decision making at the affiliate level rather than centralized with the parent company (ex. Clear Channel), (iv) link employee bonuses to the performance of their affiliates/divisions rather than that of the parent.

    Now before someone shoots me another email asking “How left wing are you going to allow yourself to get?,” such rules have been the bread-&-butter at the FCC and state regulatory agencies for decades. For example, there are regulatory ‘chinese walls’ between Verizon’s parent and its state affiliates as well as between its regulated and unregulated services. I was fortunate enough to work on the question first-hand in the context of NTT’s (Japan’s main telephone company) divestiture into a holding company structure. It’s not pleasant nor perfect, but imminently feasible and recognizes the reality of today’s marketplace.

    Eric de Fontenay, Editor