IBM, record industry pact: Opportunity or threat for Indies?

News of IBM's venture with major record companies to distribute music online bodes well for consumers, but some industry players fear Indie labels will be left out of the "big boys club".

Big Blue, together with five music giants including EMI, Sony and Universal, is developing a system for music distribution on the Net that is based on open standards and that does not flaunt artists' rights. But there has been a mixed response from the UK record industry to the project code-named Madison. Jollyon Benn, operations executive for the British Phonographic Industry, said consumers would benefit from the initiative. "It has got to be a good thing. People will not just rely on listening to the radio or going into a record shop," said Benn.

But he sounded a note of caution for the Independent labels. "Because the labels involved (in the IBM deal) are multinationals, it is quite a closed shop. The small-sized record labels are not involved. It remains to be seen whether the Independents will want to be counted in or whether it will remain a big boys' club," Benn said.

So does this mainstream embracing of the Internet mean the demise of high-street music stores? Benn does not think so. "It would be hard to envisage a time when people don't hang out in record stores. There is a swing towards online stuff but I can't see it having a major effect for the next ten years or so."

Benn believes retailers still hold considerable sway with the record companies. "The retailers are holding record companies to ransom and saying we won't do business with you if Internet prices undercut the high street."

Carac Downes, Web master for the independent classical label Nimbus believes the Internet could benefit the smaller labels because it offers a cheaper alternative to traditional distribution channels. "Small record labels will no longer have to hold product and as they often cannot produce runs of less than 500 discs, this could be a big advantage."

Smaller labels may well respond to the big boys with their own Independent download site, according to Downes. "Smaller record labels tend to bunch together to distribute things, so I don't see why this model cannot be applied to the Internet," Downes said. But, like Benn, Downes finds it hard to believe that the Internet will ever replace convention ways of listening to music. "I think people like having shelves of CDs. From the consumers point of view, downloaded music doesn't exist anywhere," he added.


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