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Indie Music’s Digital Drag

First published on http://www.nytimes.com/

Universal, the world’s biggest music company, sells or distributes 38.9 percent of the music in the United States, according to data from Nielsen SoundScan. But measured strictly by copyright ownership, Universal has only about 28.5 percent of the market, while independents collectively hold about 34.6 percent, according to the American Association of Independent Music.

Market share is important leverage in negotiations with digital services over licensing terms, and the independents claim that the majors’ inflated share allows them to demand higher royalty rates as well as other payments like minimum guarantees and large advance payments. Those payments may be unavailable to indies, or available only in much smaller amounts.

The fight with YouTube is only the latest to galvanize the independent sector, as technology companies like Apple, Amazon and Pandora have become the most powerful outlets for music and years of mergers have resulted in a concentration of power among just three major labels.

“Even if the market shares were more accurately measured, we would still have the inescapable fact that the three big labels account for the majority of music sales and the indies only have an impact as a collective,” said Mark Mulligan, a digital media analyst and consultant.

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