What Is Fair Market Share?

Don Rose speaks for more than 100 indie labels, and lately, his favorite topic of conversation is collective indie market share.

Rose, president of the American Assn. of Independent Music, and many indie executives feel strongly that their share of the market should be based on label ownership, regardless of who distributes the music.

A quick look at the 2005 numbers explain Rose's position: According to AAIM figures provided to Billboard this week, indie market share is a resounding 28.21%, 10 percentage points higher than Nielsen SoundScan's 18.14%.

So what is indie? Depends on who you ask.

According to Billboard and SoundScan, indie market share comprises all releases with indie distribution. This includes the indie distribution arms of the major labels—Warner Music Group's Alternative Distribution Alliance, Sony BMG's RED, EMI's Caroline and Universal Music Group's Fontana. Rose, in a commentary published in Billboard last year, called this "an old, obsolete paradigm."

AAIM arrives at its 2005 figure by starting with the SoundScan number and adding 10% from the sales of labels like Curb, Razor & Tie, Sanctuary and Hollywood Records, which are distributed by the major labels' indie distribution companies. In AAIM's world, the majors only have a 71.79% market share.

The majors count market share in a different way from AAIM, or SoundScan and Billboard. The majors include any sale from any distribution company they own, including their indie distribution arms. From this perspective, independents have only 13.18% market share, while the majors are credited with 86.82%.

It is not a black and white issue, because each new deal between a major and an indie seems to introduce a new shade of grey. For instance, in 1992, WMG formed ADA, which distributes independent labels, including Sub Pop, which is now 49% owned by WMG.

Billboard long ago decided to track labels by distributor, and when SoundScan was founded in 1991, it carried on the tradition. But today, the line between indie and major distribution is a bit blurred. The four major-owned independent distributors have grown to reside among the six largest U.S. indie distributors—the other two being Koch Entertainment Distribution and the self-distributed Madacy. And so the argument continues.

Billboard agrees that there is more than one way to define "independent." But a fact of retail life is that albums included in a major distributor's catalog have a distinct advantage over indie-distributed titles in terms of gaining shelf space and ad programs from large chains.

Rose, however, seems resolute in fighting for what he believes to be the indies' due. "In an ideal world, there would be no need to distinguish between majors and indies," he argues. "But indies are pragmatic as well as idealistic. So, since the marketplace tends to segregate on the basis of size, let's allow the market share report to reflect truthfully the considerable size and impact of the indie sector." ••••