 "Niche Your Record Label"
by Peter Spellman
adapted from INDIE POWER: A Business-Building Guide for Record Labels, Music Production Houses and Merchant Musicians by Peter Spellman, MBS Business Media
www.mbsolutions.com
(suggested by Gilli Moon of
www.songsalive.org)
Indie labels are a richly diverse group of small companies, spanning every music style from a capella to zydeco. Their business structures are diverse too, from full-corporate
subsidiaries to solo micro-business. And so defining them remains difficult. Some indies
with minority or majority ownership by major record companies are classified as "independents" thanks to their use of
independent distribution (i.e., national and regional distributors NOT owned by the major labels). Others are
distributed by majors, but remain fiercely independent in terms of spirit and ownership. The rest (most, really) are very
small, often artist-run music production/marketing companies doing the best they can in a tight marketplace.
Indie market share in the U.S. is about 25% (most surveys say 20%, but they don't account for "under the radar" sales
that happen at performances and through direct mail). Indie market share is even higher in other countries like Japan where indies account for well over 50% of all record sales.
What they all have in common, however, is a focus on "niche" markets. "Niche marketing" strategies have long been
used by small or undercapitalized firms as a means of achieving some sort of competitive advantage against other
companies in their market. "Niche" is an architectural term referring to a special place that's designed to display or
show off an object of some kind, like an ornament, that's placed in a recess of a wall or an arched area of a room. And
that's just what a niche can be for small labels. A niche sets them off from other labels who do something similar and
draw the best possible attention to what they can offer. Your best niche will always be the one that you're most
motivated to work hard at, learn as much as possible about for years to come, and evolve with as it matures and
develops. Successful niche marketing among independent labels has taken a number of forms, including:
* format specialization (such as Ryko's "CD-only" strategy and Twin Tone's "digital music file-only")
* price (Rounder Records' focus on "cut-out" records, i.e., records that are no longer being manufactured)
* distribution outlet (e.g., any number of small indie record companies operate strictly as mail-order houses).
* packaging (Putumayo's colorful world music series is easily recognizable in stores)
Most indie record labels, however, use GENRE - the stylistic or thematic classification of popular music works - as their
primary means of market differentiation. The Americana sounds of New West Records, Red House Records' focus on
singer/songwriters, the creative acid jazz of Instinct, and the deep reggae catalog of Trojan insures listeners they can
expect quality discs from each company within their respective niche. Indie labels have almost exclusive dibs on niche styles since their market size fails to attract major label attention.
The majors simply can't justify putting resources into music styles where unit sale outcomes hover in the 2000 to
20,000 range. They need 150,000 sales and up to even register on their radar screens. Music genres operate as social
contracts of sorts, uniting those involved in the music production (including musicians, engineers, producers, and
songwriters) and the music promotion (distributors, record stores, publicists, radio stations, clubs, TV networks, the press
and consumers) in a shared understanding. In a real sense, music genres serve as a shorthand between artist, label
and listener. Each music genre is surrounded by its own media culture too, enabling its promoters to target its unique market channels quite effectively, with high contact and little waste.
The indie sector is the crucial breeding ground for new music. It serves as the R&D lab for the majors but its primary
motive (unlike the majors) is the love of the music and an intimate acquaintance with the same.
"While the majors want to sell music like MacDonalds sells hamburgers, we'd rather be a small chain of gourmet
restaurants with a line going around the block," says Alligator Records' founder Bruce Iglauer. "It's the menu that
counts - not how many are served." Independent labels are artistically and creatively on the cutting-edge of the new
music. These companies didn't simply find a niche and fill it - as so many lesser new age and "fuzak" labels do. Nor
did they just concoct one and market it, like so many major-label-forged "alternative" indies. They usually developed
their label along with the music they presented, often as a hobby, bringing bands and artists to an ardent audience and then riding the crest of their influence.
For a number of the smarter ones, yesterday's hobby has become today's gold mine. -----------------------------
Peter Spellman is author of The Musician's Internet: Online Strategies for Success in the Music Industry (2002, Berklee Press)
, The Self-Promoting Musician: Strategies for Independent Music Success (2000, Berklee Press
) and
several other music business development guides. These guides are used by music entrepreneurs in over twenty
countries around the world. In addition, Peter is Director of Career Development at Berklee College of Music, Boston,
and spent several years with an internet startup where he consulted on web design, online music marketing and
software development. Peter is a popular speaker at colleges and conferences and is available for lectures, seminars
and workshops. He is a prolific writer whose work has appeared in Musician Magazine, Gig, Performing Songwriter,
International Musician and numerous other publications. Peter is also drummer for the improvisational collective, Friend Planet. For more info, visit www.mbsolutions.com, or write to Peter at success@mbsolutions.com. Please, no unsolicited material.
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