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What's That Sound? Probably an Indie Label

Stocks in this article: SNE WMG P

NEW YORK ( TheStreet) -- The influence of the Big Three major record labels and the broadcast industry that supports them is noticeably shrinking, giving way on several fronts to the growing power of independent music businesses.

The Big Three are what's left of what was once a larger group of huge labels that between them still dominate the industry. Market pressures over the last 20 years effectively forced a reorganization that has left three giants standing: Sony Music, a part of Sony (SNE), Warner Music Group (WMG) and Universal Music Group, a unit of Paris-based Vivendi.

Independent labels already have nearly a third of the total market share for album sales, and that number appears to be growing. From 2011 to 2012, that share went up 0.5%, to 32.6%. Looking at only digital album sales, market share for indies is even higher, at 39%.

As a group, independents tend to specialize in specializing, feeding niche markets that the big commercial labels largely ignore. Many artists in jazz, reggae, blues or electronic music, or new composers of classical music can be found on independent labels.

But independents are also at the top echelons of hit makers. Taylor Swift, crossover artist extraordinaire and multi-Grammy winner, records for Big Machine Records, a label in the independent, Nashville-based Big Machine Label Group, founded in 2005.

As Jason Notte notes in an article from May 27, the top song Memorial Day weekend on Billboard's Hot 100 was Macklemore and Ryan Lewis' Can't Hold Us from their independently recorded and released album, The Heist.

Concord Group (purchased by Wood Creek Capital Management in March) not only has the leading jazz catalog but through its subsidiary labels also holds Creedence Clearwater Revival's catalog and a distribution agreement with Starbucks' (SBUX) Hear Music label that includes the likes of Paul McCartney. Concord artists took home eight Grammys in February.

More significantly, independents as a group are mobilized, cooperating with one another, pooling resources and creating opportunities for one another.

This week, the leading voice for that organized approach, American Association of Independent Music, or A2IM, held its annual conference in lower Manhattan, to be capped by an awards ceremony Saturday night.

"We have 317 label members of all different genres and sizes," A2IM President Rich Bengloff said in phone interview Thursday. "This conference features members from 28 states and 13 different countries."

As Billboard points out here, determining what constitutes an independent label can be tricky. There are distribution partnerships with majors to be considered, as well as investments by the majors in independent labels' business and a growing number of side deals that blur the old lines.

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