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AIM: Association Of Independent Music

Alison Wenham • Steve Johnston
By Simon Trask

The AIM web site at www dot musicindie dot org.The AIM web site at www dot musicindie dot org.We'd all like to make a living from selling our own music — but how would you actually go about it? The UK's Association Of Independent Music offer some thoughts on how to cope with the opportunities and pitfalls of the modern music industry.

The worldwide music industry is at a crossroads — on the one hand, the Internet offers new means of selling and distributing music, but on the other, traditional record companies everywhere are consolidating and merging, as seen most recently in the case of the Sony/BMG merger, which reduced the worldwide 'big five' of record labels to a tremendously powerful quartet of companies. Of course, the smaller the label, the more they are vulnerable to to the effects of these far-reaching changes, and into this category fall all independent record companies and 'one-man band' operations, such as those started by SOS readers to sell the results of their own musical endeavours. Without a mechanism for these labels to act and negotiate deals collectively, the UK's healthy tradition of diverse, independent music could be endangered. And this wouldn't be merely a cultural loss — taken as a whole, the UK independent record sector is not only strong creatively, but also financially. Last year, the indie market generated 30 percent of the year's platinum-selling artist albums, and accounted for 25 percent of sales in the UK market, worth around £420 million in total.

In the UK — the third largest market in the world for music sales, after the US and Japan — squaring the circle of indie solidarity and indie diversity is a task which has fallen to the Association of Independent Music (AIM) ever since they opened their doors in March 1999. Created by the independent sector to represent the interests of indie labels, AIM are a non-profit trade body which handles educational, promotional, lobbying and negotiating activities on behalf of their membership — now more than 800 labels strong.

What Can AIM Offer You?

Both labels and distributors can join AIM providing they are at least 50-percent independently owned. Which means a major can have a stake in a member company, so long as it's not a controlling one. Members must also produce or distribute records and/or music videos in the UK, and have a place of business in the UK.

In addition, labels need to be PPL members. This is because their annual subscriptions are derived from a percentage deduction from their PPL income (12 percent this year, up from nine percent previously). For those labels who don't yet have any PPL income, AIM has introduced a £120 annual subscription fee. Labels also pay a one-off joining fee of £100 plus VAT, while distributors all pay a set annual fee of £750 plus VAT.

If you're a sole trader making your own music, you can still be a member of AIM. However, you need to be running your own record label. And like all AIM label members, you need to be a member of PPL and also a copyright owner — which you would be, of course, unless you'd signed your rights away.

"The company could be a limited partnership, it could be a sole trader, it could be a cooperative, it could be a number of different corporate entities." says Alison Wenham. "But it needs to be a copyright owner. There are more and more managers who are copyright owners nowadays. The world is changing, and so are the old business models. The record company role may be fulfilled by other entities like managers, publishers, artists or artist communities."

AIM membership benefits include access to a members-only section of the AIM web site (containing a wealth of advice and information and a web forum discussion board), a free copy of The AIM Guide to Survival and Success in the Music Business (a rather large PDF file, almost 700 pages long, which comes on CD-ROM, and is also available to non-members for £10 plus VAT and postage). Members also get regular email updates on AIM activities, access to specialist legal, financial and technology advice, and the ability to participate in regular educational and networking events, as well as access to the Internet licensing deals negotiated by AIM's new media arm, Musicindie. Companies which have business connections to the independent record sector can help support AIM and have special access to members and events by becoming Friends of AIM for an annual fee of £1000 plus VAT. Currently AIM has almost 50 Friends, among them Capital Radio Group, Channel 4, OD2 and Shazam. Microsoft are the latest company to become a Friend — although Apple are conspicuous by their absence.

Coping With Divergence

Of course, the British record industry as a whole has had a body fighting its corner since 1973, when the BPI were formed, principally to fight the growing problem of music piracy, and representatives of both the majors and the independents sit on the BPI's Council. However, back in the '90s, as most of the large independent labels were swallowed up by one or other of the majors, a number of independent-label BPI members began to feel that the organisation couldn't effectively address both their needs and those of the majors.

Alison Wenham, CEO of AIM.Alison Wenham, CEO of AIM.Photo: Piers Allardyce"There had been growing concern that the direction of the industry would lead to increasing divergence between the agendas of small and large, and national and multi-national, companies," says Alison Wenham, AIM's chair and chief executive, who has headed up the organisation since its inception. "As a result, a growing number of independent labels, the leaders of whom were on the BPI Council, felt that even though the industry had an effective trade body, it couldn't solve, or accommodate, the gap that they saw opening up. It was partly to do with on-line music sales, and partly to do with globalisation."

So it was that a group of about 40 indie labels got together in 1998 and decided that they needed a professional organisation dedicated to supporting and promoting the interests of the independent sector. Interviews followed, and Wenham got the job of leading AIM, and representing what Mute label boss and former AIM board member Daniel Miller once called "a bunch of disparate despots."

Part of the rationale behind forming AIM was a perception that the indies' on-line interests would diverge from those of the majors. "The Internet's a global distribution platform, and the majors obviously have the investment capability to exploit that opportunity, while the independents, left to their own individual devices, wouldn't necessarily have had as much opportunity or choice," says Wenham. "So we've worked extremely hard to give smaller companies access to on-line licensing services."

Wenham points to two recent examples of ways in which AIM and the BPI have divergent priorities: "If you take the Sony/BMG merger, the BPI are on record as saying that they do not feel it appropriate to make comments about the business intentions of two of their members. I, on the other hand, representing the independent sector, have no such problem. The independent sector needed to object to the merger. And I gave a quote when the BPI announced they were intending to sue [file-sharing] customers, which was that AIM support efforts to control piracy but not to the extent that it means suing the customers. We do not endorse the suing of our customers. The independents are not culturally attuned to litigation. They would rather cut a deal, they would rather let bygones be bygones and find a pragmatic solution than throw lots and lots of lawyers and money at proving a point."

Team Player

Occupying modest offices in Chiswick, London, AIM remain a lean operation like many of the labels they represent. A core team of three full-time employees and several part-time staff is augmented by a 15-member Council and six committees, including those dedicated to Legal & Business Affairs, New Media, International, and Training, Education & Mentoring — all of which draw on representatives from the member labels. Member representatives on the Council are elected by the membership on a one-member, one-vote basis.

Wenham herself brings to AIM a long and varied history in the music industry, going back over 25 years, which has seen her working in both the independent and multi-national sectors. She's run her own distribution company and her own independent record label, and for around four years prior to taking up the AIM post, she worked at BMG as a Managing Director. She's also sat on the BPI Council and the PPL Board. But it's not just her industry experience which makes her ideal for the task of shepherding the indie sector through increasingly challenging times — she has a steely determination born of enthusiasm for the job she does. From the outset she has been determined that AIM wouldn't be an organisation that tried to effect change by "standing on a hill and throwing stones at the existing structures" as she puts it. "We've achieved change by sitting at the table and negotiating, rather than by being accusatory, obstructive, and therefore easy to be ignored."

The One-man Operation & AIM — Buzz Records

Scottish blues guitarist Dave Arcari is living proof that AIM encompasses even one-man indie labels — and that its membership base extends beyond London and South-east England. Based in Perth, Scotland, he singlehandedly runs Buzz Records — primarily an outlet for his band Radiotones — along with Buzz Artist Management and Buzz Publicity (collectively the Buzz Group).

The one-man label — Dave Arcari of Buzz Records.The one-man label — Dave Arcari of Buzz Records.An AIM member since the organisation's early days, Arcari first heard about the then-new Association of Independent Music in 1999 at a meeting of NEMIS (NEw Music In Scotland), itself at the time a newly established network for the Scottish music industry.

"I thought 'Well, I'm a PPL member, so I can join AIM fairly easily'," he recalls. "Our subscription was taken from our PPL income, and there was also a deal that if you were part of NEMIS, you could join AIM for what was really a token payment. So I joined, and then started finding about all their initiatives and seminars. They're very supportive of people regionally, and I feel confident that if there was a big issue up here they would have no hesitation in helping us."

Arcari points to AIM's presence at tradeshows like MIDEM, the deal it negotiated with leading Russian distributor Soyuz, and its 2001 Far East trade mission as ways in which it effectively represents and promotes UK indies large and small. "Through going to MIDEM and what have you, we've managed to get good distribution in the States and Canada, Australia and Sweden. And these distributors are fantastic, they're pro-active." He's less impressed with UK distributors, and says his current one is winding down. A visit to an AIM distribution day in London proved useful, however. "It was great to sit down with all these various distributors. I certainly felt that I learned a lot from it, from a strategic point of view."

For the moment, however, he's decided to concentrate on the self-help approach — which means focusing on Internet-based sales. "We're selling more CDs on-line than we are through distribution in Britain and Europe put together. And that's been the case for a while," he reports. Arcari is also expanding into selling Buzz Records' catalogue on-line as MP3 downloads, using the Paypal-based Payloadz.com to provide the e-commerce facility. Meanwhile, he's been getting the label's catalogue into the on-line music services for several years by signing up to AIM's Internet deals, beginning with the original Napster.

"We've basically signed up for all of them. Anything that's non-exclusive, we go for," Arcari says. "Originally I thought, 'Nobody's ever going to pay for a download!'. Now I watch the money rolling in! Well, not quite rolling, more like a trickle, but it's a trickle that wouldn't be there otherwise."

www.thebuzzgroup.co.uk

www.radiotones.com/buzz/records.htm

www.davearcari.com

Testing Times

Perhaps more than any other in AIM's history, this year has highlighted the divergence of issues facing the majors and the independents, and underscored the importance of collective bargaining power for the indies. First, European independents had to face down MTV in contract renegotiations. The music video broadcast giant wanted to halve the amount it had been paying for the rights to show their videos on its MTV Europe channels, while increasing the number of channels covered — and threatened to stop showing indie videos altogether if they didn't comply. AIM were at the forefront of organising collective resistance to this move, not least by organising and chairing a conference call for the press to highlight the issue.

Then came the iTunes Music Store launch in the UK, France and Germany, and the spat between Apple and the indie community which left the on-line music store launching over here without the rights to sell music by any European indie artists (see the News pages in SOS 's August and September issues).

Although Apple were negotiating directly with the likes of sizeable indie Beggars Group rather than with AIM, it was in effect negotiating with AIM, or at least with the sense of collective enablement that AIM has fostered. Ultimately, it was the solidarity of the biggest independent labels with all the rest right down to the smallest which brought both MTV and Apple back to the bargaining table, and resulted in deals which benefited the indie community as a whole.

"We have the backbone of support from the large labels, who could do their own deals but believe in the collective approach," says Wenham. "They believe in a community benefit, and they're very happy that smaller labels are getting more as a result. It's no skin off their nose, they get a good rate, but so do the younger, newer labels."

Five Become Four

The other big issue to confront the independents this year has been the merger by Sony and Bertelsmann of their recorded music divisions to form Sony BMG. As SOS reported a couple of months ago, the merger has been given the go-ahead by both the European and US anti-trust regulatory bodies — in both cases, essentially on the basis that there wasn't enough evidence to rule to the contrary. Speaking at AIM's AGM in advance of the decision, Wenham herself said it would be "an act of cultural vandalism" on the Commission's part if the merger went through. Now that it has, four multi-national companies between them control some 80 percent of the global recorded music market.

The full AIM team (from left to right): Michael Fuller (Director of Business Affairs), Remi Harris (Project Manager), James North (Assistant Press Officer), Lara Baker (Association Administrator), Sam Shemtob (Press Officer), Judith Govey (International and Membership Manager), Steve Johnston (Head of Licensing, Musicindie) and Alison Wenham.The full AIM team (from left to right): Michael Fuller (Director of Business Affairs), Remi Harris (Project Manager), James North (Assistant Press Officer), Lara Baker (Association Administrator), Sam Shemtob (Press Officer), Judith Govey (International and Membership Manager), Steve Johnston (Head of Licensing, Musicindie) and Alison Wenham.Photo: Piers Allardyce"There's now an increasing need for independents to work together, not just on a national level but also an international level," Wenham says. She summarises the implications of the merger for the music market in general as "further concentration and consolidation." and feels that it increases the chance of an EMI/Warner merger. However, the prospect of a 'super-indie' is unlikely, she says. "The indie business structures are, and always have been, more flexible than the corporate model. And size is no longer a guarantee of success. The far more likely scenario is that the indies will do well through successful A&R and working in partnership."

Meanwhile, a lot of people are set to lose their jobs as Sony and BMG set about combining two businesses into one. "The only silver lining is that there are a lot of people with relevant skills coming onto the job market," says Wenham. "Some of them will start their own independent companies, and some of them will go to existing independent companies, which is a good thing."

For the most part, however, Wenham sees the effects in a negative light. On past form, it's likely that there'll be a cull of the artist rosters, as the sheer size and scale of the majors as businesses will push them towards having fewer, bigger-selling artists. "I think the corporate model for music is one which will mitigate against diversity," says Wenham. "The naive, simplistic view is that bigger and fewer majors means more artists signing to the indies. The naivety in there is that it presupposes you can reach the market. Market share is market power. And the more you concentrate market power into the hands of the few, the more difficult it becomes to keep the access open to all forms of music. You need access to the intermediaries, to radio, magazines, television, and retail. If you're not played, you're not heard, and if you're not heard, you're not bought. It's as simple as that. Consumer habits, behaviour and expectations are somewhat modelled by the mass-market principle, and therefore one cannot just assume that a multiplicity of genre-specific radio stations on the Internet will reach an audience sufficient to make it commercial."

Wenham points out that the trend of consolidation has been with us for some years, with consolidation in retail being particularly of note. "It's not just the structure and size of the majors, it's the structure and size and dominance of retail. There are now fewer distributors as well, because of this contraction in diversity and choice, and the contraction in retailing, which unfortunately confirms the trend. I'm not sure that it will be better in the on-line world either; I think one or two players will dominate. Dominance is never good for culture."

So how can AIM best help their members meet the challenges of a more consolidated market?

"By acting as the fifth major, keeping market access open through both commercial and political activity, aiding international development, sharing knowledge, and providing hands-on help," Wenham replies succinctly.

The Small Record Label & AIM — Hospital Records

London-based indie drum and bass label Hospital Records, which has been going since 1996, joined AIM at the beginning of 2000. "At that time Hospital were still quite small," says label co-founder Tony Colman. "It was a gut feeling for me. I spoke to a couple of people who were involved with AIM, and I thought 'Maybe this will fail, maybe it'll succeed, but I want to give it a chance.' And it soon became apparent that this was a very important thing for any independent label to be involved in."

Tony Colman, co-founder of Hospital Records and creator of the London Elektricity project .Tony Colman, co-founder of Hospital Records and creator of the London Elektricity project .Colman also cites the importance of AIM's — and in particular Alison Wenham's — ability to bring the indies together as a collective force.

"The size of our membership now means that we're collectively another major label in terms of our bargaining power. Alison is very charismatic, she's very driven, and she's one of the few people I know who can actually steer this ship. It needs someone like her who's extremely headstrong and knowledgeable and good at negotiation. She confronts everybody in the world on our behalf when it's needed." Without an organisation like AIM, he avers, a lot of independents would end up arguing among themselves instead of working together.

Hospital have been growing significantly in size over the past few years, with an ever-expanding catalogue of releases on CD and vinyl from a growing roster of artists. This year has also seen the label's first music DVD release, and while they've had their own web shop selling physical product for about the past five years, latterly with AIM's help they've been moving into Internet and mobile download sales as well, through the likes of Wippit, O2, Sony Net, iTunes and Napster. Not surprisingly, then, Colman considers AIM's new media activities through its Musicindie arm to be a significant part of what the trade body does.

"Our main formats are still CD and vinyl, but the on-line digital formats will no doubt increase exponentially in importance over the next few years," he says. "I've had someone here full-time since last October working on new media, and it's really helped him to work with AIM, attending their monthly meetings and using some of their contracts. They're basically invaluable in terms of the information and telling you what deals are coming up, because we'd be blundering about in the dark otherwise.

"AIM can introduce you to deals, allow you to use their contracts, help you as much as they can, but you have to bear in mind that they're not your mother, and they don't make sure that you get paid at the end of the day!"

www.hospitalrecords.com

Dealing With The Internet

A key area of AIM's activities has to do with on-line licensing deals, which are negotiated by their new media arm, Musicindie. On behalf of AIM's label members, Musicindie have struck deals with a growing number of Internet and mobile music companies, such as OD2, O2, Crosswarp, So-net, Napster MkII, Wippit, and Sony Connect. All the deals are open to any member to take advantage of, whether they're a multi-label group like Beggars or Sanctuary, or a one-man operation like Buzz Records (see the box below).

Steve Johnston, head of the Internet-licensing part of AIM, Musicindie.Steve Johnston, head of the Internet-licensing part of AIM, Musicindie.Photo: Piers Allardyce"We're creating far better access than independent labels could achieve individually, but the old-fashioned jobs of marketing and promotion still have to be done," Wenham cautions. "There's a lot of work needed to create awareness and interest, but that's not our job." Each member label is free to opt in or not to each of AIM's download service deals. And in the case of OD2, which licenses its music e-commerce platform to a variety of on-line retail outlets, labels can opt in on a per-outlet basis. Now that non-music companies are starting up on-line music stores to add to their core businesses, it's clear that this was a clever move which respects the diversity of views among the membership. Not all labels might want to sign up to Wal-Mart Music or MyCokeMusic, for instance. On the other hand, Oxfam's OD2-based download store Big Noise Music, launched at the end of May this year, is not only a very clever marriage of music and Oxfam's international social agenda, with a percentage of each sale going to support Oxfam's fair-trade campaign, but also a very comfortable fit culturally for many indie labels.

"There are some parallels there with the music industry; globalisation doesn't necessarily lead to healthy local sustainable economies," observes Wenham. "And AIM is very much about making sure that in music there will be a sustainable, healthy, strong, vibrant, independent industry."

AIM have been open from the outset to working with the commercial on-line music services — even with the original Napster, which could have become a going commercial concern if the majors had followed AIM's lead instead of concentrating on suing the file-sharing service into oblivion. Wenham proudly observes that AIM are the only organisation to have struck licensing deals with both versions of Napster. "How about that for a unique claim to fame!" she grins. On a more downbeat note, she views the closing down of the original Napster by the majors as a "big, big mistake". "Shawn Fanning was the Richard Branson of the new music-business model. And the people who ran Napster, although they were in court and it was an illegal file-sharing service, they were doing their very best to change Napster into a legitimate on-line service that would compensate artists. They had some record-industry people in there, and they were trying very hard to reach an accommodation that everyone could live with for the future. Whereas KaZaA have no such intention, never had any such intention, and don't give a damn. There are very different corporate consciences at work there."

That Sharing Feeling

Wenham says that AIM don't have a public position on file sharing, because the membership itself encompasses a diversity of views — for instance, for the smaller labels in particular, limited marketing budgets make file sharing an attractive way to build awareness. "The independents are as different from each other as they are from the majors," Wenham observes. "Whereas it might be easier for the publishers or the BPI to be emphatic about a position, my position with over 800 label members is that I respect the differences as much as I respect the similarities. What is right, though, is that any copyright owner should have the choice as to whether their music is made available for free or not."

Musicindie's Head of Licensing Steve Johnston (above), who has negotiated many of AIM's on-line deals on behalf of its members, has an interesting perspective on where the indies should be headed. The deals with the likes of iTunes, Napster MkII and Sony Connect are "not earth-shattering innovation in the independent style," he says. "These are like big corporate services. We're not just following the majors where they're plodding, we're trying to think outside these mainstream channels, because that's what iTunes is really, it's a mainstream retail channel."

Johnston says that independents shouldn't be complacent about making use of the opportunity that's offered by the Internet to make a much wider choice of music available for people to listen to.

"The majors have never been interested in people hearing that much music, they're more interested in controlling the amount of product that people get to hear."

Instead, he talks in terms of an "outbreak of peace" with the file-sharing networks. "We continue talks with them, because if we can find the business model that means artists are remunerated, we'll do that deal," he says. "At the moment, these services are just like a bugbear for the majors. But the independents appreciate how much music consumers can get hold of now that they couldn't easily before. If we can put in the business structures to make sure that the artists get their due, then independents are going to succeed massively in this area."

The Media Empire & AIM — The Echo Label/Chrysalis Music

Like the other two indie labels highlighted in this piece, The Echo Label joined AIM early on. Unlike them, they're part of a large independent media empire. Parent company the Chrysalis Group encompasses a Music division, a Books division, a Radio division, and — since March of this year — a Mobile division as well. Echo, naturally enough, come under the Chrysalis Music division, which also encompasses music publishing and music licensing. The label was formed in 1993, and today includes the likes of Feeder, Moloko, and The Stands on its artist roster (Chrysalis Records, incidentally, is owned by EMI, having been bought by the major from Chrysalis back in 1989).

Jeremy Lascelles, chief executive of the Chrysalis Music division, was elected to the AIM board last year, and also sits on the BPI Council. He has a long history in the independent sector. Following 13 years at Virgin Records in A&R and Marketing positions as well as a spell as MD of label subsidiary 10 Records, he became MD of Chrysalis Music in 1994, then MD of The Echo Label in 1998, before assuming his current post in 2001.

"I'm a great believer in the importance of independent music companies for the health of the industry, and I think it's incredibly important that they're able to stand shoulder-to-shoulder on certain key industry issues," he says. "But they also tend to be under-resourced, and many of them don't have departments devoted to negotiating industry issues. So I'm emotionally supportive of AIM as the body that represents them, and acts as one voice negotiating on everyone's behalf."

Lascelles cites the independents' victory against MTV earlier this year as an example of what can be achieved by indie solidarity. But he also points to the value of the on-line music service deals that Musicindie have negotiated. "Musicindie's knowledge in the on-line field is something we take full advantage of, otherwise I'd have had to look at redeploying my resources, or even bringing someone in to do all those kind of deals. It's an increasingly important part of our business model."

As a well-established label with all the resources of the Chrysalis Group behind it, Echo don't need all the services and advice that AIM offer to labels. Nevertheless, Lascelles is supportive of the breadth of AIM's work. "A company that's really just one person operating out of his front room, with very modest turnover; that's still a valid business. People who are starting out with very little money in their bank account, trying to run a small independent label — their business survival is as important as anyone's. And AIM provide the information services that will let people like that find out more about how things work."

www.echo.co.uk

www.chrysalis.com

The Virtual Major

Of AIM's many initiatives, the most ambitious one has to be the Worldwide Independent Network, or WIN, which is just getting off the ground. The project's goal is to network together the various record label trade bodies around the world utilising the Internet. Wenham refers to WIN as a "virtual major" — and given that the independents collectively are on the scale of a major, it's a concept which makes sense.

"The majors have got global infrastructure, the independents haven't," says Wenham. "When I sat down and thought about what the differences were between the independents and the majors, that was one of the key things. So the question was what could we do to create global infrastructure without interfering with our members' businesses."

Initially WIN will network together AIM and their companion indie trade bodies in Australia (AIR), Canada (CIRPA), and the US once the new body gets started — but AIM have also been actively approaching independent trade associations in other countries such as Brazil and Japan. WIN will be a closed network, accessible only to members of the various participating trade bodies. Johnston comments: "Principally, it will be an information resource for UK acts to understand how, say, the Australian market works, how they get there, who the tour agents are, who the promoters are. And likewise, to be a source of information about the UK market for the Australian industry as well."

Wenham enthuses that WIN will grow to become "a worldwide information, communication, networking, licensing, shopping, learning network." If you're a hip-hop label in Australia, she says, or a reggae label in the States, and you're looking for a radio station in Germany that specialises in playing your type of music, WIN will be the place you'll go. "It's going to be a deals platform as well, and there'll be things like a parcel tracker, currency converters, and templates for standard license deals and distribution deals. I'd also like it to have an on-line licensing platform."

It's a bold and ambitious vision, and only time will tell if it's successful. Despite Wenham's long-ranging, some might say lofty ambition for the indie music industry that she loves, she also takes a pragmatic view. "You don't know what's going to affect the indie industry at any time. You can predict certain things, others you couldn't possibly predict. All I want is for AIM to be there, at the ready, able to move quickly and appropriately to meet the agenda that we can set, and the agenda that we don't yet know about."

Published November 2004