Indie vs. Major
Good News, Bad News

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Late last year, two interesting things happened. Jim Jones’ third solo album, Hustler’s P.O.M.E., debuted at No. 6 on Billboard’s Top 200, having sold 106,000 copies its first week in record stores. Jones’ album was released by Koch Records, the New York–based independent label previously dismissed by 50 Cent as an “artists’ graveyard.” Six weeks earlier, Capitol Records, the venerable major-label home to the Beatles and the Beastie Boys, sold its iconic tower on Vine Street in Hollywood to a New York–based real estate developer. With album sales plummeting (Capitol’s 2006 releases included Hoodstar, the lowest-selling album of Chingy’s career), the 64-year-old company was badly in need of new income. (In January 2007, as sales of Jones’ album surged off the strength of his Top 5 pop single “We Fly High,” the announcement came that Capitol would merge with Virgin Records, another sign of parent company EMI’s ongoing financial troubles.)

The two events signified something artists and industry insiders have known for a while: This is a good time for independent labels, while major labels are struggling. (At 385,000 sold, Hustler’s P.O.M.E. has outperformed two recent G-Unit/Interscope releases: Lloyd Banks’ Rotten Apple and Mobb Deep’s Blood Money.) In an era of diminished album-sales expectations, the way independent labels operate is proving to be a more viable business model than that of the spendthrift majors. How did this happen? What are the indies doing right and the majors doing wrong? And what exactly is an independent label, anyway?

Billboard magazine, the industry-standard periodical that maintains official charts for sales and airplay, defines an independent label as one “not immediately affiliated to a larger corporate umbrella or ownership.” Billboard recently named Koch the nation’s “Top Independent Label” for the sixth straight year—Koch charted a total of 23 releases in 2006, a whopping 28 percent more than any other independent label. While the company releases everything from reissues of classic rock bands like the Kinks to the kiddie music of the Wiggles, its bread and butter is rap—the company made over $40 million last year in sales of rap titles alone.

“We were blessed to have radio hits this year,” says Alan Grunblatt, referring to Jones’ “We Fly High” and Atlanta rapper Unk’s “Walk It Out.” “We haven’t been that kind of company in the past. But Jim and Unk did great for us… The majors have so much overhead that they can’t make money off a record that sells 200,000. At Koch, we love that!”

A 42-year-old industry veteran, Grunblatt worked at Sony Music’s Relativity Records in the 1990s, making deals that gave regional labels like Houston’s Suave House and Memphis’ Hypnotize Minds national distribution. He understands the history of indie/major-label relations.

“In the beginning, rap music was really the exclusive domain of the independent labels,” says Grunblatt. “You had Jive, Tommy Boy, Profile, Def Jam. The majors didn’t want to get involved. They didn’t want to deal with that type of artist. They wanted only R&B. And it was great. Independent labels made a lot of money. Then, in the mid-’90s, the majors woke up, saw how big hip-hop was, and a feeding frenzy began.”

At the time, major labels leapt to license the entire output of successful independent labels. In 1996, No Limit signed a distribution deal with Priority, owned by EMI. Major label BMG began acquiring shares of Jive (a process completed in 2002, when they became outright owners of the label). In 1998, Universal Entertainment, the French-owned conglomerate that owns Interscope, A&M and Geffen, brought Def Jam into its empire. A year later, Cash Money signed on with a whopping $30 million pressing and distribution deal (a deal wherein Universal granted the nascent New Orleans label full ownership of its masters, a rare coup, and an 80 percent royalty rate on CD sales). Even the standard-bearer, the “Independent as Fuck!” Rawkus Records, attached itself to EMI, through Priority, in 1999.

At the height of the boom-time ’90s, it was not uncommon for a video to cost a million dollars or for a hot producer to get six figures for a single beat. Budgets across the board were overinflated, and as Grunblatt believes, “The majors destroyed the golden goose.”

The retail landscape of the music industry has changed drastically in the past year. CD sales are way down, while single downloads and ringtone sales are up. Tower Records, once the largest record-store chain in the United States, ceased operations in late 2006. Mom-and-pop record stores are closing everywhere, as large chains like Best Buy and Target can afford to undercut their prices. (Easier to offer a CD for cheap when some of the shoppers you lure into your store might buy a lawn mower too.)

Selling albums has become more difficult. And, simply put, the less a label spends on the making of an album, the fewer copies they have to sell in order to turn a profit. While Alan Grunblatt admits that the oft-mentioned figure of Koch artists making $7 or $8 per album sold is somewhat inflated (“That’s before money deducted for promotion and manufacturing costs,” he says), a smaller amount spent on promotion and marketing leaves more for an artist’s proceeds on the back end. (And artists like Jim Jones, who have their own promotion and marketing operations set up beforehand, can optimize such a situation.) Major labels have long operated on the premise that the more money spent making and promoting an album, the more money can be made selling it. That only works, however, when the public is buying.

South Bronx rap don Fat Joe is a good example of an artist who’s shown flexibility in the face of the faltering market. After watching his major-label releases’ sales slip, he decided to handle all the producing, marketing and publicizing of his music himself, under the auspices of his Terror Squad imprint, and in 2006, he signed a distribution-only deal with Virgin Records that grants him a higher percentage of profits and allows him to retain ownership rights of his master tapes, to boot. “I had to make sense of my career and figure out how I could benefit while not selling as much as the biggest niggas in the game,” says Joe, who last went platinum with 2001’s Jealous Ones Still Envy. “It’s a lot more work, no doubt about it. Very much more hands-on. Since I’ve been on an independent, I figured out that major labels are a bit sexier. They’ll put you in a nice hotel with your friends. You’re like, ‘Yeah, I’m at the Four Seasons with my people!’ But the truth is, you’re selling a million records and never seeing royalties. It’s more pampering, but it’s more of a stickup. It was a great look—I had my picture taken with some presidents—but God forbid I own my own masters.” (Spurred by the hit single “Make It Rain,” Joe’s latest album, Me, Myself and I, has sold 194,000 copies, and Joe says he’s made more money off it since its November release than he ever did from any of his previous efforts.)

im2.jpgIn another sign of the shifting power dynamic, many major labels are breaking with the long-held convention of requiring that their artists record exclusively for them and are allowing the artists to sign side deals with indies. (While granting the artist greater financial freedom, this can serve as free publicity for the major, keeping their artists’ public profile high between releases—just like mixtapes.) Although he and his partner, Havoc, are signed to Interscope’s G-Unit, as the duo Mobb Deep, Queens MC Prodigy recently released his second solo album, Return of the Mac, on Koch. Similar deals allow Slim Thug, who’s signed to Geffen Records, and B.G., an Atlantic Records artist, to put out group projects—Slim Thug Presents Boss Hogg Outlawz: Serve & Collect and B.G. and the Chopper City Boyz: We Got This—both also through Koch.

B.G. presents an interesting case: a former major-label star who used success in the independent world to get back to the majors. After starting his career on Cash Money, where he sold millions of albums through the arrangement with Universal, the New Orleans rapper switched to Koch when his fortunes dipped. But last year, after releasing four money-making indie albums, he signed a new contract with major label Atlantic.

“When you’re on a major, you can get put in the public eye more,” B.G. says of his reasons for returning. “You can ask for more money when you doing shows.”

——- Read the rest of our Indie vs. Major feature in XXL’s July 2007 issue (#93)
  • Danny

    HAHAHAHAHA Once again it’s Dipset Bitch!!! hahaha

    Thank you for shutting 50 the fuck up and proving once again that Cam might come across ignorant when he speaks, but dude speaks with facts instead of outside the side of his mouth like “BugsMonkey”

    Ya dig??

  • green eyes

    great article.. the game has definetely changed from the mid 90s lets all get crazy money from rap.

  • Holla

    This is a really good article – I suggest everyone pick up the mag and read it.

  • killa the dawn

    Its 6 dollars a record nigga and dont be mad ur *itch hollered to check it nigga, I heard u big but money aint the problem….Im hoppin out to jimbos if im hungry up in harlem (yeeeea) – JIm Jones

  • http://xxlmag.com eskay

    It is a good article. There’s also another piece that follows it in the book that explores the differences between indies and the majors.

  • smog

    good read, this needs to be longer though this would be a good part 1 of 5 props to the drawing too

  • kal

    dipset is overr face that shit… onli reason jimmy look good wit his album sales his cuz both lloyd banks nd modd deep are garbageee!! jimmy garbage himself tho onli reason ppl think he nice wit it is cuz that ballin shit that was remixed 1000 times… the era of dipset is done 50s bringin g-unit back in the game… even if hes carryin it on his own back

  • kal

    dipset is overr face that shit… onli reason jimmy look good wit his album sales his cuz both lloyd banks nd modd deep are garbageee!! jimmy garbage himself tho onli reason ppl think he nice wit it is cuz that ballin shit that was remixed 1000 times… the era of dipset is done 50s bringin g-unit back in the game… even if hes carryin it on his own back… nd o ya im jus commentin on a lil bit of this shit i read that shit was too long fer me i got places 2 be

  • The Truth…

    Good article. Yo Es, what do you mean “in the book”? You mean in this issue?

  • Town Biz

    The Bay has been eating that way since the lated 80′s. the Bay showed everyone how to be independent.

  • Two-Times

    While Alan Grunblatt admits that the oft-mentioned figure of Koch artists making $7 or $8 per album sold is somewhat inflated

    ^^ Now they wanna admit this… They have no credibilty

  • Two-Times

    You make like aroudn $1- $1.75 a record off of Koch. That’s it.. Quit believeing all that bullshit.

    Jim Jones sold 385,000
    $2 x 385,000 = $ 770,000

    the cost of the videos “We Fly High” & “Emotionless” in the range of $1-1.5 million…
    Jones already in the red…

  • http://www.fedex.com EReal

    Danny Says:

    June 5th, 2007 at 10:53 am
    ^^
    Actually, non comprehending dumbass, he said Jim Jones was lying. You may wanna read that again.
    7 or 8 BEFORE marketing, promotion AND manufacturing costs.

    Settle down there Stanley.

  • dr flash

    man danny u’re fuckin idiot wats that got to do wit 50 and cam. jimmy is d one signed to koch

  • auau

    @TOWM BIZ U crazy the bay aint start this down south we been doing this the first person from the bay to do this was master p who saw how it was down from down south players like screwd up click do ur history dj screw been doing this and cash money got money just had to put that in 504 baby

  • thur$ty

    the bay started this independent shit.

  • landlORD

    … yO Eskay … go to Nahright.com and fix your shit …. you gettin’ sloppy Son …

  • seez

    u only make the $7 or $8 after all the marketing,manufacturing & promotion. But cos jimmy handle marketing and promotion he recoups faster. Thats really rap hustling.

  • JasonKeith734

    Niggas still aint figured out that independent has always been the way to go. For years the West (especially the Bay Area who made it a phenom to go indie) the South and Midwest have always gone that route thats why we can sell records in each others markets like we can. This day in age why wouldnt you go independent. Your seeing the returns. on a major if you wanna see some real money you gotta go platinum.

  • Stax On Deck

    Bout time XXL did a decent article. You niggaz better wake up and get like The Bay n Da Souf. Push your own shit!

  • goosey

    thanks 4 writing something thats worth reading great article

  • green eyes

    #
    eskay Says:

    June 5th, 2007 at 11:58 am

    It is a good article. There’s also another piece that follows it in the book that explores the differences between indies and the majors.

    ^ you trying to tell us to go out and spend our hard earned money there Es?

  • traebiz

    I had to make sense of my career and figure out how I could benefit while not selling as much as the biggest niggas in the game,” says Joe, who last went platinum with 2001’s Jealous Ones Still Envy

    After reading this it makes sense why sells are down for your favorite rappers. I was in high school when Jelouse ones envy first came out in the late 90′s, and every body copped that album, If the fans grow up then the music definitely has to grow as well.

  • That Dude

    Nah, the independent game started in the Bay. I’ve lived in the South for 21 years and I know that shit. Master P came from the Bay area to go independent in the South.

  • Macdatruest

    corporate rap was only designed to bring down hip hop. even now if these artst went INTERNATIONAL INDEPENDENTLY, they could sell a million or two at six bucks an album to a consistent large fanbase. The majors know that. thats why you sell 5 million worldwide of good studio product on a major and dont make shit, except off your stage shows, like a coon dancing for leftovers. Hip Hop started in the streets, and that’s who needs to develop it. White muthafuckas only understand politics, that’s why hip hop ALMOST died, cause it turned into a political stucture with the majors. Look at this magazine, still putting G-unit on the cover when they been dropping shitloads of fuck. Why? politics. Tony “Ike The Children” Yayo got a cover. Some of the greatest hip hop artist will never get a cover. Fuck outta here. I cant wait for these muthafuckas to get they hands completely out our pockets and let us decide what’s best for us in all industries we have obviously dominated, but us africans gotta step up and claim what’s ours cause the master never just give a slave his freedom when thats how he eat. I’m proud of all my independent aka free niggaz-that’s tha killuminati legacy my niggaz! this rap shit is a weapon in a war that niggaz dont even know we fightin right now, so we need to organize like soldiers from coast to coast anyway. One Nation!!!!! K.G.1I.

  • Macdatruest

    corporate rap was only designed to bring down hip hop. even now if these artst went INTERNATIONAL INDEPENDENTLY, they could sell a million or two at six bucks an album to a consistent large fanbase. The majors know that. thats why you sell 5 million worldwide of good studio product on a major and dont make shit, except off your stage shows, like a coon dancing for leftovers. Hip Hop started in the streets, and that’s who needs to develop it. White muthafuckas only understand politics, that’s why hip hop ALMOST died, cause it turned into a political stucture with the majors. Look at this magazine, still putting G-unit on the cover when they been dropping shitloads of fuck. Why? politics. Tony “Ike The Children” Yayo got a cover. Some of the greatest hip hop artist will never get a cover. Fuck outta here. I cant wait for these muthafuckas to get they hands completely out our pockets and let us decide what’s best for us in all industries we have obviously dominated, but us africans gotta step up and claim what’s ours cause the master never just give a slave his freedom when thats how he eat. I’m proud of all my independent aka free niggaz-that’s tha killuminati legacy my niggaz! this rap shit is a weapon in a war that niggaz dont even know we fightin right now, so we need to organize like soldiers from coast to coast anyway. One Nation!!!!! K.G.1I.

  • http://XXLMAG.COM LAWTON’MURDA MASS

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  • http://XXLMAG.COM macdatruest

    whatup

  • http://XXLMAG.COM LAWTON’MURDA MASS

    what uo

  • Dr Flav

    Y’all just dont want to give it to Jones and the Dips, that nigga caked up with Koch and we aint even speaking on ringers and show money. Some of these major artists only see cents per album. Too Short and E40 put it down for the indy game in the bay, 40 was the first to cut a million dollar dist deal with Jive.

  • mr. ca$haholic

    back in the 90′s there were only three indies atttached to majors: bad boy, death row,def jam.now everyone wants their own label and they leave their labels in pursuit of this while turnin their backs on their boys just to profit this is all about greed when it comes to new artists i say show em to the public and acculminate the reponse from the crowd so we can hear about their skills since WE NEED REAL LYRICALLY SKILLED ARTISTS COMING WITH ALBUMS TO BUY IF ANYTHING IS GOING SELL THIS IS IT emcee’s are real hip hop rappers are douce bags that clean their shit to be radio friendly WHAT YOU SHOULD KNOW IS THAT IT IS ALL ABOUT BEING YOURSELF WHEN IT COMES TO THIS HIP-HOP MUSIC

  • beeyo

    Its about time XXL did a worthwhile article.
    I probably should have more to say about this, but fuggit. Maybe later.

  • beeyo

    Holy shit, everyone read macdatruests comment. That shit was dope.
    On the flipside,being successful on a Major opens more doors for a person careerwise. Jimmy could never have a career as an actor (not to try to limit the brother), but Fif got like 5 and a half movies in the works. Fif got Sam Jackson to do a movie with him, and Sam Jackson hates rappers (except David Banner, I guess).Tip was good in ATL I’m sure he could snag a few more roles. Jay and Dame sold Roc a Fella for 100 mil. Cam and Jimmy are gonna sell Dipset for 8 forties, a skullbelt, a bright purple Lambo, and hopefully a pair of pants Cam can wear when he’s on camera. Shit, even Eminem got one of those fake executive positions at jimmyscope.

    And mark my words, Koch will be bought by a major label. Maybe not today, maybe not even this year, but they will sell Koch records. Guarantee.

  • Ali

    y u gotta use G-Unit albums 2 show mainstream is fallin off? cuz THATS how big they are man….G-Unit IS mainstream this post explained it….they didnt tell u that Cam only sold 270,000 either…i dont give a fuck about sales but dont come with that “its dipset all day” shit haha sales r down 4 EVERYONE they dont mean shit aight

  • TaZ

    I still say fuck a major label til it limps,
    Put your deal up on our table and we’ll show you whose the pimp.
    -”One Of A Kind”, Slug Of Atmosphere
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    Fuck mainstream hip hop, the underground keeps the art alive…

  • http://www.myspace.com/numbuhs The Equation

    So know that it has been properly covered. How does an artist make any real money anymore? This also means we will have a shifting of tides in the hip hop era. No real group will hold the spotlight. No longer will just one artist make all the money. I guess that mean that the artist have to start making better business decisions in the end. My suggestion is they start hooking up with some of these pro athletes a create their own franchise!

    XXL Magazine keep doing your thing! I loved the NAS cover!

    Reece Love

  • XXXL

    I like that this article avoids some of the shallow, misguided anti-industry hype that is so common on the net.

  • Alex Vanderpoole

    To the idiot Beeyo:
    1. Jay and Dame did not sell Rocafella for 100 million. They shold it to Def Jam for 10 million
    2. Koch is already owned by Canadian corporate giant The Row (not Suge’s company) for hundreds of millions of dollars.
    3. Jimmy Jones actually does have a career as an actor. He’s appearing in two upcoming motion pictures, one where he plays Elise Neal’s love interest and the other is the sequel to the Vivica Fox movie “Two can play that game”.
    4.Eminem does NOT have an executive position at Interscope records. Marshall Mathers doesn’t even own his own masters. Michael Jackson just bought Eminems catalog and now controls Em’s music.
    5. You must not have know but while Jim Jones records on an indie label he holds an executive post at Atlantic Records which is a major label you fuck boy!!!

  • john cochran

    People run with majors cause of the allure of fame. Koch aint puttin niggas on tv. Look at the biggest artists, all majors. which means they got more oppurtunity to be successful in other ventures, like clothes, movies, and all that other shit. But in the end it all depends on that artists personal grind. Never put your livelihood in someone elses hands.

  • Chris

    Excellent read and articles like this really set XXL outside of the competition in terms of strong writing and tight fact-finding. I am going to go out on a limb and assume that this trend will continue to gain popularity; that is, indie’s popping up and majors falling down. But it would be nice to have a music video/radio station collective dedicated 24/7 to indie music. That would really put the nail in the coffin. I mean, this is what we all really want to see anyway, right? To have the larger conglomerates start taking notice of the quality of music they mass-produce and get back to basics? Yeah, I think that would be pretty dope, actually.

  • Bibs

    but aren’t independent hit songs a game in itself? Who knows what catches on anymore.

    For every We Fly High, there’s a thousand youtube songs and myspace labels that never catch on.

    What I get from indie and major now, major usually means you have market appeal and can do stuff other than (sorta) rap. Indie, for the most part is what dudes use to make “CEO” business cards, filter “other money” and use as game to hit on women.

  • mememememe

    i feel like the people who post here are a bunch of interns from diplomats records.

  • hfghfh

    Koch are owned, they’re not independent. They use some independent techniques to maximise profit margins, but they’re not an independent label, even by Billboard’s definition as quoted in the article.

    …hmm…shareholders…who said indie?

  • blahblahmonkeyboy

    Koch is owned. They’re not an indie label.

  • ridiculous

    Koch is not an indie lable, it’s owned…and stop deleting this information…

  • 11kap

    I bet people were making a lot of doe off mixtapes too before that industry got shut down. Big record companies have a lot of power, but they’re very greedy, so if they are having financial difficulties at this point, that’s totally their fault.

  • Dante McAuliffe

    I never really understood the differences between indie and major labels ’til now, but I do understand that in today’s hip-hop market, everyone seems to be saying the same shit. These indie labels and their willingness to let artists be artists may ultimately end up saving the game.

  • doctor69

    ok fuck koch records the sold everybody on that 7 dollar a cd but like I stated before the bitch set can’t do math if koch was all that we bg left and he was certifed gold if jenny jones go so much paper where max b at and 50 said it best if they paid that much wouldn’t he be on koch learn to read contracts before signing anything and the dips lie as usual about everything

  • http://XXLMAG.COM Macdatruest

    If you are a legitimate artist, an “indie” aka “your own shit” label is the way to go.A real artist aint secretly weighin’ his possibilities to crossover to selling clothes, and doing lil’ movies when he decide on how to proceed with what he loves, which is music. Respect this rap game. Do you wanna rock big ass ice or secure your future as an artist. I noticed that mostly everybody who post shit on here is lookin at the rap game from this get rich quick, one shot at fame standpoint. It’s really more about longevity and security. As an artist, you want creative freedom and financial flexibility or a nigga wanna say what he wanna say and get paid what he deserve if people is feelin it. Signing with a major label does offer you more time on radio and television. But not out of the kindness of they fuckin hearts. Big budget videos come out the artist’s budget.And at a major, you are not a part of your own career, you are a workhorse. An employee. Signing any contract that gives someone the power to push back or even shelve you hard earned work as an artist is like selling your soul. That’s like, “Fuck you, your family, and your fanbase. Us good ol’ boys in the boardroom don’t wanna risk losing money on music we don’t know about, and market charts and expert fucks say yata yata sales yata yata, so your dreams are on hold indefinitely. Not eatin? Start one of them dang nigger rap beefs!” If sellin’ out aint sellin’ out no more, then what the fuck IS sellin’ out nowadays? Oh I guess the new sellin out is NOT signin’ the rights to your destiny over. And snitchin’ is the new keepin it real right? And hatin’ is “just sayin” right. And major labels can suck my independent dick

  • Mouf

    You’re kidding, right? I would rather have not read the article at all than get to the end and find out I have to buy the damn magazine for rest of it. Now I have to go out and buy the whole magazine for the last few missing paragraphs? Wow. That’s not cool, XXL.

    It’s ironic that they cover the music industry and they’ve learned nothing from the shady practice of making people buy a whole album just to get one or two good songs.

    The only reason I’m even here is because this article was linked from another site.

    I should scan this magazine monthly and post it online.

    Greedy fux.

  • http://www.myspace.com/dachaomusic DaChao(Look What I Have Become)

    I still dont understand how i would start off independant. if u add costs up YOUD BE BROKE TRYING TO PUT YOUR ALBUM OUT

  • http://www.myspace.com/dachaomusic DaChao(Look What I Have Become)

    I still dont understand how i would start off independant. if u add costs up YOUD BE BROKE TRYING TO PUT YOUR ALBUM OUT

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    If I had a nickel for each time I came here.. Incredible post.

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    If I had a greenback for every time I came here.. Superb read!

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    I do not consider I have ever viewed a website using this numerous comments into it!