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Independent record labels are small companies that produce and distribute records. They are not affiliated with or funded by the three major records labels. According to SoundScan and the Recording Industry Association of America, indie labels produce and distribute about 66% of music titles, but only account for 20% of sales.
The distinction between major and independent labels is not always clear. The traditional definition of a major label is a label that owns its distribution channel. Some independent labels, particularly those with successful artists, sign dual-release agreements with major labels. They may also rely on international licensing deals, distribution agreements, and other arrangements with major labels. Major labels sometimes fully or partially acquire independent labels.
Other nominally independent labels are started and sometimes run by artists on major labels, but are still fully or partially owned by the major label. These labels are frequently referred to as vanity labels or boutique labels, and are intended to appease established artists or allow them to discover and promote newer artists.
According to the Association of Independent Music, "A 'major' is defined in AIM's constitution as a multinational company which (together with the companies in its group) has more than 5% of the world market(s) for the sale of records or music videos. The majors are (currently) Sony, Warner and the Universal Music Group (which as of 2012 incorporates EMI)... If a major owns 50% or more of the total shares in your company, you would (usually) be owned or controlled by that major."
Independent labels have historically anticipated developments in popular music, beginning with the post-war period in the United States. Disputes with major labels led to a proliferation of smaller labels specializing in country, jazz, and blues. Sun Records played an important part in the development of rock 'n' roll and country music, working with artists such as Elvis Presley, Carl Perkins, Johnny Cash, Jerry Lee Lewis, Roy Orbison, and Charlie Rich. These independent labels usually aimed their releases at a small but loyal audience. They relied less on mass sales and were able to provide artists much more opportunity for experimentation and artistic freedom.
In the United Kingdom during the 1950s and 1960s, the major labels EMI, Philips, and Decca had so much power that smaller labels struggled to establish themselves. Several British producers launched independent labels, including Joe Meek (Triumph Records), Andrew Oldham (Immediate Records), and Larry Page (Page One Records).Chrysalis Records, launched by Chris Wright and Terry Ellis, was perhaps the most successful independent label from that era. Several established artists started their own independent labels, including The Beatles' Apple Records, The Rolling Stones' Rolling Stones Records, and Elton John' The Rocket Record Company. These labels tended to fail commercially or be acquired by the major labels.
In the late 1940s and into the 1950s, the American music business changed as people began to more quickly learn the industry. Several companies set up their own recording studios, and the number of label owners began to increase. Many of these owners realized that whichever label first publishes a song is legally entitled to receive compensation for every record sold. Following the original pioneers of the music industry, many new labels were launched over the following decades by people with industry experience. During the 1980s and 1990s, many rap labels were started by artists looking for new talent. Madonna is one example of an established artist who helped launch the career of newer artists with her Maverick label.
A&M Records is widely believed to have been the most successful independent label in history due to its 37-year run and catalog of commercially successful and critically acclaimed records. Founded in 1962 by trumpeter Herb Alpert (A) and record promoter Jerry Moss (M), A&M was initially the label and distributor for Alpert's own Tijuana Brass recordings, but the label quickly began signing other artists. Over its 37-year run, A&M sold records from such artists as Sergio Mendes & Brazil '66, Claudine Longet, The Carpenters, Phil Ochs, Carole King (A&M distributed her label, Ode Records), Joe Cocker, Free, Cat Stevens, Procol Harum, Humble Pie, Peter Frampton, The Police and Sting (as a solo artist), Styx, Bryan Adams, Amy Grant, Suzanne Vega and Sheryl Crow. A&M was also the initial distributor of Windham Hill Records and George Harrison's Dark Horse Records. Alpert and Moss sold A&M Records to Polygram in 1989 with the caveat that Alpert and Moss would continue to manage the label. Polygram was bought by Universal Music Group in 1998, and A&M folded the following year.
The punk rock movement was another turning point for independent labels, the movement's do-it-yourself creating an even greater proliferation of independent labels. In the United States, independent labels such as Beserkley found success with artists such as The Modern Lovers. Many of the United Kingdom labels ended up signing distribution deals with major labels to remain viable, but others retained their independence, such as Industrial Records, Factory Records, Warp, Ninja Tune, Wax On, and BlancoMusic. Another factor that came to define independent labels was the method of distribution, which had to be independent of the major labels for records to be included in the UK Indie Chart. The UK Indie Chart was first compiled in 1980. The chart was unrelated to a specific genre, and the chart featured a diverse range of music, from punk to reggae, MOR, and mainstream pop, including songs by artists like Kylie Minogue and Jason Donovan on the PWL label.
The late 1970s had seen the establishment of independent distribution companies such as Pinnacle and Spartan, providing independent labels an effective means of distribution without involving the major labels. Distribution was further improved with the establishment of 'The Cartel', an association of companies such as Rough Trade Records, Backs Records, and Red Rhino, which helped to take releases from small labels and get them into record shops nationwide. The UK Indie Chart became a major source of exposure for artists on independent labels, with the top ten singles regularly aired on the national television show The Chart Show. By the late 1980s, the major labels had identified an opportunity to establish new artists using the indie chart, and began setting up subsidiary labels that were financed by the major labels but distributed independently. This allowed the major labels to effectively push the indie labels out of the market, and the independent chart became less significant in the early 1990s. The term "alternative" was increasingly used to describe artists, and "indie'" was more often used to describe a broad range of guitar-based rock and pop.
The Offspring's 1994 album, Smash, is the best-selling independent record of all time. The album was certified six times platinum in the United States and sold more than 12 million copies worldwide. Norman Schreiber wrote a 1986 book called The Scouting Party Index of Independent Record Labels that covers a list of over 200 independent record labels, their artists, and examples of their work.