Disclaimer: Steak Worldwide distributes music with The Orchard

Independence is a hot button topic in the music industry world. While artists like Tech N9ne & Mumford & Sons quietly operated as independent or independently distributed artists, it was Chance, the Rapper & Nipsey Hussle's statements about artistic freedom that initially brought the debate to the mainstream.

This debate mainly revolves around an artist & their decision to sign to a major label. We don't discuss the seemingly inevitable step where an independent distributor sells their catalog or is acquired outright by a major label or their catalog is purchased. In this situation, the artist thought they were choosing independence but ends up partner with a major in the end anyways.

This week, I read about the 'perceived' end of an era for Independent music after the Sony Music Entertainment (SME) acquisition of AWAL & Kobalt Neighboring Rights (KNR) from Kobalt.

AWAL is an independent distribution firm that works with famous artists such as Finneas & Lauv. KNR is a performance rights collection agency with a clientele including Cardi B, Ed Sheeran & more.

I want to pose a question to everyone reading this right now. What does independence mean to you?

I think we've reached an impasse when discussing independence in the music industry. Does that mean artistic freedom? Or ownership of masters? Maybe financial literacy? We're all guilty of applying the term "independence" as a blanket - whether it be Chance, the Rapper with corporate sponsorships; Russ uploading via Distrokid (before his joint venture deal with Columbia); or Mumford & Sons, distributing through their own label & licensing their releases to UMG or Sony. Are all three of these artists independent? Are none of them?

Well, that all depends on your definition of Independent. I think there are three buckets outlined below. Within any of these, there's a spectrum of artistic freedom that only the artist understands. As the audience, we'll never know if Def Jam made Kanye & Jay Z include "Lift Off" on Watch the Throne because it featured Beyonce, but we can work to understand the information available to us.

Bucket #1: No Association with a major label

The idea of an artist or a release having no association with a major label is the most cut & dry example of defining independence in the music industry.

Russ' Distrokid releases, anything before 2017's "There's Really a Wolf," are an excellent example of drawing this line in the sand. Russ self-funded recording, marketing & music videos for these tracks out of pocket. Meanwhile, his partnership with Columbia on "There's Really a Wolf," "Zoo," & "Shake the Snow Globe" are good examples of non-independent releases. Even with his 50/50 joint venture deal with the label, these are clear cut examples of working with a major label & giving up your masters.

On the other hand, Mumford & Sons provides a paradoxical example for us. The band distributes their music through their label, Gentleman of the Road. They have separate licensing deals with independent labels worldwide, such as Glassnote records in the US, purchased by Universal/Vivendi back in 2014 [Editor’s Note: Glassnote launched a new strategic partnership with AWAL in 2019 prior to the Sony Acquisition. This even better demonstrates how complex an “independent deal” can be over a long period of time]. These licensing deals allow Mumford & Sons to retain ownership of their masters in perpetuity & avoid sacrificing creative license. Meanwhile, they're able to gain some of the advantages of the global footprint major labels tend to have.

This is where it gets hairy.

Are Mumford & Sons not independent? They're technically working with Universal Music Group while simultaneously holding on to their clear priorities as musicians.

And there will always be outliers like Logic & his Def Jam approved "Young Sinatra mixtapes," but these label plants are indeed few & far between.

The above examples outline why No Association with a Major Label is a fair but ultimately flawed way to evaluate whether an artist is independent.

Bucket #2: No Association with any major corporations

We take the prior perspective one step further - what if we separate artists who do and do not have relationships with major corporations, including traditional major label deals and sponsorships or partnerships with major brands, big tech companies & more.

Because in theory, we want our artists to be as uncompromised by major corporations as possible, right?

Well, looking through this lens, we'd have very few legitimate independent artists. Chance, the Rapper’s controversial partnership with Apple Music for Coloring Book disqualifies him immediately.

Even AWAL's artists would struggle to qualify as independent, with significant cash injections from Michael Dell & Google Ventures in 2014 & 2015, respectively.

Do I personally believe that these investments compromised the organization or its artists in any way? No, I genuinely do not. But, if we're applying an objective lens, we have to disclose these investments, which clearly disqualify AWAL artists from representing themselves as independent through this lens (and likely laid the groundwork for a ballooning valuation encouraging this SME acquisition down the line).

Even Distrokid is without entire independence, driven by a significant investment from Silversmith Capital Partners in 2018. Silversmith is far from insidious, but it's important to note that even the organizations touting democratization & independence are unable to attain that same goal for themselves (look at Robinhood's last few days)

Ultimately this perspective prioritizes our needs as a consumer over the artist’s needs (financial, growth, publicity). This bar for artists is impossibly high, but an earnest conversation occurred back around the Coloring Book release. Thankfully, it has fallen out of popularity in recent years.

Bucket #3: Ownership of masters

Ownership of masters is the only legitimate way to understand if an artist is independent. Whether you're releasing through AWAL now or in the future, Distrokid or Sony's The Orchard - as long as you own your masters, I believe you qualify as independent.

All of the other perspectives here concern consumer perception but not the viability or long term health of an artist's career. Some fans would have you believe that you need to bootleg your albums & share them exclusively through MediaFire, or they're going to believe unknown corporate forces have compromised your artwork.

This is not true.

None of these private equity firms, venture capitalists, or brands you partner with own your masters at the end of the day. You can take those recordings at the end of your contract and release them to the world for free if that's your desire.

And that's real ownership to me.

But what does this acquisition mean for Kobalt as an independent organization?

Both AWAL & KNR are integral pieces in the independent music industry, generating about $117mm in revenue in FY19 alone.

While this is a significant change for Kobalt, they aren't letting go of their primary money earner, Kobalt Music Publishing, which still drove over 75% of their revenue ($400mm+). Kobalt is around for the long game, so no worries there.

It's important to remember that the distributors you're working with are never truly independent. There are barriers to entry, both connections & capital, that are near impossible to overcome at this time without support from a major label or large investment.

But at the same time, independence for artists & independence for the organizations they work with are not necessarily one & the same.

How will the artists who partnered with AWAL & KNR going to fare? We'll just have to wait and see.