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Welcome to the dark, scary forest of the digital music business. Here is your flashlight.

Wednesday, May 10 2006
If you're a "little guy" in the music business today — an up-and-coming artist, say, or a seasoned virtuoso with a cult following, or a one-man record label with a trunk full of merch — your strategy for the future faces a paradox. With the spread of digital music, the industry has never offered you more opportunities, more information, and more chances to reach the ears of the folks who will "get" you. Yet, at the same time, it has never been more difficult to take advantage of every opportunity, follow every lead, and make the most of every new development — because new developments in digital music spring up every week.

For both the little guys of the world and the scores of fans who buy their music, making sure that indie artists get the same shot in this online outback as the Kelly Clarksons and Kanye Wests of the world is an important, if challenging, concern. That's where Sherpas like San Francisco's IODA — the Independent Online Distribution Alliance — enter the picture. In the last few years, IODA has established itself as one of a handful of companies (the Digital Rights Agency, also in San Francisco, is another) whose primary focus is making sense of the rapidly evolving digital marketplace confronting the more resource-challenged players in the music game. It currently serves more than 750 clients, including labels (such as Absolutely Kosher and Secretly Canadian), distributors (including Bayside and Revolver), and sometimes the artists themselves.

Say you own a label but you don't have a digital strategy — or you're too buried in checking out demos and hand-holding your biggest artists to see such a strategy through. IODA will rip your CDs, encode them with genres, titles, and artist names, and submit them to the digital music services and stores, from iTunes to eMusic to Live365. IODA provides these services in exchange for a cut of the sales. As founder and CEO Kevin Arnold explains, "We're there to handle every aspect of getting a business up and running online, with no real upfront cost on the label's part."

When he started IODA in 2003, Arnold was drawn to the indies, partly for the business opportunity, but also because he's a lifelong fan of the music; you may recognize his name as the founder of the Noise Pop festival. "It really is a matter of being involved in this independent music community here in San Francisco, and having most — but not all — of the music that I love coming out of the independent world."

Arnold's allegiance to the indie scene means his company is, for the most part, dealing with small businesses that are often starting from scratch, meaning they're more concerned with keeping the lights on in the office than with things like the complex accounting of the digital arena.

"If you're going to do the digital thing yourself," he says, "you're going to end up having dozens of deals that you have to compile, and figure out who does what with regard to your artists, and what each release and track earned. Track-level accounting is a brand-new concept for most labels. So there [are] a lot of challenges there." IODA also provides the promotional support and retail marketing to push artists onto Rhapsody's home page, or to the front of the iTunes Music Store. Just as important, the firm brings muscle to the collections side of the business: Indies have always struggled to negotiate the same deals with the digital stores as the majors get, but through services like IODA they can establish a kind of collective bargaining, resulting in a situation that is, according to Arnold, "definitely getting better."

They also need guidance with online promotion and marketing. Now that everyone has broadband and everybody and his grandmother has a blog, MP3 blogs and podcasts have established themselves as undeniably valuable marketing tools that can catapult new, obscure, and foreign artists into the American consciousness. But these outlets raise copyright issues: The techies maintaining these new outlets often have trouble lining up all of the permissions they need, and sometimes they don't even bother to ask. How can artists and labels balance the value of online promotion with the risk of giving their music away for free?

IODA's latest initiative aims to solve this problem by helping bloggers and podcasters work with rights-holders. Promonet, which went live as a beta last summer but officially launched this March, funnels music into the blogosphere without losing control of how it's used. Approved users — from critics and industry types to bloggers and podcasters — can log onto the Promonet Web site, where they're greeted by the latest featured albums, new and old, from every genre. Once there, they can preview tracks, download artwork and promotional materials, and, in some cases, even obtain an authorized MP3 of a song to post on a blog or include in a podcast.

Arnold hopes that Promonet will relieve the labels' fears of rampant piracy by vetting the people who circulate the music and reporting back valuable information: The labels will know how many users downloaded their tracks, clicked a link to get more information, and ultimately made a purchase. They'll also have a list of their most loyal and effective bloggers, whom they can contact directly when the next album comes out.

Even in beta, Promonet has attracted a number of podcasters who enjoy having another source of music with no licensing headaches. Dailysonic (, which co-founder Adam Varga describes as "an NPR for hipsters," combines news, humor, and a music spotlight in a roughly 50-minute show, three times a week. It currently counts 2,000 downloads per episode, and Varga says that up to a quarter of his music comes from IODA. "For me, the most important thing is content. The labels they have in their catalog are great labels with great artists, and I also think that [the catalog] is curated well."

"It's a great thing to have cleared music, and it's great that IODA's doing that. It certainly encourages the free distribution of music," says Chris MacDonald, founder of the leading indie podcast network, which sees 350,000 to 400,000 downloads a month. But, he adds, "It's not the primary reason we come to IODA. We come to IODA because they have great content."

If Promonet can tie bloggers and podcasters more tightly to labels without cutting into the overall freedom of the practices, it'll be a coup. But that's only one of IODA's goals for the year. While the company made its name working with indies, Arnold has plans that go beyond the indie space — and even beyond music.

For example, IODA carries large back catalogs of older and international music, and it'll continue to expand both. "There's no catalog out there that isn't going to have some value online," says Arnold. "The goal certainly for everybody in this business — maybe not everybody, but certainly most of the very large all-inclusive stores — is to host all the content in the world, and make it available." Last September IODA struck a major deal with the China Record Corp., the Chinese government's oldest and largest record company, to license a deluge of music: 60,000 releases spanning some 5,000 years of music history, with recordings that date back to the 1920s. That's a lot to sift through, and "we won't be building recommendation engines ourselves, but we will be building and maintaining as rich a set of metadata as possible to help make it easy for other people."

The other big push for this year will be video content. "With YouTube or Google Video, anybody can upload anything," says Arnold. "There is no filter there, which is essentially the way that music was in the late '90s — everybody in the world was putting up an MP3. And that's cool. That should exist. But at a certain point, you want to go out and start to create a little bit of an economy and help these artists earn some money off of their work. And that's where the stores started to come in, that provided this convenience and filtering and editorial, and I think the same thing will happen with video." He expects that IODA will start with music videos and independent shorts, and gradually work up to feature-length films.

Ironically, IODA's growth through working with the little guy illustrates one of the central rules of digital distribution: There is no indie. As an aspiring artist or label owner, you may think you can start small, but from day one you're in a worldwide market. All of the artists, labels, and distributors — new and ancient, savvy and naive, multinational and minuscule — enter a digital music space that is instantly global, and that instantly confronts them with hundreds of decisions. IODA has to serve as a kind of switchboard in the middle, to pass the music around and to collect as many leads as possible. And let's not forget: It also has to adapt and grow every week — sometimes every day.

About The Author

Chris Dahlen


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