A day after independent music label negotiator Merlin warned its artists that social music site Last.fm Ltd. had balked at compensating artists for past infringements, both sides said they remain optimistic that a deal can be reached soon.
Merlin, the so-called fifth major label, which negotiates for royalties on behalf of more than 12,000 independent labels, sent a bulletin to its members Wednesday afternoon expressing wariness of Last.fm's new Artist Royalty Program, noting that it "does not appear to offer any compensation for any past illegal use" of their songs. Last.fm announced in January that the new program would allow unsigned artists whose songs appear on Last.fm's on-demand streaming music service to sign up for royalty payments. The program was officially launched Wednesday morning.
CBS-owned Last.fm reiterated Thursday that the program is intended to extend benefits to independent artists out of respect for their creativity. "While we are disappointed that Merlin is talking publicly about our discussions, we respect them and their members, and will continue to work hard to close a deal with them," the company said in a statement to Tech Confidential.
In a brief e-mail interview Thursday, Merlin CEO Charles Caldas declined to discuss terms of his negotiations with Last.fm, but noted that Merlin "remain[s] committed to closing a deal." Asked if Merlin would consider making its labels' music unavailable on Last.fm's service, he declined to speculate, adding only, "Our first choice remains concluding a comprehensive agreement with Last.fm."
For online services such as Last.fm that endeavor to present a large universe of music, it's difficult enough to negotiate with the four major labels, let alone figure out how to compensate a vast number of indies that collectively account for almost twice as many U.S. sales than the smallest major. Other online services have struggled with the same problem as well: Indies have been denied equity in the MySpace Music joint venture, although some observers have suggested that Merlin might also negotiate a fair deal on their behalf. Direct compensation programs such as Last.fm's are a step in the right direction, especially as the power of labels continues to be diminished by disruptive technologies. The future, after all, will include more and more artists doing without labels, meaning that independent artists' representation and compensation will become more and more important. - Paul Bonanos
See July 9 posts from Tech Confidential on Last.fm's program and Merlin's objection
See April 9 and April 10 posts from Tech Confidential on indies' representation on MySpace Music
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