By Eliot Van Buskirk of Wired

Tommy Boy Records' Tom Silverman has said that independent record labels are responsible for 30 percent of music sales and 80 percent of all releases worldwide. If indie music were a major label, it would be the biggest in the world -- and in a way, that's what's about to happen.

One of the few things the majors still have going for them is their ability to offer a single point of contact for companies that want to license massive amounts of music for online and other ventures. When Yahoo wants music videos for its site, or Sprint wants a mobile music store, they can call up their contacts at the majors and be up and running fairly soon with a million-song-plus catalog.

They're about to lose their exclusive claim to licensing vast tracts of music. A relatively new crop of indie label trade organizations, including the recently announced Merlin, is poised to do for indies what the majors have long been doing for themselves.

Here's a theory: The biggest trend in music in the past 10 years has been decentralization. Technological advances have made it possible to form a label if you're just one person with a computer -- all it takes is finding a few new bands, which seem to be everywhere, then convincing them to let you handle their business needs (which increasingly means acting in a managerial role while outsourcing promotion and distribution).

As the music business becomes more fragmented, though, a funny thing seems to be happening. Along with the decentralization trend, a strong need for new types of centralization has appeared, such as MySpace and the original MP3.com. It has been possible for more than a decade to produce music pretty inexpensively without being part of a label or any other network, but there was no central repository for the results. In retrospect, MySpace's ascension looks inevitable; once it reached critical mass, no band could ignore it. It's as if the more decentralized things get in music, the greater the need is for certain kinds of centralization.

Indie labels have started organizing themselves into a single negotiating and lobbying unit -- another move toward centralization -- in response to being locked out of markets and lawmaking sessions dominated by major labels. Charles Caldas, the CEO of Merlin, and Alison Wenham, the head of both AIM and World Independent Network, or WIN, trade groups have accused Yahoo and other companies of practicing "copyright apartheid," according to Music Ally, claiming that they treat majors and indies in vastly different ways when it comes to the licensing of music and music videos.

In the past, this uneven treatment has made a sort of cruel, logical sense. If a major label gets upset with a licensee, it can take all its toys and go home, effectively ending the party, because most online music services want all the majors represented. If an indie decides to do the same, it has far fewer toys to take home, and so the licensee's party can continue in its absence.

Merlin aims to rectify that situation, letting indies bargain for better terms collectively and giving them a much stronger bargaining position.

Rumor has it that Merlin will first demand licensing fees from Microsoft's Zune sales for its members, as Universal was able to do for itself. There also seems to be a plan for Merlin to hit up YouTube for licensing fees; the organization already announced a deal with SnoCap and MySpace.

But licensing is only part of the game. A2IM, a U.S. sister organization to Merlin, has already centralized U.S. indie labels into a lobbying force in Washington. One of its first acts was to send a letter to the FCC, asking them to look at the payola scandal uncovered by Eliot Spitzer in New York State. Labels were paying independent promoters to get songs on the radio; the independent promoters then paid the radio stations to play the labels' songs. Effectively, this was classic payola, albeit with independent promoters as middlemen.

To solve the problem, the FCC initially proposed that radio stations stop dealing with independent promoters entirely, and only deal with the radio rep at each label.

Peter Gordon, who acted as A2IM's lead negotiator with the FCC, wears a number of other hats (including running Thirsty Ear, sitting on the steering committee of Merlin, and being the AVP of WIN). According to Gordon, this policy would have proven disastrous to indie labels, who don't have someone on staff dedicated to wangling radio airplay. Without independent promoters, their link to radio would be lost.

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Fascinating