A small Chicago-based online music supplier is singing a happysong now that his company has inked a deal with Apple's eight-month-old iTunes Music Store and other online music businesses.
I Am Music Online.com is one of only roughly 200 independentlabels that signed deals to supply content to iTunes for downloads.The company joined major record labels BMG, EMI, Sony MusicEntertainment, Universal and Warner, who also signed deals withApple.
Black-owned I Am Music, formerly the gospel record label I AmRecords, is supplying iTunes with a variety of content, said JunMhoon, president and founder of both companies. That content includesgospel tracks from the late Grammy winner Pops Staples as well asJames Cleveland, R&B dance music artist Jody Watley, and spokenmaterial that includes poetry from Nikki Giovanni.
Mhoon, whose predecessor record label companies I Am Records andLunar Eclipse did about $1.5 million in sales annually, saysopportunity has knocked. He conservatively estimates that the Appledeal will generate roughly $10 million in revenue for his companyover the three-year life of the contract.
Apple said Tuesday that music fans had purchased and downloadedmore than 30 million songs from the store, which debuted last April28 and is the No. 1 download music service in the world.
Music fans are buying and downloading roughly 1.5 million songsper week from the store, Apple said last month. That creates a wealthof opportunity for companies like Mhoon's.
"I am extremely blessed, and my objective is to spread theblessing," said Mhoon, a 25-year veteran of the record industry whosecompany is on South Lumber in Chicago.
The former director of A&M Records' gospel music division said hehas worked with artists such as Al Green, Shirley Caesar and BarryWhite.
Mhoon said among his goals is providing opportunity for youngindependent artists to break into what he labels a typically barrier-filled industry.
"The industry basically is a very closed-door, proprietaryindustry," he said. "It has been controlled by five to six majors forthe last 40 years. The same people have had control over thedistribution."
Mhoon, who teaches courses on the business of the music industryat Columbia College and is authoring a book on the subject, saidblack artists and small independent labels have been particularlychallenged.
"We are always on the supply side with no direct link to theconsumer," he said. "The Internet and Apple have given me anopportunity to supply a direct line from the independent artist tomillions. This creates a level playing field for the little companiesto compete with the larger majors [that have] deeper pockets."
The iTunes Music Store enables customers to search a catalog ofmore than 400,000 tracks to locate songs by title, artist or album.Customers pay 99 cents per song to download songs into their Maccomputers, from which they can burn an unlimited number of CDs forpersonal use at no extra cost. The tracks also can be downloaded froma computer into Apple iPod portable digital music players.
Apple's iTunes store in October also became accessible from themuch bigger universe of personal computers using Microsoft Corp.'sWindows operating system, which will allow companies such as I AmMusic to reach a broader audience.
Mhoon said he opted to shift his business model from that of alabel selling products in retail stores to that of a download musicsupplier as he watched downloads soar, industry CD sales fall and theevolution of Napster, the formerly illegal but now legal downloadoperation.
"I started researching the opportunities," he said.
When he learned of Apple's plans to include independent labels inthe iTunes store, he said, he blanketed the company with proposals.
"I e-mailed everybody I could think of at Apple," he said.
That ultimately landed him a meeting last summer at Apple withother independents, which led to the three-year contract, he said.
"Gospel didn't seem to be that well represented at the Apple MusicStore, so I think that's what really got me the invitation."
Mhoon works with artists with finished product. He said hisevolution from a label that manufactures product for sale in storesto an online music supplier has significantly reduced his costs.
"If I released 10,000 songs this year, that would normally cost meabout $20,000 to manufacture," he said. "That's just one song on adisc. This eliminates all that cost."
He said another advantage for smaller independents signed withApple is that Apple isn't selling any advertising or placement/positioning on the iTunes site. Mhoon said it can cost artists asmuch as $50,000, excluding production costs, to get their CDs on theshelf in the major retail outlets, which makes it almost impossiblefor a start-up label or independent artists.
I Am Music has also signed deals to provide content to Napster,the Rhapsody Digital music subscription service, and also will haveproduct available in the soon-to-be-launched RealNetworks downloadmusic store, according to those companies.
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