Sony Corp's Sony Music Entertainment, the second largest music company in world, said on Wednesday it made a strategic investment in IODA, a digital distributor of independent music.
The move is a sign of a trend by major music companies to tap into the indie music sector's growing importance. More artists are able to use smaller record labels to promote their music as the traditional barriers to physical distribution of CDs become irrelevant in a digital world.
Sony Music, home to major artists such as Beyonce and Bruce Springsteen, already has its own independent distribution unit, RED, which will now use IODA's digital distribution as part of the overall Sony Music network.
IODA is a natural extension of our indie strategy, said Thomas Hesse, Sony Music's global president digital. As entrepreneurs, we think this is a business we'd like to grow and expand and as a result we took an investment.
The terms of the deal were not disclosed.
Six year-old IODA is one of a growing group of digital music distributors who help smaller labels handle everything from digital rights licensing through to royalty payment administration, as well as promotional support. It has nearly two million songs in its catalog, which it licenses to more than 400 digital storefronts worldwide.
Others in the sector include The Orchard and INGrooves, as well as many other smaller players.
Because of the democratization of media and distribution channels, independents have taken on a larger role in the business, said Kevin Arnold, chief executive of IODA.
Arnold said his company would benefit from being able to use Sony Music's existing global network of digital technology beyond distributing songs to include everything from ringtones to music videos.
(Reporting by Yinka Adegoke and Susan Zeidler in Los Angeles; editing by Andre Grenon)