It used to be that indie labels were easily distinguishable from major labels.| Then, in the mid-Nineties, a handful of true indies got swallowed up by majors -- they were either purchased, their artists made the leap, or distribution deals were inked. With the hoopla surrounding MP3, it's becoming easy once again to tell who's part of the big-league cabal and who's not: Generally speaking, indie labels and artists latch onto new technology; majors have resisted. This week, a new rabble-raiser -- Microsoft -- further divided the music biz. With the introduction of its controversial MP3-killer technology, MS Audio 4.0 (officially called Windows Media Technologies 4.0), we once again see indies going one way and majors going another.

In one corner, we have the five major labels -- BMG, EMI, Sony, Universal and Warner -- quietly ostracizing Microsoft's downloadable technology as they develop their own MP3-killer. No one from the major labels attended Microsoft's unveiling of its new technology at the Los Angeles House of Blues onTuesday. At least no recognizable executive. Nor would anyone comment on the industry's cool reaction to MS Audio, either. The unspoken rule seems to be that the labels have sided with IBM and its Electronic Music Management System (EMMS) system (code-named "Madison Project"), which promises secure downloadable music by the end of the year. Real Networks, whose Real Player boasts more than fifty-six million registered unique users, recently announced it's signed on to help IBM get the music distribution model to work.

In the other corner, we have a few dozen indie labels and Web sites that have, to varying degrees, embraced Microsoft's audio technology. This includes labels like Restless, Rykodisc and TVT Records -- as well as major sites like Broadcast.com, Excite, MTV and Tunes.com (which hosts RollingStone.com).

Why the rift between majors and indies? Some pundits have said that the major labels doubt the security of Microsoft's system. More likely, executives fear or resent the mighty Microsoft and don't want to look like they'll consider any new technology that comes along. They don't want to look desperate.

According to Steve Gottlieb, president of TVT Records, there are numerous reasons to welcome Microsoft's technology. "First, this is better audio," he says. More specifically, MS Audio promises MP3-like quality at half the file size (or, twice the download speed). In addition, MS Audio offers controls, as the EMMS system will, that MP3 on its own doesn't have. Third, TVT is a freestanding label, not owned or distributed by any major.

"That's part of the reason we were able to jump in here," says Gottlieb. "And why historically we've set our own agenda and not waited for a committee. We went back to all our artists and said, 'What do you think?' Overwhelmingly, they want to be involved with this. They don't see any point to waiting for the industry to figure out what's going on. If the industry was gonna lead, the time to lead was two years ago. You can't come at the end of the game and say, 'Hey we're the leader!' That's what pushed us forward."

Putting his money (and his music) where his mouth is, Gottlieb announced that several new TVT tracks will be released online in MS Audio 4.0 format. "We put twenty unreleased tracks on Launch.com right now and in three weeks it will be on TVT Records online. We have XTC, a new Big Pun track, some R&Bacts. We put up a ton of great stuff." First on the list is a new single by Arrested Development's Speech, "Clocks In Sync With Mine," from his upcoming solo CD, Hoopla.

Gottlieb believes the majors boycotted Microsoft because "they took offense to Microsoft going outside and coming up with a solution." But Real Networks' director of communications, Jay Wampold, believes it's not so much a threat or offense as a late and misguided initiative. "Microsoft is trying to push their own proprietary format, and cram that down the throats of consumers and the labels," says Wampold, "I think they're sort of going against the industry. I don't think it's so much a threat to Real Networks or IBM. I just think they're not in touch with where the industry's going."

It all depends on how you define the industry and what you mean by "going." Critics have noted that IBM's system does not address the interests of many independent artists, or labels -- or their fans. Is "the industry" just the major labels?

As a result, MS Audio 4.0 has become, ironically, the technological underdog, radically bucking the trend and challenging the music monopoly. According to Gottlieb, Microsoft has provided a puzzle piece that could move music further along the spectrum of digital evolution: A superior format with controls that's available now. Why not try it? Will waiting six months for IBM's solution to surface really pay off?

"I think it's very presumptuous for people to think we can ask everyone to be on hold while we work things out," says Gottlieb. "If you look into what's going on online, this is not a substitution to buying CDs and cassettes. This is a whole different kind of social experience. It's a whole different relation to music, an ability to share, whether it's on Shoutcast to program and mix your own [Web radio shows] and share them with friends ... or the instantaneous feeling of excitement. We just enhanced the shareability exponentially. I don't think anyone can reliably say how this will impact the business."

JAMES OLIVER CURY(April 16, 1999)