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updated 3/30/2004 2:13:40 PM ET 2004-03-30T19:13:40

Independent record labels in the U.S. are drawing up plans for a new trade association to handle copyright negotiations and distribution deals for the music industry.

The association is expected to link several hundred record labels, with details due to be hammered out at meetings next month in New York and Los Angeles.

Executives from more than 150 independent music companies have discussed a preliminary framework for the association, which has a working title of American Music Independents.

Those labels account for almost $2.5 billion of annual music sales in the US, or 19 per cent of the country's near-$13 billion music sales. But they have a far larger proportion of online music retailing at closer to 30 per cent of the small but growing market, executives involved in the negotiations said.

Officials from Britain's Association of Independent Music (Aim) and Impala, the trade association that represents 2,400 European labels, have played an advisory role in the proposed new organization.

Alison Wenham, chairman of Aim and vice-president of Impala, said: "We have met with record companies, and we are actively encouraging and facilitating the collective will that is required to create a trade body to represent the independents of America."

Most U.S. music companies are represented by the Recording Industry Association of America (RIAA), whose 800 members manufacture approximately 90 per cent of all legitimate sound recordings produced and sold in the country.

The RIAA has been at the forefront of fighting rampant Internet piracy.

Last week the association launched legal action against alleged pirates using copyrighted music on peer-to-peer networks, "including illegal file sharers at 21 different universities."

It is understood that American Music Independents would be a complementary organization to the RIAA.

But the new association is likely to be more aggressive in negotiating broadcasting rights on behalf of the independents and concerned with the perceived market dominance of the so-called majors, including Universal Music, Warner, Britain's EMI, Sony and BMG.

"It's about ensuring the market access for small and medium-sized labels; they have a different business model to the multinationals," said one person involved in the talks.

If it adopts strategies similar to Aim or Impala, the new association would be expected to oppose the planned merger of BMG and Sony's recorded music operations.

Copyright The Financial Times Ltd. All rights reserved.

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