HISTORY
. Thomas Edison invents phonograph in 1877 (records on metal cylinder format); earliest
uses thought to be for dictation and other business needs
. Emile Berliner patents gramophone; makes spiral track recordings on flat disc
. nickelodeons: 1890s amusement arcade device that plays back a two-minute recording
for five cents; immensely popular. Demand for “entertainment cylinders” grows
Rivalry
Berliner premiers the Victrola in 1906, the first disc player designed to look like the furniture. He forms the Victor Talking Machine Company (the trademark is the famous picture of a dog peering into the bell of a gramophone with the logo, “His Master’s Voice”). The superiority of his device essentially ends the intense business rivalry going on in the recording industry between him, Edison, and the Columbia Phonograph Company.
Early popular recorded music included sentimental favorites, ragtime, jazz, and film musicals. By 1914 record players and record collections become a household standard, encouraged by a national dance craze that lasts through the World War I years. The boom continued into the 1920s with the dawn of the Jazz Age, the blues and jazz music foundation for the Roaring Twenties era.
The Impact of Radio on the Recording Industry
By 1924 record player sales drop 50 percent from 1923, largely due to the popularity of live music delivered via the new radio medium. Record companies counter in 1926 by introducing electronic recording which much improved sound quality, and the marketing of radio-phonograph combination devices. Audiences soon identify radio as the home of “live” music compared to the “canned” music of records. RCA and Victor merge in 1929 to dominate the radio and recording industry.
The Great Depression
With a hard economy imposing record low profits on the industry, a new coin-operated music device called the juke box helps rescue the industry during the Depression years. Installed in bars, diners, and drugstores, juke boxes help boost record sales nearly 500 percent by 1939.
World War II and After
Shellac, a vital manufacturing ingredient for records, is declared a vital defense commodity by the government during the war, and record making plummets. Adding to industry woes is the American Federation of Musicians' strike, 1942-44, who fear losing jobs from canned music. Capitol records, however, begins novel idea of sending free records to radio stations to promote certain songs; it becomes a practice that soon revolutionizes both mediums.
In 1947 the 3M Company introduces magnetic recording tape (an idea borrowed from wartime Germany) which provides better sound quality, easier editing, reduced costs, and multitrack recording capabilities. In 1948 Columbia Records introduces the 33 1/3 long-playing record (the LP). RCA enters the fray with its 45 rpm record, and the marketing battles of this era soon became known as the "Battle of the Speeds." Soon the 33 1/3 becomes the preferred format for albums, and the 45 remains the choice for single hits; the older 78 rpm format quietly disappears. In the 1950s stereophonic players debut, which quickly double the number of records being sold.
Other events that also help heighten record sales:
. emergence of small independent labels (made possible by lowered manufacturing costs)
. emergence of radio as a promotion device (the "promotion" department now a permanent
fixture in every recording company office )
. the nearly unbreakable new records enabled them to be sent through the mail, thus making
possible the birth of record clubs
. as an emerging TV medium strips radio of its standard formats in the early 1950s, radio
looks to new ways to attract audiences; playing the Top 40 songs becomes one of the most
popular ideas.
The Coming of Rock and Roll
As teenagers in the 1950s began to create their own identifiable, American sub-culture (unique clothes, customized cars, and hair styles), they lack their own brand of music. Rock and roll, with its roots in rhythm and blues, commercial white popular music, country and western, and jazz, quickly fill the void. Rock and roll owed much of its explosive popularity to new singers such as Elvis Presley, Bill Haley, Buddy Holly, Little Richard, Jerry Lee Lewis, and Chuck Berry, all of whom brought to rock and roll their own unique styles that helps give even more richness to the emerging music genre.
Rock Goes Commercial
For various reasons (some scandalous, some not), all the original rock stars had left the scene by 1959. The radio-recording payola scandals of the period further blemishes an already suspect image of rock and roll. In the early 1960s the industry counters by cleaning up rock's image with a new wave of wholesome, clean-cut American singers: Ricky Nelson, Bobby Vinton, Paul Anka, Connie Francis, Fabian, the Four Seasons, Annette Funicello, and Brenda Lee to name a few.
The British Invasion
In 1964 the Beatles took rock and roll by storm with a sound that was widely recognized as upbeat and innovative. Many other British groups followed, but not all followed the same music style; the Rolling Stones and the Animals, for example, exemplified a new blues-based, harsher, and slightly more aggressive sound. Both styles merged somewhat with two music genres currently coming of age in the United States: folk (with artists such as Bob Dylan, Joan Baez, and Peter, Paul, and Mary) and the Motown sound (with artists such as Diana Ross and the Supremes, and the Jackson Five).
Transitions
Music genres in the late 1960s reflect the social experimentation and cultural transition of the times. Freedom, experimentation, and innovation are in. The group Blood, Sweat, and Tears blend jazz, rock and classical music. The Who record a rock opera, Tommy. By the 1970s rock music becomes synonymous with the counter culture, giving rise to non-mainstream groups who play the brash new heavy metal sounds. Countering heavy metal, a softer rock sound emerges, and a few years later a crossover movement sees both genres merging somewhat with a country western music sound. Often the same top songs are featured on the charts of both rock and country music charts.
Industry Trends 1970-1990s
Profits in the record industry followed several roller coaster trends since the 70s, some of which were due to trends (disco), high profile artists (Michael Jackson), new technologies (CDs), the 80s promotional vehicles of music videos and MTV, and the main stream debut of rap music in the 90s.
RECORDING IN THE DIGITAL AGE
The Impact of Napster
The Napster service gave any Internet user the ability to download digital music files to his or her own computer and convert the files into smaller and computer playable MP3 files. Napster users were not charged for services (at least in Napster’s first incarnation). Once files are on a user’s hard drive, it’s an easy step to “burn” any set of songs or music onto your own custom-made CD. Napster quickly becomes a major threat to the recording industry when users reach the 20 million mark within the first year, each user in theory downloading music files and, supposedly, avoiding paying for the original music in CD form; that trend, of course, also means less money for the artist, the recording industry, and retail outlets.
After a relatively short legal battle (1999-2001), the Recording Industry Association of America, which represents the major record companies, successfully gets the courts to refrain Napster from further distribution of copyrighted materials.
Since Napster, however, a number of file-sharing sites have emerged and it has become quite simple to download songs without paying for them.
Interestingly, since iTunes (and other pay music download sites) emerged, the trend is for young adults to pay a small fee (usually around $1.00) for songs. In other words, people are illegally downloading LESS today than they were five years ago.
More Diversity
The availability of digital music on the Internet direct to the consumer is yet another example of the trend toward disintermediation.
DEFINING FEATURES OF SOUND RECORDING
• Sound recording is a cultural force, characterizing social groups, defining movements, and setting trends in society and, in turn, helps to shape modern culture.
• Second, sound recording is an international enterprise (five record companies dominate the global market, each company headquartered in a different country).
• Third, the recording business is a unique blend of business and talent.
ORGANIZATION OF THE RECORD INDUSTRY
The recording industry can be divided into four major segments:
. talent
. distribution
. production
. retail
Talent
The talent segment of the industry consists of all the singers, musicians, songwriters, arrangers, and lyricists who hope to make money by recording and selling songs, but the road to success is hard and long. Few make it big. A group's first step is usually to perform for local clubs and events; next, if they survive, they'll take their act on the road to gain experience, money, and a little recognition. Traveling acts play in bars and clubs where the band is little more than a human jukebox providing accompaniment or background music. If the talent is lucky, they might be noticed by an A&R (artist and repertoire) scout from a record label. If so, they might be invited to sign a contract.
Production
At a recording studio the group records an album or a few singles. Audio engineers use elaborate sound-mixing systems to perfect the right sound. When the label releases the group's single or album, promotion, publicity, advertising, merchandising, and packaging expertise start in. Though there are dozens of record labels, five firms dominate the industry: Sony, AOL-Time Warner, Bertelsmann, Universal, and EMI.
Distribution There are five main outlets for music distributors:
. direct retail stores (most of which have gone out of business in the past five years)
. rack jobbers they serve department stores and major discount chains (WalMart, Target, etc.)
. one-stops buy CDs from industry, then resell to CD stores and juke box firms
. direct consumer sales (a.k.a. packagers) sales from TV promotions and record clubs
. online sales the consumer deals directly with an online retailer (iTunes, amazon.com, etc.)
Retail
There are two major trends in the retail music segment: consolidation and online selling. Big music chain stores used to dominate, such as Sam Goody, Media Play, Camelot, but brick-and-mortar retailers faced increasing competition from online retailers such as Amazon.com and iTunes (and the general transition to digital music) and most have closed their doors.
WalMart has done well with its music sales (CDs and its online downloads). Today, most music sold comes from either iTunes or WalMart.
OWNERSHIP IN THE RECODING INDUSTRY
The recording industry is one of the most concentrated of all media industries, with just FOUR companies accounting for more than 87 percent of all sales. In addition, these companies are multinational conglomerates with interests in many different industries.
Here's a list-- courtesy of the AP-- of the top recording companies and a sampling of the artists they represent:
By The Associated Press
Here's a look at the top record labels, their artists and their U.S. market share as of Oct. 9:
_ UNIVERSAL MUSIC GROUP: 35.12 percent market share in U.S.
Labels include: Geffen Records, Island Def Jam Music Group, Motown Records, Verve Music Group, Decca Music Group.
Artists include: Gwen Stefani, Elton John, Jimi Hendrix, Kanye West, Shania Twain.
_ SONY MUSIC ENTERTAINMENT INC.: 22.79 percent market share.
Labels include: Arista Records, Columbia Records, Jive Records, RCA Records.
Artists include: Carrie Underwood, Alicia Keys, Usher, Chris Brown, AC/DC, Leona Lewis.
_ WARNER MUSIC GROUP CORP.: 21.12 percent market share.
Labels include: Atlantic Records, Warner Bros. Records.
Artists include Madonna, R.E.M., Green Day, Eric Clapton.
_ EMI GROUP PLC: 8.35 percent market share.**
Labels include: Capitol Records, Virgin, Blue Note.
Artists include: Coldplay, Katy Perry, The Rolling Stones, Lenny Kravitz.
_ ALL OTHERS: 12.61 percent.
Source: Nielsen SoundScan, company Web sites.**EMI Group PLC is now a subsidiary of Universal Music Group, so its effective market share is 43.47%.
PRODUCING RECORDS
Departments and Staff
There are seven departments within the typical recording company:
. artists and repertoire (A&R) at times industry talent scouts; also administrative duties
. sales and distribution sells products, makes sure inventory gets to targeted markets
. advertising and merchandising aids sales by planning media ad campaigns
. business lawyers, accountants, researchers, financial analysts, secretarial staff
. promotion get releases played on radio stations
. publicity tries to get press coverage and reviews for new performers in trade press
. artist development helps further artist’s career with tours, concerts, and TV appearances
Making a CD
For a new group to win a recording contract, their first step is usually to produce a demonstration tape, or demo, which in turn is generally introduced to a recording studio by a manger or agent. If successful, the third step is to go to the studio to record a master tape. A modern sound studio features full multi-track recording capable of recording up to 48 different tracks.
Today a band doesn’t even have to record a piece at the same time; with multi-track recordings each instrument, person, and effect can be record separately and professionally blended together later. After the recording session, the next step is the mix down, the technically job of mixing down the multiple tracks to a two-track stereo master. A master is then reproduced on disc.
ECONOMICS
Economic Trends
The economic trends of the music industry are illustrated in a separate post. As a rule of thumb, sales reached a peak in 1999 and have gone down ever since (post file-sharing). While profits are still robust, they're no where close to where they used to be. The expected trend is that sales will continue to slide, but that paid digital downloads will continue to rise (the problem is that a paid digital download doesn't generate the same kind of revenue as does the sale of a CD).
Rock Performers: The Bottom Line
In terms of profits for the artists themselves, a new group can expect to make from 9-12 percent royalty from a CD, up to 15 percent for established artists, and perhaps even 20 percent at the superstar level. Royalty rates on singles run about 6 to 9 percent.
Performers generally have two main sources of income: (1) record royalties, and (2) personal appearances. Unfortunately, much of a group’s income can be eaten up by support expenses such as agents, legal help, publicity, and accountants’ fees. Most groups get paid by funds advanced against future royalties, and as a result many groups end where they started—in debt.
FEEDBACK
Feedback in the record industry is measured by Billboard magazine’s weekly ratings of stars, triangles, and bullets. Stars are “mover” titles, bullets go to one million seller singles, and triangles to the two million single sellers. In general, the Billboard’s “Hot-100 Chart is based on two components: exposure and sales.
For sales figures, Billboard measures the top 50 retail sales markets, subjectively choosing the most influential music outlets; about 185 outlets are surveyed weekly.
To measure exposure, Billboard surveys the play lists of about 240 leading radio stations, all of which are weighted by audience reach (bigger audiences count more than smaller markets). As evidence of their symbiotic relationship, radio stations usually monitor Billboard magazine to see which records they ought to be playing. The magazine then combines the two components to forge a final figure, which is reported as that song’s rating. Billboard publishes a chart for almost all popular music formats. Although sampling numbers may vary, the underlying process remains the same.
Sound-Recording Audiences
Demographic profiles for record audiences are difficult to come by because the recording industry is supported by audience purchases and not by advertising. This means that recording companies concentrate on overall sales figures rather than seeking detailed demographic information about their audiences. What information that does exist centers mainly on estimates of the number and type of playback equipment, CDs, files, etc. in the average household. In terms of music sales, people over 35 now account for more than 60 percent of sales (a 30 percent increase over the past 20 years ), while spending by those 19 and under has decreased from 35 to 15 percent during the same period (which gives us an indication as to how popular file-sharing is among teens).
