music industry

music industry
   The market for rock and pop music is dominated by a handful of companies known as the Big Six: WEA, Sony, Polygram, CEMA, BMG and UNI. The global market remains under the power and influence of the Big Six because of their control over distribution.
   In the USA, from the late 1930s onwards the major recording companies, Columbia (established in 1889), RCA (1929), Victor (1901) and Decca (1934), were competing over recording and reproducing techniques in order to gain a significant share of the market. In the 1930s, the standard record format was a ten-inch disc which rotated seventyeight times per minute. After the war, Columbia were the first to introduce vinyl, and also the first to introduce the long-playing hi-fidelity record. They then went on to release the innovative twelve-inch 33 1/3 rpm long-player. RCA in turn developed a seven-inch record on vinyl which rotated forty-five times per minute. Because there was an appropriate market for each, each company decided to produce their records on both formats. The LP became the main outlet for classical music, and the 45 rpm seveninch ‘single’ format was more convenient for popular music, which was played at radio stations and on juke-boxes. The seven-inch single format was much easier to distribute, and in this way, smaller record companies were able to promote their artists amongst radio stations cheaply and more effectively, giving rise to the development of independent national distribution companies. By 1948, the four main record companies were RCA, Columbia, Capitol and American Decca. Out of the top ten most successful records of that year, 81 percent were produced by these four major companies.
   The music industry is a multi-layered organization, including not just the artists but also employees of the record companies from managing directors down to A&R (artistes and repertoire), recording studios, production and management companies, songwriting and music publishing houses (including film music and jingles for adverts as well as mainstream songs), the music press, manufacturing establishments (cutting and pressing rooms, blank tape and CD suppliers, makers and suppliers of instruments and PA systems), retail outlets (mail order catalogues, record stores), venues (from pubs to purpose-built complexes) and electronic media, from radio to the Internet. The music industry is not subsidized by the government, but regional councils will fund local events such as festivals or outdoor concerts. In the United Kingdom in 1996, retail sales exceeded £1bn, and the industry employed over 48,000 people. There is considerable revenue to be earned from the industry’s various associated activities and products, such as tours and the merchandising which inevitably accompanies them, sponsorship deals, endorsement deals (of instruments and amplifiers, for example), royalties, and public appearances and interviews.
   The international music industry is a multi-billion dollar enterprise, and is primarily articulated by the dynamics of market capitalism. It is historically located in the USA, but the United Kingdom has always played a significant artistic and commercial contribution. The music business follows the economy very closely, and tries to influence trends and consumer practices. The industry has been dominated by Western practices, not purely in terms of its products but also in its economic structures and its legal and political transactions. However, the Anglo-American hegemony has waned in recent years in the light of the emerging European market forces and the Japanese multimedia conglomerates, which have been instrumental in changing the identity of the industry.
   The forces which can affect the structure of the industry range from customer behaviour through to competition from the smaller independent labels, the changes in technological reproduction and the creative process itself. The music and radio industries had always to a degree been interdependent, but in the United States during the period 1954–8 this interdependence underwent significant developments. Radio depended on the record industry as providers of material for its shows, and the record industry relied upon radio for the exposure and promotion of its products. Radio had started to become a medium in itself, and the number of radio stations was expanding rapidly. This inevitably led to the need for diversity and station identity, and thus radio became regional rather than national in focus. Stations were on the lookout for new or local talent, and were keen to offer air time to acts which belonged to the lesser known labels such as Sun, Atlantic and Coral. This created opportunities for the independent labels, enabling them to compete for a share in the national market. Over the last two decades of the twentieth century there has been another substantial revolution within the framework and constitution of the industry, due to the external developments in mass media communications. Music in its commercial aspect was easily made into a commodity, and the systematic exploitation of consumers could be negotiated within the markets.
   The transformation of the media industry has led to a complete overhaul, with the ownership of media outlets belonging to a small number of corporate entities. In 1995, Seagram’s Company bought 80 percent of MCA for $5.7 billion; Westinghouse took over CBS for $5.4 billion, and the Disney Corporation bought Capital Cities/ABC for $19 billion. In 1996, Time/Warner bought Turner Broadcasting, with its outlets in cable, film and sports organizations, for $7.56 billion, establishing the industry’s role as a major player in other areas of media consumption. The music industry and its economy became integrated with the worldwide computerized infrastructure of telecommunications and media. This process of controlling both hardware and software markets and distributing products through a range of media types is called ‘synergy’, and it has created opportunities for crossover marketing strategies. Records could sell films, and vice versa; the filmto-video industry was booming, and computer games companies were now buying up rights for film and music. This was to be a complete monopolization of trans-global media, adopting the individual-as-consumer point of view.
   Technology has always been a significant factor in shaping the development of the music industry. With the onslaught of technological advances in recording equipment and the introduction of new formats such as the compact disc (CD) and digital audio tape (DAT), new marketing strategies had to be developed, which in turn affected the consumption habits of the record-buying public. The CD offered a clarity of sound and a scope for longevity with which vinyl could not compete, bringing about its eventual decline. Also in decline was the sale of the seven-inch single. In 1980, before the rise of the CD, the gross annual worldwide turnover of singles was £550m, but in 1988 this had dropped to £375m. In the USA, cassette sales were on the increase, grossing $22.5m in 1988, and by the end of 1989, this figure had significantly risen to $32.5m. Vinyl had all but disappeared from the shelves of major record stores, but this in turn created an alternative market in the record collector, and jazz and blues connoisseurs still preferred the authenticity of vinyl.
   A continuing problem faced by the industry is that of piracy. This can be in various forms, from the illegal recordings of live events (known as ‘bootlegging’), to ticket-touting and forged merchandise (posters, t-shirts, programmes and so on). The pirate industry is estimated to have an international value of £3.7 billion, which totals 12 percent of the retail value of all legally sold recorded music. In the United Kingdom alone it is thought that music writers and publishers are losing about £40m annually, due to the upsurge in pirate CDs and cassettes. There is a current crisis in the music industry, with a catastrophic decline in sales, and the source of the blame lies in the increased tendency to visit the various music sites (of which there are more than 26,000) currently offering music free of charge on the Internet. Music on the Internet is not yet covered by the various protecting bodies, such as the Mechanical Copyright Protection Society and the Performing Rights Society, and is offered without any author-ization from, or payment to, the legal holders of the copyright. The Internet has therefore served to increase the threat of lost revenues for musicians. Customization on a mass scale is fast becoming the commercial pattern of the future. On visiting certain sites, the net user is invited to make a personal selection of desired tracks, which are then dispatched at a fraction of the price of a commercially produced CD.
   Record companies need to maximize profits in order to create market stability, and within this need is the obligation to offer their customers a degree of change and innovation. The record industry is capable of establishing new and original ideas as standard in order to generate a market for them. This creates a cycle of innovation, whereby the next new act to come along has to be more diverse, or more original, in order to break through the now established norm.
   During periods of a stabilized market, the major companies can exert some control over the growth of the smaller labels, which specialize in the more uncommercial genres or scenes, by buying them into their own conglomerates, or merging with them. This can often mean taking control of not just the performers, but also of their creative rights as artists (which led to a major court case involving George Michael). The independent record companies have risen in the international market stakes, and as they are swallowed up into the mainstream by the majors, others spring up in their wake. In the United States, industry power is located in three main areas, Los Angeles, New York City and Nashville, with the occasional ‘scene’ emerging on the peripheries, such as grunge in Seattle. In Britain, power has always been located in London, despite the phenomenal success of groups such as the Beatles, who were at the forefront of the idea of a regional sound in the 1960s; this ‘Mersey’ sound was resurrected in the 1980s by bands such as Echo and the Bunnymen, Wah, Teardrop Explodes and China Crisis, and again in the 1990s with The La’s, Cast, Space and The Lightning Seeds. There was also the ‘baggy’ scene in 1980s Manchester with The Stone Roses, The Inspiral Carpets and The Happy Mondays. National identity has become prominent in recent years; notable is the rise of the Welsh band with acts such as Catatonia, Super Furry Animals, 60ft Dolls and Park Trolley. Local labels are few and far between—Probe in Liverpool and Revolver in Wolverhampton are examples—and 99.9 percent of labels in Britain operate from London, which means that most bands have to migrate to the capital for the convenience of managers, agents and record label bosses.
   There has been a rise in the consumption of independently produced and distributed artefacts, and the Big Six’s dominance over the global market has declined in recent years. With the rise in popularity of world music (South American and Asian music’s popularity is at an all-time high) the focus has shifted away from Anglo-America to Europe (especially in the light of the Ibiza ‘rave’ scene and the European quirky dance acts such as Whigfield, Aqua and Two Unlimited). The independent or alternative labels operate on a different basis to the major players, the difference being purely economic. The former deal with shortterm contracts, sometimes without an advance to the artist, and production and distribution can be local rather than national. In the UK, Pinnacle are the main distributors of independent labels, while in the USA this role is filled by Jet Distribution. The desire for independent labels to produce innovative and quality work has to be matched with the necessity to work within economic boundaries, the main cost being that of promotion and marketing. Nevertheless, the latter half of the twentieth century’s rapidly developing technologies have made it possible for music to be both seen and heard far and wide, immortalizing musicians and their creative works in the process. Its omnipre-sence is guaranteed through radio, television, cable, satellite, vinyl, cassettes and CDs.
   See also: pop and rock
   Further reading
    Shuker, R. (1994) Understanding Popular Music, London: Routledge.
    —— (1998) Key Concepts in Popular Music, London: Routledge (an excellent analysis of the music industry).

Encyclopedia of contemporary British culture . . 2014.

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