The Recording Music Industry: The Structure Of The Recording Industry

1.1Summarise the development of the UK popular music recording industry from the 1950’s to the present day.

The history of music players dates back to November 21, 1877 when Thomas Alva Edison invented a device for recording sounds and then playing it back called the Gramophone. It was patented on February 19, 1878. The Gramophone looked like a cylinder that was smaller at one end and bigger at the other. Even today, at the annual Grammy Awards the awards that are given out are miniature versions of Edison’s invention.

The music industry is made of companies which produce and sell music. The music industry as we know it was solidified in the mid-twentieth century, where records succeeded sheet music as the primary product in the music business. Record companies were established, but did not last very long until the late 1980s when the “Big Six”, a group of multinational corporations consisting of Sony, MCA, WEA, Polygram, EMI, and BMG controlled most of the market. Initially there were five corporations (CBS and RCA (both now belonging to Sony), WEA, EMI, and Polygram) that had emerged in 1978 to own 60 per cent of the market. (Wallis and Malm, 1984, p. 81)

The first problem is the royalty fees made with labels. An artist’s album can cost anything from $15,000 to $200,000 (Recording Connection) and the artist is often left in debt after which is slowly paid back through the sales of their own records which only leaves them a fraction of what the original product was sold for. Another major problem with most major record labels is that their sole reason to get artists is to further their own profit. Most major labels put business before art,

“One of the largest and most influential electronics companies during the 20th century was the Radio Corporation of America, or RCA. At one time, the breadth of its operations included everything from making vinyl records to building and manufacturing communications satellites.” (Engineering and Technology History Wiki: RCA (Radio Corporation of America)). Today, RCA stands as of the most popular and successful record labels in the music industry, and it serves more purposes now than ever before. Over the years, RCA has taken on responsibilities such as searching for talent, signing talent, developing the artists (sometimes), recording and producing their artists, promoting and marketing their artists, and exploiting their

‘Independent record labels have been around since music started being recorded’ (King, 2012, p.13). Created by fanatics with a passion for music, the recording and production process was often self-funded and the purpose was to nurture talent and creativity. Most of the major record companies we know today would have once started in this manner (King, 2012).

The popular music industry in the late 1990s was dominated by a small number of integrated corporations with headquarters in Europe, the United States and Japan. This music market starts simply with an artist and moves along through many steps to the consumer. Everything has its start when a musician presents his music to a music manager, and if he/she finds the music promising, a contract is signed between the two, recordings are made and a marketing plan is drafted for the

In this article, Peterson and Berger show how the organization of the popular music industry affects the music that America hears.

Initially, protected by patents, Edison, Columbia, and Victor maintained an oligopoly in the recording market for many years. They extended their reach around the globe through alliances and partnership with smaller companies, such as the newly established Gramophone Company (which become Victor’s European representative). Afterwards, RCA/Victor, EMI, and CBS Records dominated the industry during the 1930s and 1940s. The six largest companies produced 158 of the 163 records that achieved “gold record” status between 1946 and 1952. Since the Depression, mergers and acquisitions accelerated during the 1980s and 1990s, which leads to nearly 85% of the global market for recorded music rested in BMG Entertainments, EMI, Sony Music Entertainment,

The major music-only stores such as Tower Records (which once wielded considerable influence in the industry) went bankrupt, replaced by box stores (such as Wal-Mart and Best Buy). Recording artists began to rely primarily on live performances and merchandise for their income, which in turn made them more dependent on music promoters such as Live Nation (which dominates tour promotion and owns a large number of music venues.)[6] In order to benefit from all of an artist 's income streams, record companies began to rely on the "360 deal", a new business relationship pioneered by Robbie Williams and EMI in 2007.[7] At the other extreme, record companies also used simple manufacturing and distribution deals, which gives a higher percentage to the artist, but does not cover the expense of marketing and promotion. Many newer artists no longer see any kind of "record deal" as an integral part of their business plan at all. Inexpensive recording hardware and software made it possible to create high quality music in a bedroom and distribute it over the internet to a worldwide audience.[8] This, in turn, caused problems for recording studios, record producers and audio engineers: the Los Angeles Times reported that, by 2009, as many as half of the recording facilities in that city had failed.[9] Consumers benefited enormously from the ease with which music can be shared from computer to computer, whether over the internet or by the exchange of

I think the argument that control of the recording industry by a few multinational conglomerates inevitably leads to cultural homogenization and the ascendance of profit over music is true. “Cultural homogenization is the worrisome outcome of virtually all the world’s influential recording being controlled by a few profit-oriented giants” (Baran, 165). How can a major label spend millions of dollars on one major talent who can immediately provide goods to the public rather than a great artist who is truly inspired by events that occurred in their lives. Think about this—Mariah Carey’s label spends about $80 million on her because she can achieve “instant goods”, while Chance the Rapper is executing music well and is not assigned to a label.

The music industry is an oligopoly. Since the late 1800’s people like Thomas Edison have been buying up patents in communication technology, forming monopolies, leading to a non-competitive entertainment industry. With only a handful of corporations controlling all aspects of acquisition, distribution and marketing of music, harsh business principles create an exploitative industry that takes the best of what artists have to offer and leaves many of them unable to support themselves. Beginning in the 1950’s with payola and white cover music and ultimately evolving into iTunes and Spotify, the music industry has grown into a billion dollar industry with far-reaching influence and control. Contracts rarely serve the artists’ best interest and many are left out to dry when their usefulness has expired.

Over the past decade, the use of CDs has been replaced with online streaming and retailing. This has eliminated much of the record companies revenues as they were used to making most of their profit off of distribution and promotion of physical copies of artists albums (Niemen). This has caused for a major shift and remodeling of major players in the music industries business models. Companies such Sony, Warner Music Group and Universal Music Group have started to completely rethink the way they conduct business (Forbes). In the past record labels were not only responsible for production, distribution and promotion of an artist and his/her music, but they also acted as a bank (Forbes), funding the artists tours and recording sessions. Recently, these music giants have been moving towards becoming more of a modular network organization. What this means is that they are less occupied with the nitty gritty, and more focused on what they do best which is distribution and promotion. This also allows for more freedom of creativity for the artist as well as fairer split of profits (Forbes). This adaption of new business models clearly shows the versatility of the music industry in adapting to new times and technologies.

Radiohead, one of the most popular and contemporary bands of this period, attempted a significant break from the industry standard of fixed price music. In 2007, Radiohead had planned release of its new album, “In Rainbows”, exclusively as a digital download on the band’s website, with an innovative pricing option of allowing its buyers to decide on how much they wanted to pay for the music. Radiohead’s “name-your-own price” pricing model for its new album generated an intense speculation about the future of recorded music industry. The key issues with Radiohead’s innovative distribution model and my views after an analysis of these issues are as follows:

The world market of record music in 1990s was dominated by only five big corporations: BMG Entertainment, EMI, Sony Music Entertainment, Warner Music Group and Universal Music Group. The majors could maintain their status thanks to patents and agreements, technological improvements and M&As. The majors had the complete control of patents and music rights from the artists. Even though the artists tried to directly contact to the customers, they could not afford the attempt. Thus, they relied on the professional signers and on the publishing company. The