The Record Business. A Brief History of Destruction.
Growing up in the sixties and seventies music was everywhere, it was all we talked about. It was the invitation; want to come over and listen to the new Creedence Record? Meet me at the record store?
Status in those days was the guy who had the best stereo and the best record collection. Fans saved their money and purchased records whenever they could.
It was a shared experience, it was communal. People would hang out and listen to music, pass around an album cover, read the liner notes and talk about who played on the record. Music videos would not appear until the eighties and social networking was what happened in the aisles at Tower Records.
Peer-to-peer file sharing was a ninety minute cassette tape recorded in real time, filled with songs from your favorite artists. Making great ‘mix’ tapes, that earned you bragging rights, was an art form that took time to master. This is why sharing music in those days wasn’t much of a threat to record sales. It took so damn long to make copies.
When I worked in a record store in Berkeley in the early seventies, it wasn’t unusual for customers to purchase five LPs and take a chance on new artists. Often customers would ask for recommendations based on the artists they were following. In my store we had a contest every day to see how many copies of a record we could sell when we played it in the store.
The introduction of the CD.
By the early eighties the record labels began transitioning away from relatively inexpensive LPs to CDs. Compact Discs were expensive, costing twice as much as records. Customers who bought multiple records and once took a chance on new releases, bought less. The CD was the motherlode of profitability for the record companies. They weren’t only far more profitable, but people began replacing and repurchasing their music collections.
Unfortunately, the labels rode that horse into the ground. Their focus became more about short term profits as opposed to making the investment to develop new talent. The CD is one of a handful of technology products that never came down in price. Even when the price to produce CDs dropped dramatically as demand spiked and more production facilities were built.
The strategy of keeping profit margins high would eventually backfire two decades later as a generation saw piracy as a justifiable payback for greedy record labels and their overpriced music.
Video Killed the Radio Star.
The other major game changer in the eighties was MTV, launched on August 1, 1981. Within a very short time traditional radio found itself in heavy competition with MTV, as cable television became available in more households. The radio promotion guys working for the labels discovered that having their band’s video added to heavy rotation on MTV was like getting airplay on every radio station in the country.
Not surprisingly, MTV became the dominate force for breaking acts and transforming music into music videos, expanding music’s popularity by creating even more super stars.
The Record Business and Wall Street.
Music was now big business with massive profits from compact discs and sales from MTV. By the nineties the music business was beginning to attract the attention of Wall Street. A business once dominated by music people, was now attracting lawyers and power brokers from other businesses filling high level creative decision making positions.
Respected industry leaders, like Mo Ostin, who had built Warner Brothers Records into one of the most respected and successful record companies would be forced out after twenty-five years as CEO in 1994. The man who forced Ostin’s resignation, Robert Morgado, who had no experience in the record business, would be fired six months later and Warner Brothers would never regain its’ former glory.
The Telecommunications Act of 1996.
In 1996 the music business would suffer another setback. The Telecommunications Act of 1996 allowed broadcasters, who up until then could only own a handful of radio stations, were allowed to purchase as many stations as they could afford.
A buying frenzy ensued with corporations like Clear Channel buying up hundreds of local radio stations, eventually stripping them of their individuality.
Thousands of program directors and DJs who once “added” songs and created playlists that reflected the taste of their local audience disappeared. Fewer, emerging local artists got airplay and listeners starting complaining that all radio sounded the same.
Wednesday, the Internet, Piracy and Spotify.