The music industry is broken.....and this is how we fix it.

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Technology didn’t break it - piracy didn't break it - music fans didn't break it.....bad music didn't break it.......don't believe these things....they simply aren't true.

The truth is corporate behavior broke the music industry - the tech INDUSTRY broke the recording industry... and guess what? streaming is a beautiful thing for discovering music.

Streaming is not the recording industry - and it won't be a replacement for it. Streaming is a fantastic ....on demand......radio.

I might sound like i'm giving conflicting views - but actually, from the experience I've had operating Victor Talking Machine Co. (a brand that can trace its roots all the way back to the birth of the modern sound recording industry) ....I am uniquely qualified to give an overview of this situation.

If you don't like to read - I will try to make this as short as possible. Let me first take you back to the birth of the sound recording industry - and detail to you some of the steps along the way ....and how these apply to today .....and how we can use this data and historic overview to support the growth of the modern record industry.

Once upon a time, Victor Talking Machine Co. and its predecessor The (Berliner) Gramophone Co.....had a great concept. On the back of Mr. Emile Berliner's invention of the disc record- and Mr. Johnson's method of stamping out a seemingly infinite number of beautiful copies of a master recording - Victor did something the cylinder companies really DIDNT. They embraced the concept that the disc record - would become to music what the bound book is to literature...this wasn't going to be a device of novelty....this was an industry of art.

Time moved forward - and the company became the first global media empire - forming a major music (and later tech) company in every market. Victor Talking Machine Co. operated a division in Japan (which would become tech giant JVC), The UK (which became EMI), and Victor itself would eventually become enfolded into tech giant, RCA.

Music companies gradually found their way from the tech of the recording industry - into radio, TV, and eventually computers of all kinds. Truly, the boom of the industrial and tech revolutions of the 20th century had surpassed music in terms of importance - they were on to bigger and better things as far as incoming executives were concerned.

By 1924 - the record industry looked like it faced steep competition. A new company had risen to combat Victor & Columbia's lock on home entertainment; RCA. RCA had been instrumental in the establishment of radio as a commercial entity - and soon the entire industry feared that "music would never be purchased - they can just listen to it for free!!!". Record sales drooped by the end of the decade and at the onset of the depression.....all three major record companies were on the brink of total annihilation.

Edison Records declared bankruptcy (the day before the crash of 1929)

Columbia Records had formed a radio company known as CBS - and was forced to sell the company in the late 1920s. This cost saving measure wasn't enough - and Columbia shuttered its doors in 1929. The remnants were purchased later - and in the 1930s, CBS purchased the label.

 Victor Records in the 1930s during ownership by Radio Corporation of America

Victor Records in the 1930s during ownership by Radio Corporation of America

Victor Records was in a better position than most at the onset of the great depression. The parent company, Victor Talking Machine Co. - was truly a music company. They manufactured the highest quality home audio units - and they carefully chose some of the world's greatest (and most expensive artists) for their label. No expense was spared at Victor - and thus, when the record industry appeared to be dying - the company began to enter the radio business. By combining radios and record players - they once again attracted interest from buyers. Coupled with their pedigree, RCA and Victor Talking Machine Co. merged in 1929. Victor Records remained the top label in the music industry until 1946 - when parent company RCA downsized the music division in preparation for the manufacturing of television. Soon, they shuttered Victor Records - and officially formed RCA-Victor Records (later RCA Records) - a much more scaled down label ....that left Camden, NJ (the historic home of Victor) that same year.

By the 1940s, the record industry had returned with vengeance.

but still.....

Recorded Music- it would seem - was not a priority to this tech giant.

As time went on, RCA sold off its interest in music - including Victor's former subsidiaries....The Gramophone Co., Abbey Road Studios, JVC, Electrola (Germany) etc... The tech giant had strayed from the vision originally maintained by Victor at the birth of the record industry - they simply looked at this invention as a piece of tech ....to be replaced and constantly upgraded.....with little regard to the industry around it. Purely an en-devour for the profit of hardware - the music could attract buyers - but it often wasn't a focus from this point out....and the long vision didn't see the record industry as publishers see the book industry.

This lack of long-term vision is integral to why the modern tech industries (which control the vast majority of the music industry).....are entirely lost - no....clueless....as to what direction the recorded music industry will go.

Its actually really funny. WELL.....not for musicians/producers/engineers/music fans that relied on that infrastructure....even if they didn't know they did

anyways;

As humans do - and as technology does - innovations came and went. The reel-to-reel, 8 Track, Cassette Tape, CD, and download ....all came....and all went.

Bigger, better, faster - until......

We reach a point of diminishing returns.

Truth is, the average music listener (including myself), saw few differences from format to format. Some had their benefits - cassettes were ultra portable, CDs were ultra quiet, downloads were FAST and immediately gratifying........but through these years........the music industry had one underlying problem; tech industry set about a vast campaign to sell its hardware units (be it record players, 8 track machines, the walkman, the discman, the mp3 player, the ipod)...at the expense of the music industry....and at an unhealthy rate.

Finding that the music industry would be 'a thing of the past' - tech company RCA was famous for ignoring RCA Records....eventually signing Elvis Presley in the 1950s in a very see through attempt to bring panache back to its own music division. In reality, they knew that Elvis could also be instrumental in sales of hardware units - after all, he was a sensation - a once in a lifetime type artist that any tech company wouldn't mind being associated with. One can relate this to Taylor Swift's recent aligning with Apple.

The relatively healthy music industry of this post war period eventually separated largely from tech industry. These companies - it was thought - would act as publishers do to books and authors. This arrangement was extremely healthy...and this accounts for what we can call the "golden period" of music industry. Largely, these record companies of the time paid careful attention to detail and quality of recording - and above all, musicality. Companies like Atlantic, Motown, Decca, Capitol - had no corporate parent to attend to and no minimums to make in terms of profit. They were free to create music in a healthy environment that didn't REQUIRE massive success in order to keep operational.....they were allowed to fail, basically....and in this failing often created original groundbreaking art that modern labels wouldn't dare attempt - lest it waste their budget. The music industry infrastructure of radio play, record stores, record buyers, music fans, and TV support - made this industry THRIVE.

 Many record companies and labels - from various time periods

Many record companies and labels - from various time periods

By the late 1970s and 1980s.....the writing was on the wall in boardrooms at tech companies across the globe; a possible collapse of the music industry was incoming within 25 years....speculators noted that consumers would grow tired of format changes.....and with the digital age approaching....music could stand to become 'free' to everyone and that generation Xers would welcome this. These same tech companies also knew one thing; the point of diminishing returns. The back catalog of these music companies accounted for 90% of the music we all know and love - and the tech industry knew that......based on the hard ownership contracts of this music - these record labels could be *cash cows* for YEARS - while investing VERY little money into the development of new artists or industry.

Think of it this way; How many times can we re-issue "Dark Side Of The Moon"? or "Sgt. Pepper"??? and at what point will we be seeing 25th anniversaries of 25th anniversaries?

I can see it now; "WOW!!! ITS GOT THE SAM GOODY STICKER JUST LIKE THE ORIGINAL RE-ISSUE FROM 1991!!!!!!!" (on my 25th anniversary of the 25th anniversary of "Nevermind" reissue in 2041.)

Between the late 1970s and the 2000s we see a great consolidation of the record industry;

Sony Corporation (a tech company) purchased up the music division of CBS - they would eventually go on to purchase RCA's music division from Bertelsmann. They also purchased many other smaller companies.

Warner Communications acquired what is now Warner Music Group- which would later be owned by a tech/chemical conglomerate Access Industries. They also purchased many other smaller companies.

Universal Music Group (formerly MCA, formerly Decca records) - would eventually be owned by another tech/media conglomerate VIVENDI. They also purchased many other smaller companies.

 The 3 final major labels control 90% of all music

The 3 final major labels control 90% of all music

And then there were 3. 3 'major labels' from what were many many many many many profitable music companies.

The next time you want to ask yourself "I wonder what happened to music??" this is the answer.

While labels often get a bad reputation - this is a relatively recent development in the music industry. People had arguments - like any business does ....with their labels - as far back as the 1900s. BUT, as the industry became more sparse - and more driven by profit instead of development - we see the artist complaint to record deal ratio rise drastically through the late 70s-80s-90s.

The truth is; record labels aren't the bad guy. The corporate parent is in fact- 'the bad guy' (for music purposes.) When these corporate parent companies came to own these record labels - absolutely all of them started initiating cuts to things they considered 'frivolous'. Not understanding the concept of artists (and the general eccentricity of musicians), these companies sought to keep the number of studios (and hours) to a minimum, and the number of bags of cocaine to as few as possible at any given Aerosmith session.

The point I'm making is; labels were very very very good for the music industry at one point in time - and the infrastructure that they started creating - and consumer attraction to owning music - as early as 1900........is what created the entire concept of a record industry.....and thus allowed many 1000s more musicians and millions more music fans to enjoy incredible works of art that we still revere today.

NOW; lets move to the modern age- ya still with me? I told you this was complex.....its the worst.

As noted above; we have a very very unique and rare opportunity in time to fix the music industry....and return stability to the number of new signings - and build the fan base of recorded music once more.

Let me explain!

 Steve Jobs introduces the iPod MINI

Steve Jobs introduces the iPod MINI

In 2001, the iPOD launched - and forever changed music. This was no mistake - Apple had invented something capable of this same function many years before ....but alas.....no one was "ready" for it yet. (remember that scene in Back To The Future?).....anyhow; in the years leading up......if you will recall.......the word on everyone's lips was PIRACY.

It was the BEST. I did it- you did it....you know you did it.

And guess what?

Sony, Apple, (and the other conglomerates that owned labels as sidepieces to their main businesses).......they loved it too!

Here is where some industry insider stuff comes in - I won't reveal any names at the risk of hurting peoples careers - but ....I happen to have a document from one of these major corporate entities which features an intriguing concept at the beginning of the new millennium. This concept is titled "Dismantling The Music Industry: Profit without Pain". This article (presumably from a shareholder's meeting), details the incoming digital revolution - and gleefully declares a final tech industry profit base to be launched with heavy campaign in 1998.

The CD Burner....and CD-R

Incredibly, it details that the bloated music industry will yield HIGHER profit margins - once the industry is gutted of pesky industry traditions in the digital era. No more maintaining distribution routes and relationships, no more pressing plants for CDs, no more art booklet creation, no sending representatives to scout acts, no sending merch to TOWER, Sam Goody etc, no paying for premium placements in advertising in hard paper or storefront .....the digital age will allow a label like COLUMBIA to become an office of 30 - maybe less! The entire music division, in fact, could downsize - selling off its remaining studios and pressing plants - staffers, producers, ETC.

The digital age would come upon us - and companies like SONY MUSIC (and their lovely staff- whom I adore) would complain about piracy ....and truly .....it WAS ripping business down to nothing.....meanwhile....as they requested legal funds (and received very little comparatively).......Sony Corporation (and companies like Panasonic) were making RECORD profits from CD Burning Hardware, software, and CD-Rs.

This was no mistake. Executives were well aware no one would truly be using CDs by the time 2010 was out - and this last money grab was (according to my understanding) entirely a planned obsolescence on the part of the tech industries involved.

Consumers soon saw physical formats not just devalued literally- but mentally .....

"Why have a CD- I can make this at home....and for nothing..."

Which was .....a perfect time to institute phase 2 of a 3 phase plan......which was a tech device that simply cut out the middleman; the "mp3 player". Utilizing files that music fans had already learned to drag and drop into a CD burner - they could simply drag and drop them into a new MP3 player- by Apple, Sony- any number of companies were making absolute record profits on these hardware units.....much more so than some $12 profit off of an N'Sync CD.

Business- at least for the parent companies of these labels........was good!

By the mid-2000s - margins were WELL on their way to being healthier than at the recording industries' peak.....and further....tech industries prepared for phase three; streaming - as download profits tapered.

Now; we spoke earlier about the importance of these labels- the importance has nothing to do with the staff at any given time (although, again....some of these are absolutely great people- but are simply at the whim of the higher ups)....nor the name, nor the facilities they may control (very few major labels actually own studios these days). The tech industry purchased these companies because they determined that the golden period of music - 'the point of diminishing returns' of music quality - was reached at some point between 1940 and 2000. Meaning; Frank Sinatra, The Beatles, Bob Dylan, Led Zeppelin, Michael Jackson, Prince, The Rolling Stones - these groups and many more had music that stuck into the consciousness of a ripe music adoring world - and these recordings would be 'listenable' and use-able for reissues, commercials, television, and film - for GENERATIONS.......

 Thom Yorke

Thom Yorke

Thom Yorke was once asked "what killed the music industry" - and his reply was simply "back catalog". If this ever confused you - the above is absolutely true.

To these companies; there is no need to risk spending money on untested talent- and the music buying and listening world simply isn't receptive enough without generally inaccessible amounts of promotion for a new product.

Think of it this way; you are the President of Yum Yum Records - a Division Of ....GATEWAY computers..........the CEO of the company - your boss - gives your division $100,000 every quarter - with which it is your job to determine what will make you the most money in return - because the CEO requires that you make $100,000 + 10% before the next quarter..........

You head to your office staff....and they tell you "We can re-issue an album that is currently being played on every classic rock station across the US - for free...and already has a fan base of 5.5 million.......................OR we can spend that money on a new band - one that has no shot at radio play......because everyone is converting to classic rock- and classic rock formats (and all infrastructure for new music discovery is virtually gone).

Yup; i'd pick the re-issue too.

So now lets get to actually fixing this;

Not too long ago; circa 2013 -  I was sitting with a friend of mine from a company (a company that has been mentioned here several times)....and I said "What do you think of what is happening with vinyl? will it continue like this- or is this a hipster ...thing?"

To my shock he replied "we think its here to stay- and will grow"

Interesting!

SO; if you are confused as to why this is important....keep the following things in mind;

*Vinyl is very profitable; it made more money for musicians than all 3 major streaming services COMBINED in 2016....it has risen almost 700% across 7 years.

*The Vinyl revival is no mistake; now that the download is DEAD - officially.......and the CD is deceased - music lovers are now seeking a physical format.....one they can't make at home.....and one they don't download. They are making VINYL the bound BOOK .....of the music industry.

 The pressing of records at EMI, 1965

The pressing of records at EMI, 1965

*Why Vinyl? WELL.....this is a great question and the answer is many fold.

1. The vast majority of kids and young adults buying vinyl today - their parents never bought vinyl.......they have also been raised on classic rock, tribute shows, and a dying modern industry- as well as a booming DJ industry........vinyl is simply ....classic, traditional - and even better? its COOL. They are more technically advanced than the previous generation of kids - and so PHYSICAL sound on disc - is SORCERY ....and guess what ? it really IS. 

2. These kids have never listened to music on anything but a LAPTOP - or a Cellphone.......to them........vinyl sounds GREAT - even if its on a portable turntable......this format is a large improvement to them.

3. As the music industry tended towards BACK CATALOG - as we discussed earlier....the vast majority of classic albums in the *golden era* were originally issued on VINYL record - akin to wanting a copy of "Moby Dick" in hard book format- kids want the classics - as they were originally issued ....and further .....musicians want to create these items - as writers desire to create a bound book. Tradition is a giant part of this movement -

What is occurring is the tech industry inadvertently destroyed and then saved the music industry - without even trying to. Their reliance on back catalog has bred a generation of younger people that see back catalog as traditional, cool, and soon - default. - and thus the format on which it was originally issued as equally cool. Whilst the record industry allowed Sgt. Pepper to be born in 1967 - in 2017 Sgt. Pepper is pressing forward the vinyl agenda across the music industry...and agenda that seeks to create out of the music industry the same stability that major publishing companies have experienced in light of the digital era in books.

 Graham Alexander/Victor Talking Machine Co.

Graham Alexander/Victor Talking Machine Co.

The bound book - and vinyl disc are very similar- but follow alternate paths of corporate control; They are both *technically* obsolete, they both are susceptible to damage, destruction of a physical nature - but......they have the incredibly fortunate place in time of being innovations in their respective industries that changed how the industry functioned inherently - and thus generated classic works that we seek to walk alongside in tradition as we craft new works.

Want to save the music industry? SIMPLE; buy vinyl. buy phonographs. learn how to press records.......in turn, the investment will return to the music industry - consumers will buy (as they have been from locations like Barnes & Noble and Urban Outfitters) unique retail stores will emerge (like HMV UK, Third Man Records, and Victor are already in the process of) ......and music will form a stable core that won't be upset by tech industry meddling....after all.....where else can recorded music GO (in technical terms)......? It is streaming from here on out, folks.

Several models across the 'new music industry' are taking hold;

Jack White and Third Man Records are heavily vested in record pressing and sales as a means of producing new artists' music in conjunction with their record label -

Victor Talking Machine Co. (Victor Music Group) have followed the model of recombining the manufacturing of record players - whilst sinking profits from that division back into Victor artists in order to create not only new music - but music careers for artists. When one buys a Victor turntable - you are directly investing in Victor Records and artists .....Victor is concentrated on the creation of music as opposed to the development of a new app...or mp3 player.

Even phonograph manufacturer Crosley have recently purchased a record pressing plant. Make no mistake - these decisions will come back towards the musicians of the world in the next 20 years.

all of that said......

CONGRATS! "tech innovation" in recorded music is dead .....now we can get back to making an industry strong and healthy for artists everywhere.

 

Graham Alexander/Victor Talking Machine Co. (Victor Music Group)