Previous Music Industry Business

The major record labels had control of what was getting out into the mainstream for a long time. They had the capital and the technology to make artists succeed. From the 1960's to 1999, the major labels had control of the industry.

The record label pays all of the initial costs:

• Creation of the music
• Distributing the music
• Promoting the music

These costs, however, are considered advances against the income due to the recording artists, known as a royalty. Any other costs paid out by the record company needs to be recouped before the artist makes any money off sales of the album.

In the past decade, the established music industry has lost their control on their intellectual property due to the MP3's non-physical form.  The unchecked distribution through file sharing on the internet (Peer-to-PeerTorrent) has threatened the traditional music industry's revenue. 

The music industry is down 45% from where it was in 1973.

The CD peak was only 13% better than the vinyl peak

 

Left shows the inflation adjusted (but not population adjusted) version of the revenue chart

Informational slide that tells about the structure of the outdated recording industry business model.

• Distribution: TV, Radio, Retailers
• Costs: Royalties, Marketing & Promotion, Distribution
• Revenue Streams: Merchandise, Live Performances, and Large Sales from Pop Artists

"There's a lot of fear because the old models aren't working the way they did before and the big businesses were based on those models, [which] were based on control, and control was based on limiting supply. You can't limit supply in the digital world — it's an unlimited thing."

-----Tom Silverman, Founder of Tommy Boy Records

Technology in the Music Industry 

1440: Printing Press

Society Before:

Prior to the invention of the printing press, the only way someone could listen to music would be from live performances. These concerts would be preformed by a small class of professional musicians. The amount of musicians that existed was a very small portion of the population due to the lack of a communication medium for their music and the expense of the instruments. There was no efficient way of spreading songs, or how to learn to play an instrument to the masses. The only way that a person would be able to listen to their classical artist would be to actually be there when they preform. This made the musician class's well-being heavily reliant of the noble class and religious institutions of the time. Listening to music at this time was a very social occasion. In order to be able to listen to musicians, a listener would have to go to a hosted event that has live music being played. Due to the lack of available technology, being able to have music that was available to everyone was not possible.

Inventor: Johannes Gensfleish zur Laden Zum Gutenberg

Gutenburg was a German inventor, blacksmith, printer, and publisher born on 1398 and in the Holy Roman Empire. His invention of the movable type spurred the Printing Revolution, which led to the modern period. His invention enabled knowledge written in books to be spread very cheaply to the masses. The printing press has played a key role in intellectual growth for the last five-hundred years, it was an integral part in the Renaissance, Protestant Reformation, Age of Enlightenment, and the Scientific Revolution.

Function: 

The function of the printing press is to evenly distribute ink onto a print medium such as paper or cloth. These inks are applied to a movable type system to transfer onto the parchment surface. This creates a more efficient and economicly viable way to produce text to communicate information to a wide range of people. The literacy rate of the lower class starts to increase, which started to create a midd-class in society. The printing press brought forth a new age off Modernism. The printing press replaced all other forms of industrial text production. It permitted a single original version to produce roughly 3,600 pages of text per work day. Assuming the work day was 15 hours long.

Society After:

Commercially viable printed sheet music became available to the lower classes due to the invention of the printing press by Johannes Gutenburg around 1440. This invention enabled amateur musicians to join the previously elite society of musicians. Because of the significant increase in the number of musicians that were able to afford sheet music, music became available to more people than ever before.

1877: Phonograph

Society Before:

Prior to the invention of the phonograph, a patron of music would be forced to go and see their favorite artists play, or cover that artists music themselves. It permitted listening to music to be a social gathering, as it would require a group of people to form a band and preform music. 

Inventor: Thomas Edison

Thomas Edison was an inventor and businessman born in 1847. He invented the phonograph, the motion picture camera, electric car battery, the stock ticker and a long-lasting light bulb. By his death he had created 1,093 different patents at the US patent office. He was one of the first people to use teamwork method in the process of invention.

Function:

The phonograph is a machine designed to reproduce sound recordings. The recordings that are played are usually in the format of wavy lines that are either scratched, engraved, or grooved onto a disc, or rotating cylinder. As the recording device spins, the needle of the phonograph vibrates to produce the recorded sounds. 

Effects on Society 

Music was now an on-demand commodity. People were able to play music by themselves and at any point in time. The concept of a music box originally had an anxiety producing effect on listeners due to their lack of experience with recorded devices, some viewed it as a disembodied voice coming from a spinning disc on a box.

1920: Commercial Radio

Society Before:

Before the creation of the radio all forms of music were able to be controlled by record labels. When someone wanted to listen to an artist, they would have to either go to a concert or purchase a vinyl for their phonograph. Since all of the available means to be able to listen to music were controlled by the record labels, there was created a pseudo-monopoly.

Inventor: Heinrich Hertz

Several inventors actually created the technology for the radio to be capable of wireless transition. Heinrich Hertz created a device that allowed for electric currents to leap across distances between two charged orbs. Guglielmo Marconi then created a wireless telegraph by combining the works of Hertz and Morse. Lee De Forest invented the Audion, which is a vacuum tube that detects and amplifies radio signals that was later combined with the previous radio design.

Function:

By modulating the properties (Amplitude, frequency, phase and pulse width) of a radiated waves, it would be possible to carry information wirelessly. This is the the idea behind the radio. 

Effects on Society:

By allowing allow consumers access to free music, the record industry's revenue became diminished. This created a series of court cases on behalf of the record labels that forced the radio stations to cease playing the music they owned. By doing this the radio stations were forced to only play original content which they had to create themselves, this drove many smaller radio stations out of business.

See Also: Radio Industry

1964: Cassettes

Society Before: 

 People had the choice of tuning into their portable radio or sit around a large phonograph in their home. There was many problems with the vinyl records. They took a long time producing and high cost manufacturing. The final product was very fragile, prone to scratches, obtrusive, and could only hold up to thirty minutes of music.

Inventor: Phillips Company

 The Phillips Company invented and reales the compact cassette in 1962. This commercial application of technology was made possible by the German inventor Sejoseph Begun, a pioneer in the field of magnetic recording.

Function:  

 The cassette solved all the problems the vinyl records could not do.  It introduced portability to the recording industry. It was a mere 4 by 3 inches with a 3/8 inch thickness. It could hold 45 minutes of music on each side of the cassette tape due to the magnetic strip technology.  The cassette tape was able to be mass produced in a short amount of time at a low cost because the container of the magnetic roll was hard plastic. The new protective container was much more durable and people could listen to their music while mobile.

Effects on Society: 

 The cassette tape gave people way more  accessibility to when and where they want to listen to music. They did not have to worry about damaging their music library. It was then that the apparent trend of isolationism in music listening became apparent.

1982: CD Disk

Society Before:

While the invention of the Compact disk changed the way data was held dramatically, it did not change how music was listened to that much. It was a more efficient and effective form of the cassette tape. 

Inventor: Philips Industries

On May 17th, 1982, a Dutch-based electronics company, Philips Industries, and the Sony Corporation out of Japan, began marketing the compact disc and the new hardware systems to play them. In 1982 these technologies were released for mass consumption. Initially these players ranged from seven hundred dollars to one thousand dollars. Over 6,000 models of Sony's CD players were sold per month of that year. 

Function:

The compact disk encodes data onto 100 nanometer bumps on the polycarbonate disc layer. In order for the encoded data to be analyzed, above the polycarbonate layer there is a layer designed to reflect the laser back to the sensor hardware for the data to be converted into electronic data and analyzed. This shiny layer is covered in a layer of lacquer that protects it from scratching, which would cause a decrease in the lifespan of the CD.  

Effects on Society: 

The rise of the CD showed the ambition to adapt for the many tech fields of that time. With the creation of the CD humanity has set a data storage paradigm that is still apparent today in DVDs, and Blue-ray.

How a CD is made.

1995: MP3 Format

Society Before:

Before the invention of the MP3, music was sold in physical forms. By selling physical copies of the music, record labels were able to get a constant stream revenue. The production and distribution requirement for physical sales made it quite difficult for an independent artist to make a name for themselves, as it would require them to pay for recordings to be produced and shipped. This allowed the music industry a monopoly on what people listened to, and made record labels the only source of popular musicians.  

Inventor:  Karlheinz Bradenburg

 A German electrical engineer, Karlheinz Brandenburg created the compressed audio file in 1992. His first intentions were to send the audio files or music through a standard telephone line without any lost of sound quality.

The MP3 was created by the Moving Picture Experts Group (MPEG). MPEG is a group that was created by the International Organization Standardization, with the purpose of setting the standards for audio and video compression and transmitting.  

Function:

MP3 uses a digital compression technique named "perceptual coding". This means that the recorded noise has the frequencies that the human ear cannot hear are clipped and then the rest is compressed. This makes a very small data bundle that has the same audio quality as the original, but just very smaller. The higher the quality of song, means the less the music file has been compressed.

Effects on Society 

With the creation of the MP3, the music industry has lost its total control over the market of music, because now it is able to be obtained for free. Digital copies can be created without any cost and at any time, making MP3s impossible to provide any protecting from copyright laws. The MP3 also allows a cheap way to produce music, this permits unsigned artists the ability to try to attain independent stardom. 

Example of Modern Music Distribution: iTunes

Steve Jobs introduced iTunes in 2001. iTunes is software by apple that organizes and sells Mp3 music files. It was revolutionary not because it was a new way to listen and buy music, but it iTunes killed the album. In 2003, iTunes started to sell single songs. This changed music forever. Instead of buying a whole album as one, many consumers just bought a couple from each artist. Some artists told iTunes they did not want to be apart of them for this reason. Such as Tool or AC/DC. 

“We believe the songs on any of our albums belong together. If we were on iTunes, we know a certain percentage of people would only download two or three songs from the album,” lead guitarist Angus Young said in an interview.

Music Industry Politics

Radio and Record Label Disputes:

In 1924 record sales dropped to half of the previous years sales. This decline in record sales was due to the free entertainment being provided over radio airwaves. Due to radio stations not compensating the music industry for playing copyrighted music, the American Society of Composers, Authors, and Publishers (ASCAP) blamed and sued the radio industry for the damages to the record label's profits. By 1925 ASCAP established music rights fees for radio, charging stations between $250-$2,500 a week to play recorded music. These fees caused many smaller radio stations to shut down. In response to this, many radio stations started playing live music in order to avoid needing to pay for copyrighted music. 

Pirates Bay Trials:

Pirate  bay is a Swedish non-profit website that permits users to download television, music, and movies for free. The website is one the leading bit-torrent down-loaders. It is the most Resilient websites that is battling the copyright battle with the  industries in trial. The trial has been through numerous appeals in six years. In April of 2009, it was brought to the Swedish courts to verify the criminal charges to Peter Sunde, Fredrik Neij, Gottfrid Svartholm and Carl Lundström. The contributors were charged up to $3.4 million in fines and a year in prison. The site is still up today with boundaries to copyright.

The battle of free downloading websites is still around today. Today, service providers use IP blocks to certain websites.

Music's Reflection on Society

The Rise of Pop Music

In the first decade of the twentieth century, there was a large demand for group musical activity. Therefore as cheaper ways to distribute music information were invented, these inventions stood to make considerable amounts of money. Initially the music industries wanted to produce content that would be able to be enjoyed by everyone in order to have a wider consumer group. This generally appealing content is referred to as Pop music.

The inherent nature of music, is that it reflects the society that it was created by.  

• Songs like In My Merry Oldsmobile,Come Josephine in My Flying Machine, and Meet Me in St. Louis, reflect the invention of automobiles and airplanes
• Songs like Bill Bailey Won't You Please Come Home and The Darktown were social dance songs that focused on certain sub groups of American society.

• Ballroom music was culturally prominent due to the elite's interest into it, and high class clubs and restaurants were usually equipped with dance floors
• Black Americans continued to write and perform ragtime, blues and jazz in order to independently produce music for the black culture that was being neglected by the predominantly white music industry. The Blues became not only an American classic, but one favored overseas due to its liveliness. 

The Pop music developed prior to the phonograph and radio.  In the late 19^th century, the sale of sheet music sprang from a section of Broadway in Manhattan known as Tin Pan Alley.  Then, as new way been found to produce sheet music in the 20^th century, popular songs moved from being a novelty to being a major business enterprise.  As sheet Music grew popular, Jazz developed in New Orleans.  It combines the elements of African rhythms, blues, and gospel and was widespread throughout 1930s and 1940s.   

Woody Guthrie

During his career he gained the nickname "Dust Bowl Troubadour". The reason being, that he lost his job and was sent into poverty much like many Americans in the dust bowl of the 1930's. It was hard for him to support his family, so Guthrie traveled the nation as a painter and guitarist. He was one of the many individuals that traveled west on route 66 to California to find work. What he ended up finding was discriminated migrants in Hoovervilles. While living at these third-world settlements inside US soil, he started to write music. This was done not to make money or to entertain, but to make a social commentary. He saw many labor movement leaders get their heads bashed in, but it did not stop him from performing in front of many. Giving hope to his fellow "Okies". Rallying migrate workers. After gaining a lot of popularity roaming around the western states. He was put on the KFVD radio station, which was owned by the democratic Frank Burke. His protest songs became even wide spread and eventually ended up on a 78 rpm victor record. "Woody proved himself a hard-hitting advocate for truth, fairness, and justice"(WoodyGuthrie.org). He did this by targeting corrupt politicians, spreading his hate for fascism and backing up the oppressed working class.

Impact of the Industry: He made an impact on music because he did not only use his guitar, harmonica and songwriting for entertainment or profit. He used the medium to influence others politically and socially. He was one of the fathers of protest folk music. He inspired many artists and songwriters. Throughout time there has been a relevance between Woody Guthrie's songs and today's struggles.

Bob Dylan was a respectable heir to Woody and wrote "Song to Woody" in his respects of what Woody has done to the foundations of Social protest songwriting. Today, Woody Guthrie's songs are covered by many artists. Including the lead protest musician today, Tom Morello of Rage Against the Machine. He recently sang "This Land is Your Land" on the occupy wall street and Los Angeles protest, to oppose corrupted corporations. He also sang the iconic song in Wisconsin to rally the workers rights to collective bargain. Guthrie was not afraid to put humanity into music and many followed no matter what kind of genre.

Rock and Roll Is Here to Stay

Rock and roll really hit United State in the mid-1950s.  It was considered the first "integrations music," which combine both black and white music style.  Rock and roll had widespread impact on many different cultures, and more importantly, simultaneously transformed the structure of both sound recording and radio industries.  The growth of rock and roll was cause by many social, cultural, economic and political factors, these contains black migration to northern cities, the growth culture and the integration between white and black community.

Rock Muddies the Water

In the 1950s, due to the culture shift of American culture, white performer start playing R&B music and black artists were performing country songs.  Although Rock and roll break down the wall of racial in America, it also being the old distinctions between high and low culture, masculinity and femininity, the country and the city, and North and the South, and the Sacred and the secular together

Battles in Rock and Roll

 By the Mid 1950s, rock and roll gain its position in the majority of the country, but artists and promoters were still facing obstacles such as black artist found undermined by white cover music,  the payola scandals portrayed rock and roll as a corrupt industry, and fear of rock and roll will lead to censorship

Reformation in Popular Music

The British Are Coming

The British invasion, “rock and roll” unofficially became “rock’ sending popular music and the industry in two directions. On one hand, influence generations of musicians emphasizing gritty, chord-driven, high volume rock, including bands in the glam rock, hard rock, and punk, heavy metal, and grunge genres. On the other hand, others influence countless artists interested in a more accessible, melodic, and softer sound, in genres such as pop-rock, power-pop, new wave, alternative rock. The British invasion showed the recording industry how older American musical forms, especially blues and R&B, could be repackaged as rock and exported around the world. 

Motor City Music: Detroit Gives America Soul

As the 1960s began, rock and roll was tamer and “safer,” as reflected in the surf and road music of the Beach Boys and Jan & Dean, but it was also beginning to branch out. For instance, the success of producer Phil Spector’s “girl groups,” such as the Crystals (“He’s a Rebel”) and the Ronettes (“Be My Baby”), and other all-female groups, such as the Shangri-Las (“Leader of the Pack”) and the Angels (“My Boyfriend’s Back”), challenged the male-dominated world of early rock and roll. In addition, rock and roll music and other popular styles went through cultural reformations that significantly changed the industry, including the international appeal of the “British invasion”; the development of soul and Motown; the political impact of folk-rock; the experimentalism of psychedelic music; the rejection of music’s mainstream by punk, grunge, and alternative rock movements; and the reassertion of black urban style in hip-hop.

Folk and Psychedelic Music Reflect the Times

Popular music has always been a product of its time, so the social upheavals of the Civil Rights movement, the women’s movement, the environmental movement, and the Vietnam War naturally brought social concerns into the music of the 1960s and early 1970s

1960  Folk music

• this is a genre that most clearly responded to the political happenings of the time, and also long been the sound of social activism. Folk music refers to songs performed by untrained musicians and passed down through oral traditions.
• the most influential musician of Folk music is Bob Dylan. Dylan identified fold as "finger pointin" music that addressed current social circumstance.

Puck and hip hop Respond to Mainstream Rock

punk rock and hip hop are both styles that are all their own. They want to be different than the mainstream (even though hip hop is the mainstream). A lot of different feelings are put into both of these genres. [For example, there's a song by Bad Religion (punk rock) about pulling us out of Iraq. There's a song by The Clash about suburbia, describing middle class America perfectly. It can get awful political. On that same note, Eminem has his songs; Mosh and Square Dance that are political. He also has his song Just Lose it expressing his feelings towards Michael Jackson. But they are both very different types of music at the same time.

The Reemergence of Pop

Pop music has become a big genre in today's society, and it is often popularly listened most by teens and other young groups. In fact, pop music earned its name from "popular music," and its fast and catchy beat, rhythm, and music style is enjoyed by many.  The largest source for pop music to regain its spot is iTunes, which is the biggest seller of music with all top songs lead by pop artists. 

"A culture’s favored song style reflects and reinforces the kind of behavior essential to its main subsistence efforts and to its central and controlling social institutions"

-Alan Lomax (January 15, 1915 – July 19, 2002)

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