A Brief History of the Pre-Internet Music Business

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 Part One

The Business of the Music Industry

The history of the music business, or for that matter any other business,

cannot be usefully considered outside its environment. The environment in

which the music business came of age economically was in the industrialised

world of the C20th. Hence the music business is often referred to as ‘the

music industry’. This reveals much about the music-money nexus. Music is

produced and consumed in an industrial complex; the record company being

the factory where music becomes a product, manufactured to supply the

demands of their customers. Most music we hear today is filtered through

such a system, where the primary function of all the major firms is,

explicitly, to make the best return to their shareholders.

It is very important to keep such ideas in mind when exploring a history of

the music business. Doing so reminds us that industry proclamations are

influenced by the firm's 'reason d’être'. So, when the majors tell us that they

need to make huge margins on the sale of their products because they

invest so heavily in new talent, they’re putting effect before cause. They

make huge margins because the profit motive is inherent to their corporate

form (and they’re able to operate in a monopolistic environment), whereas

they invest in new talent because it’s the strategy they believe will make the

most money. These distinctions may seem subtle but they are important if

we’re to get to the truth. The music industry would like us to believe that the

interests of the music industry and the interests of music are one and the

same. This history shows they’re not. When only a few firms control a big

chunk of the market, and particularly when those firms feel under threat, the
music industry can work directly against the interests of music. This has

never been as true as it is today.

This history also touches on the question of what the value in music is, and

where it comes from. Value might be an easy thing to grasp intuitively, but

it’s a difficult concept to explain. Generally speaking people see value as

related to price. Something that they consider to have value irrespective of

price is often said to have sentimental value. Music can have great

sentimental value; certain songs really mean something to us. And it’s this

concept of meaning that is the most useful in understanding the core value

in music.

Fundamentally, music is the ‘communication of meaning’. Value exists for

the listener (and the artist) in the act of that communication of meaning.

Getting a handle on the value of music helps dispel a mythology that the

music industry has itself succumbed to on many occasions. The myth is that

it’s the media carrier – the sheet music, the radio, the vinyl record, the

cassette tape, the CD, the USB pen, the digital file – and the associated

technologies, which give music its value. Carrier technology focuses music’s

value at a price - a price which reflects the cost of the media carrier itself.

Music technology generally, can influence music’s development and expand

the musical soundscape. But music’s value has existed as long as music

itself – indeed without the central ‘communication of meaning’, the

surrounding technologies would be worthless. Music’s political, cultural and

social impact belies its economic impact; financially the music industry is a

weakling (annually, the total sales of recorded music for the whole world

added up to about one tenth of Walmart's turnover). The music business

worries - as all businesses do - that it hasn't got as much money out of

music as it should; the myth of media carrier value helps calm those fears.

Nevertheless, for music, the media carrier is a cost, not a value.

Given the centrality of the artist and the listener to music itself, it is

instructive that the following history refers to them only scantly. As with any

business history, institutions and corporations figure heavily. The systems of

control and methods of ownership that prevail are not unique to the music

industry – they seem inherent to most, if not all, corporate, industrial and

capitalist forms. However, unlike other industries, the music industry is not

exploiting a limited resource. Its trying to monetize the actions of the artist

and the listener. In its struggle to do this it has, during the course of the

C20th (and particularly in the 1960's, as I argue below), gradually begun to

recognise that its profits depend upon the artist’s creativity and the listener’s

ability to recognise meaning in the artist’s work.

What it has more trouble coming to terms with, is its own role in the music

ecosystem. It is in essence a service industry; the largest firms act as

recording agencies for their Principles – the Artists. However, in their bid to

thrive they assume the nature of manufacturers that control the production

process rather than agencies that facilitate it. They trade the passion for

music that attracts artists, for the security of income that attracts finance.

They consume competing firms until only the very largest survive. Until

eventually in the first years of a new millennium, they stand astride their

territories like dinosaurs with sensitive stomachs only able to consume the

blandest victuals, producing gas, defecating and staring fearfully at the

digital cloud that has suddenly darkened their horizons.

The graph below compares consolidation rates (i.e. the market share of the

majors) with musical creativity. The story that follows gives an explanation

of the events and circumstances represented by the ups and downs of the

line on the graph. There is no definitive mathematical proof that music

industry monopoly crushes musical creativity, just as there is no proof that it

nourishes talent. By its nature creativity cannot be directly measured and

the proxy used here – new music genres – is a subjective measure. Even so,

to put it plainly, to me it seems both intuitive and obvious that when four

large corporations control up to 90% of the industry, music is bound to

suffer. You, dear reader, are invited to draw your own conclusion.
 Part Two

The Music Industry doing Business

The market for music and music technology precedes the birth of the music

industry by several hundred years. Musical notation was born in the

medieval monasteries and it allowed monks to perform a specific musical

piece; prior to this music existed only in memory. The invention of the

piano, or rather its immediate predecessors, had an enormous impact on the

way music itself was to evolve as it gave a clear ‘scaling’ of notes to which

our ears soon became accustomed. Opera was a significant musical

adaptation which also had a social impact, pushing music squarely into the

political arena. The power of music to affect social change was recognised

early on by the state and monarchs who sought to ban those performances

they felt subversive.

A shift in the potential of music as both an art form and a commercially

saleable product came at the end of the 19th century with the development

of sound recording techniques. It was Thomas Edison who invented the

phonograph in 1877, but his primary purpose lay in the reproduction of

speech for dictation and education. Technological advances in the quality

and ease of recording followed, but it wasn’t until the Columbia

Phonographic Corporation noticed the interest its products attracted at fairs

and penny arcades that sound recording’s potential for entertainment was

really recognised.

In the early years of the 20th century there followed a battle of technologies

between the disc and the cylinder. The competitive advantage was with the
disc because 1000's of pre-recorded ebonite discs could be duplicated from a

single zinc plate master recording, whereas the cylinder could only be

produced in batches of 200. The standardisation of the carrier format was

complete by 1914 when the patent for the disc, held by the Victor Company,

expired facilitating an entry into the market by smaller entrepreneurial firms.

This stage in the development of the music industry can be characterised as

a shift to software. Previously pre-recorded music had been used as a way to

encourage the sale of gramophones, but now, in the first decades of the

C20th, the potential for the sale of recordings themselves was seen as the

business model of the future.

Traditionally, music had been commoditised and sold by publishing sheet

music so that songs could be performed by customers in their own homes.

When a song became a hit, this was a lucrative business. Publishers could

easily and cheaply obtain product as songwriters were often poor and would

sell their songs outright. The biggest difficulty and largest expense was the

promotion of the song. Prior to the invention of radio, promotion was done

by persuading the leading performers of the day to sing the publisher’s

songs, or getting them included in a successful stage production. The coming

of radio meant that it became the radio stations (and eventually their disc

jockeys) who needed persuading. Publishers would sell their sheet music

whether the radio station played live music or pre-recorded music; the

underlying dynamic - to achieve maximum exposure for a song - remained

the same.

In the first decades of the C20th publishers sought new revenue streams.

The relative decline in their income from sheet music sales made it look
likely they were set to become the poor cousins of the recording companies.

In the UK composers, publishers and performers were aided in securing their

property rights by the Copyright Act of 1911. By 1924, the various

companies that had been set up to collate and collect revenues from the

reproduction of music were amalgamated into the Mechanical Copyright

Protection Society Limited (MCPS), and collections for public performance

(live or pre-recorded) came eventually under the auspices of the Performing

Rights Society (PRS).

In the US the situation was slightly different. A similar copyright law had

been passed in 1909 to enforce the mechanical copyright of publishers; the

legislation backed a publisher's claim for compensation should anyone record

his song with the intention of profiting from it. However, unlike the British

Parliament, United States Congress thought that the copyright owner’s

consent to perform a work publicly for profit was already implied in the

publication and sale of printed copies of the work [sheet music]. The

difference may seem subtle but this provision of the copyright law of 1909

[the right to publicly perform works without extra payment being due] was

to completely alter the way business was done in the music industry. And, in

doing so, was to be the source of often bitter controversy for decades to

come. The problem was one of control. A publisher could not, once he had

sold sheet music prevent, or more to the point profit from, his song being

performed or played; there was no legal recourse. Publishers realised that

the developments in the film and radio industries would be difficult to tap as

potential revenue sources.

To remedy this situation the American Society of Composers, Authors and

Publishers (ASCAP) was formed for the purpose of issuing licences and

collecting royalties. Although formed in 1914, ASCAP did not begin issuing

royalty cheques to its members until 1921. American radio broadcasters

resisted pressure to make royalty payments for the records they played.

Radio it was claimed, had bought the records and so, according to American

law, had a legal right to play them. Besides which, playing records on the

radio was tantamount to free advertising.

A battle of monumental proportions followed. ASCAP was determined to

collect its royalties on radio play - which was fast becoming the major

distribution media for music since its coming of age as a major commercial

venture in 1921. And the broadcasters were equally determined not to pay.

The broadcasters claimed that ASCAP was acting as a monopoly (which it

was) and after having ASCAP outlawed in several states, eventually in 1939,

the broadcasters formed Broadcast Music Incorporated (BMI) as a rival to

ASCAP. Many of the musicians and composers who had been excluded from

ASCAP (Appalachian musicians, country fiddlers, blues singers, and New

Orleans jazz men) joined the BMI and began to get increasing exposure and

payments for the air-play of their recordings. However, further disruption

occurred in the US industry when the American Federation of Musicians

called a strike in 1942 that lasted over a year. To put these problems into

perspective, the US music market had the around same value in 1945 as it

had in 1920, despite the significant technological improvements.

Concurrent with the problems of profiting from the new media of radio, the

music industry also saw another key development in the 1930’s and 1940’s.

This was the development of the ‘Star System’. Jack Kapp and Ted Lewis
incorporated Decca Records in 1934. Instead of investing in machinery for

the manufacture of records, Kapp focused his attention on a limited roster of

heavily promoted ‘stars’. First among these were Bing Crosby and the

Dorsey Brothers. As well as organising promotion for these artists, Kapp also

concentrated on supplying the growing network of jukeboxes with Decca

records, and perhaps most importantly, halved the retail price of a record.

Jukeboxes had been popular in the South for a long time before they caught

on in the north. One of the reasons for this was that they acted as an outlet

for the music that didn’t get played on the radio (in particular black music).

Prior to World War Two the distribution network for music was reliant on the

sales of recordings through retailers, airplay on the radio (some of which

was paid for, some of which wasn’t), promotion through film, and jukeboxes.

All of these methods of distributing and profiting from the sale of music had

come about in the inter-war period, but had not translated themselves into

increased revenues. And whilst the technology had developed, the music

itself hadn’t changed much. But that change was just around the corner.

In the ten years from the end of WWII until 1955 the American music

market was highly consolidated. Technological development continued with

the introduction of the vinyl LP and vinyl single, which reduced production

costs and was less fragile to transport than the old shellac 78-rpm

recordings. The reduced costs of production did encourage independent

firms to enter the market place from the early 1950’s and they gradually

chipped away at the market share of the majors. By 1955 their share of the

market had dropped by around 20%, but was still standing at around 75%.
The failure of the major American record companies to develop new music

during the period 1948 to 1955 forms a key part of Peterson and Berger’s

(1975) study of cycles in production in the music industry. Peterson and

Berger were two American sociologists. They claimed that (i) the market

consolidation and homogeneity of product was part of a ‘concentration-

competition cycle’, and more controversially that (ii) changes in market

structure precede changes in music. To maintain their control in the period

to 1955, the majors adopted various tactics; these included seeking vertical

integration to help control the production process, developing links with

media companies to secure revenues from television and film networks,

payola (a bribe to a disc jockey), putting pressure on retailers not to stock

the records of other firms, churning out ‘cover’ versions of songs the instant

they became a hit, and reputedly using organised crime to control the

networks of jukeboxes. The nascent independent record companies were

involved in dubious practices too. Often independent record producers/

promoters (they were often one and the same person) would act as middle

men for the majors in assuring radio play through payola.

The payola scandals of the 1950’s have been extensively reviewed in print,

both in academic works such as that by Seagrave (Payola in the Music

Industry), and books for the general reader like the excellent Rockonomics

by Eliot. Suffice to say here, that payola is inevitable when the distribution

networks are limited and access to them is restricted. Maybe the radio

broadcasters weren’t too far wrong when they claimed that playing records

was tantamount to advertising; something for which people are used to

paying.
The years between 1955 and 1957 are a crucial period in the history of the

music industry and the events surrounding the birth of Rock n Roll are

important in understanding the relationship between consolidation of the

market and new music. Although the majors held sway in the years to 1955

(as discussed above) there had been some crucial changes in the structure

of the industry. These were to do, at least in part, with the advent of

television as a medium (by 1952 there were nearly 20 million TV sets in use

in the US). This of course represented an opportunity to gain exposure for

music, but the events surrounding the growth of television had more

complex effects.

Firstly, advertisers started to switch from radio to television - and of course

many, quite wrongly, predicted the death of radio. Although the number of

radio sets increased after 1955 (due to the introduction of the cheap

portable transistor radio), the profits of the network radio stations continued

to fall. Throughout the 1950’s radio stations tried to find show formats that

would help stem the decline in their revenues. Eventually, by 1960, the idea

of a single-format station had spread through the radio industry. Basically

this format targeted the entire output of one station to one group of listeners

(teenagers [as they were to become], housewives, or car drivers). This

format increased the diversity of music that was played over the airwaves

because stations would wish to play music suitable for their audience

throughout the day, rather than just have a ‘one-size-fits-all’ selection of

popular songs.

Secondly, a US supreme court ruling in 1948 had forced the movie

production companies to divest themselves of their theatre chains. This

ended their complete dominance of the distribution chain. Combined with

the perceived impact of television, the American Movie Industry was in

trauma. They curtailed the production of musicals which show-cased new

songs, and entered the music market themselves.

However, of the movie companies that entered, only MGM played a

significant role in the music market in the period 1956-9. The major impact

on the market was the growth of independents; the market share of the

major's had halved by 1957 (from 75% in 1955). Falling production costs,

and greater access to radio helped the independents. But the real difference

was in the music that they sold. Whilst the older record companies managed

to pick up Buddy Holly and Bill Haley, they missed out on Little Richard,

Chuck Berry, Jerry Lee Lewis, and most notably, Elvis with RCA Records

paying the independent Sun a release fee of $35 000, a huge sum for the

period. The furore that was created around the sexual connotations of Elvis’s

gyrating hips, served to publicise and mythologise the new phenomenon of

Rock and Roll.

The success of the independents in bringing to the public a new form of

music had a dramatic effect on consolidation levels in the US music industry.

By 1960 the four largest record companies took a market share of under

30%, and stayed there until 1964. The majors had regarded Rock and Roll

as a passing fad and hadn’t fought too hard to attract successful ‘rockers’ to

their labels. They reacted by price cutting and pushing the more lucrative

LP’s over singles. This was short-sighted as new artists achieve public

awareness through the single. They also tried to learn from the success of

the independents by encouraging a new entrepreneurial section of the record

company called A&R (artist and repertoire). This was a shift of emphasis

from the ‘star’ system, where a known artist or performer would be ‘turned’

into a star by heavy promotion, to A&R structures, where creative talent is

sought out and then placed in a more product congested market. This tacitly

recognised that the real added-value for the record company was not in its

ability to promote and distribute more effectively than its competition, but in

the creative ability of its artists. Put simply record companies began to

realise that they were recording agencies rather than record manufacturers.

Hence they should direct their energies to finding the most gifted and

creative artists.

However, finding nebulous talent is very difficult (if not impossible), and

stories of the blunders of A&R men are well known. The most spectacular of

these blunders is surely the decision by the A&R executive at Decca (in

Britain) Dick Rowe, to turn down the Beatles in favour of Brian Poole and the

Tremeloes. Whilst the UK and European majors had not suffered from the

same distrust of monopoly as had the industry in the US, recovery from the

second world war had made progress for the music industry hard.

Nevertheless two European firms did make strong progress, not least in

America; EMI acquired Capitol (one of the four American majors) in 1955,

and Phillips (a Dutch firm) acquired Mercury (a successful American

independent) in 1961, just a couple of months after terminating a ten year

old distribution agreement with American major, Columbia.

The Beatles had come out of the ‘beat’ scene - a British ‘pop’ variant on Rock

and Roll. After eventually signing to EMI, the Beatles began their rapid

ascent to super-stardom at the end of 1962. British record companies had

been keen on local artist development, and the phenomenal success of the

Beatles encouraged this trend. The success also altered the balance of power

between the British and American firms. Prior to 1960 American record

companies had been selling large amounts of American music in Europe. The

licensing of the Beatles to EMI’s American subsidiary, Capitol, was the start

of a British assault on the American market. The Rolling Stones soon

followed, and American companies quickly opened offices in London to tap

the source of hither to undiscovered talent.

The period of the mid to late 1960’s ushered in high growth rates for the

music industry both in the UK and the US. Musical innovation was at a peak,

and record company executives became increasingly aware of the value of

the latest sound - the days of regarding a form of new music as a ‘fad’ were

gone, new music now represented new opportunities for profit. The LSD-

inspired Psychedelic sounds of 1967 spread around the world very quickly.

Although, born on the American west coast, British artists were very quick to

experiment with these new sounds, which combined with the technological

developments in the amplification of musical instruments, played a crucial

roll in the success of the British acts that were coming to prominence. The

years 1967 to 1970 were formative times for what were to become some of

the biggest artists, and some of most popular music genres, of all time -

rock music was coming of age. America’s cultural dominance of the recorded

music industry was once more under assault from the British.

Back in the US, Rock and Roll had increasingly divested itself of the black

roots of its music, and turned itself into a mainstream medium supported by

a mostly white audience. But the black music roots of Rock and Roll soon
flourished elsewhere in the form of Soul music. Soul blended itself with pop

sensibilities in the form of Motown; an independent record company so

successful that it actually created and sustained an eponymous genre. This

success was based on finding and developing local (black) artistic talent.

Amplification was also adopted by the two new black music genres to form a

new genre called Funk. This style relied on the ability to produce a strong

amplified bass that could cut through a band’s sound to change the rhythmic

content of the music opening up a world of possibilities for old and new

artists alike - foremost among the older artists was of course James Brown.

Although now steadily increasing, consolidation levels in the US market had

remained very low from the watershed of 1955 right through to 1972, where

less than 50% of the market was controlled by the four largest firms. There

is a popular view which sees the period from the mid sixties to the early/mid

70's as modern music's golden age. Whilst one can quantify sales figures

and market shares to show a picture of strong growth in this period, the

value of the music produced in terms of its musical potential and its

influence on subsequent generations of artists cannot be overstated.

Increased competition meant that firms could not shy away from difficult

and challenging artists. As Peterson and Berger (1975) say, ‘it was not until

the mid-1960’s that the search for new talent became so intense that

performers could demand unprecedented artistic freedom’. Record

companies were also forced by the market to take risks in promoting artists

who had a political agenda. Music became linked not just to rebels without a

cause (as it had in the Rock and Roll years) but also rebels with a cause. Bob

Dylan was pre-eminent among these politically motivated musicians, and

was, according to his fans, responsible for the birth of the Folk Rock genre
when he picked up his electric guitar at the Newport Folk festival.

But in the midst of this huge outburst of new music and hence new found

added-value there was a steady rise in market consolidation through the late

1960’s until around 1975 (with the exception being the dip in levels of

consolidation in 1969 - the year of the Woodstock festival). The increasing

strength of the majors is seen as resultant from the adoption of the ‘federal

system’. Essentially, this was the multi-divisional corporate form coming to

the music industry. Flushed with what the firms perceived as the success of

their new A&R departments in identifying new music, vertical integration

became the old way to do business. Foremost among these new corporate

forms were Warner Brothers. Between 1967 and 1973, Warners acquired the

Atlantic, Elektra and Asylum record labels. Instead of integrating these new

firms into the Warner Music company in order to reduce costs, the firms

were allowed to operate as separate profit centres, developing their own

artist rosters and operating in a relatively autonomous manner. However, in

terms of finance, manufacturing and distribution, control remained

centralised. In this way the highest area of risk was hived off to subsidiary

companies, whilst the major firm at the centre attempted to minimise the

risk to its revenue streams. Until the oil crises of 1973, subsidiary firms from

within the same group were allowed to compete against one another, and

this claim Peterson and Berger (1975) ensured that diversity was maintained

despite increasing consolidation.

In the UK too, the majors seemed to be slowly tightening their grip on the

market place. In 1973 the UK industry formed a trade body, the British

Phonographic Institute (B.P.I.), to represent its collective interests. As such,

it was some way behind the US whose Recording Industry Association of

America (R.I.A.A.) was formed in 1952 for the purpose of fostering a

business and legal climate that supports and promotes their members' (the

record companies) creative and financial vitality. Both bodies keep a tally of

unit sales and hand out gold or platinum awards commensurate with an

artist's success in selling records.

So, the music industry seemed to be developing nicely, at least as far as its

masters the major record companies were concerned, until 1975, when

another (and some claim the last) seismic shift occurred in the music

industry. The epicentre for the events of 1975 and 1976, was a small shop

called SEX on the King’s Road in London. It was here that the Sex Pistols

first met, and soon afterwards were launched on an unsuspecting public by

the bohemian entrepreneur Malcolm McLaren. The uproar that greeted their

raw, raucous music, and radical politics (or at least the radical politics that

McLaren encouraged them to adopt) reached levels of hysteria and provoked

establishment disapproval to rival that of the early years of Rock n Roll. By

courting controversy and exposure, and getting it, the Sex Pistols became

hot property for the music industry.

In fact, the Sex Pistols were too hot for many companies to handle. McLaren

managed to exploit the new form and strategies that the major record

companies had adopted. Constantly on the lookout for the next big thing,

the record companies now noticed a steadying of the huge growth the music

industry had experienced from 1965 to 1972. This wasn’t so bad for the

majors because they had been increasing their share of the market. McLaren

exploited the majors eagerness to find the new musical form. He first sold
the recording rights to EMI, who very quickly (thanks in no small part to Cliff

Richard, and public and shareholder pressure) decided against releasing a

record of the Sex Pistols. EMI paid McLaren substantial damages and

released the Sex Pistols from their contract - glad to be rid of them. McLaren

then managed a repeat of this lucrative way of doing business with A&M

records, until eventually signing to the then independent label Virgin.

McLaren had exploited the major record company’s hunger for the latest

thing, and profited from their fear of controversy.

Punk did have a strong musical effect in the US making heroes of their own

‘punk’ acts such as the New York Dolls, who had actually preceded the Sex

Pistols. However, commercially in the US punk (at least in its rawest form)

was not hugely significant. And whilst in the UK the effect of punk, and the

rise of independent punk record labels are reflected in a decline in levels of

consolidation, in the US disco was the new thing. Disco music, which grew

out of the gay night clubs of New York, was correctly perceived as a safe bet

for America’s music corporations. The songs were by and large apolitical,

and the musical sound was inoffensive and certainly easier on the ears than

punk. There had been some success in promoting songs through films since

the demise of the Hollywood musical, but none matched the world wide film

and music success of Saturday Night Fever. The industry was reminded of its

past successes of using film as a method of promoting both artists and

musical content. The relationship between the entertainment and media

companies was set to get closer.

Disco, both in the UK and the US, helped the majors regain market share

because disco had much higher production values than punk, and hence
could not be effectively performed by those with limited technical skills. It

also required sophisticated studio recording techniques. A similar problem

had existed for the less musically skilled (although not necessarily less

creative) artists in the period of concentration to 1973, where the complexity

of rock music had demanded high musical virtuosity and expensive studio

time.

Nevertheless, music refused to stand still. New music was created in the late

1970’s and early 1980’s whilst the major firms were suffering a diminishing

share of the market. Record companies were worried about the introduction

of the cassette tape, fearing that they would lose money from home taping

and piracy. Although in the end vinyl sales were overcome by tape sales, the

major record companies' fear of a re-recordable format was misplaced. Less

paralysed by fear and more open to the possibilities for music rather than

format, new independent record companies formed around new genres like

New Romantic, Hip Hop, and Electro. Whilst these factors contributed to

consolidation rates dropping below 50% in the UK market in 1982-3, the

majors quickly recovered their position. Since then consolidation rates have

remained high in both the US and the UK.

In the UK the majors increased their market share from around 55% in 1985

to around 65% in 1995. They also increased their distribution operations by

acquiring or licensing more product from independent labels. This trend was

accompanied by a general increase in the value of the world wide music

market, leading to claims that the synergistic structure of the industry

(where majors feed off independents, and independents off majors)

represents a new paradigm. This paradigm is characterised, claim its

adherents, by co-operation rather than competition. It’s more efficient

because decreased costs make all the record companies leaner and more

efficient than before.

Although the mythology of it probably tallies with the major's public relations

strategy, the history of the economics of music industry shows the evidence

for the co-operation paradigm to be unconvincing. The dynamic for majors

to form links with independent third parties has been a constant, whether

that be for snatching up new artists who achieve success with limited

exposure (as with RCA’s payment to the new phenomenon of Elvis back in

1956), or for the promotion of records on radio. Back in the 1950’s it was a

need to protect themselves from the payola that was rife in American radio

which increased record companies need to use independents.

It is much more likely that growth in the size of the music industry in the

80's and 90's was due to the introduction of the Compact Disc (CD). The

history of the music industry shows that the money-value of the market

increases with the launch of popular new music carrier formats. The CD was

launched at the beginning of the latest period of consolidation in the early to

mid 1980’s. The invention and diffusion of the CD meant that the back

catalogues of the major firms became increasingly viewed as a substantial

source of revenue. As music consumers gradually replaced their vinyl LP

collections with CD’s, the music industry boomed until the recession of the

early 1990’s.

After a steadying out of growth, the music industry resumed its upward path

as new media opportunities presented themselves. The development of

music television and music video tightened the already close links between

the media companies and the music industry. In the late 1990's buy-outs,

mergers and take-overs have seen the music industry increasingly absorbed

into the multi-national corporate world of media conglomerates, able to

access and control many channels of distribution such as television and film.

In the UK the music industry seemed to be reaching the pinnacle of its

acceptance into the power elites. The British Prime Minister invited the music

industry - including some of its biggest stars - to a reception in Downing

Street shortly after coming to power in 1997. With (adopted Brits) Sir Bob

Geldof and Bono acting as spokesmen for the poor on a world stage, music's

political power seemed to be reaching a new peak at the end of a very

successful century. This was a welcome distraction from the stagnation, then

decline, in the value of recorded music sales that was arriving with the new

millennium.

The recorded music industry was the most dominant and prosperous sector

of the music business during the 20th century. It helped music affirm its

position as an art form both with mass appeal, and political resonance. But

the industrial mindset is not sufficient to meet the challenges of the new

age. The darkening digital cloud of the Internet may indeed kill the music

industry. But maybe that's what music needs; for its art and for its business.

This work by Jonathan Harris is licensed under a Creative Commons Attribution-Non-Commercial-No Derivative

Works 2.0 UK: England & Wales License.