A Brief History of the Pre Internet Music Business.pdf

A Brief History of the Pre-Internet Music Business

Picture and description is from Wisconsin Historical Society's Photostream on Flickr

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.

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