Chapter%208 - CHAPTER EIGHT Sound Recording Snapshot of the...

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Unformatted text preview: CHAPTER EIGHT Sound Recording Snapshot of the soundrecording industry in 2010 Recording is the smallest media industry in terms of the size of its work force. Although the content of recordings serve mostly an entertainment function, the recording industry itself is comprised of businesses that seek profit. Managers of those businesses understand that today's consumer is aligned with digital culture. Of all media industries we will study this semester, recording has been the most affected by the digital revolution. After 100 years of selling copies of recordings in fixed media, the recording industry has embraced a new business model brought about by digital technology and disintermediation within the distribution chain. During the first decade of the 21st century, the recording industry tried to block consumers from accessing music online. That tactic resulted in consumer resentment, and intensified piracy via illegal peertopeer file swapping. Today the recording industry is trying to make it easier for consumers to buy individual songs online than to pirate music via file swapping. The recording industry lacks product continuity, an attribute shared with the book publishing and motion picture industries. Review: Industries that lack product continuity rely on marketing and promotional efforts to produce hits (e.g., hit recordings, bestseller books, blockbuster movies). Important differences among media industries that lack product continuity: Consumers want to own copies of their music. They nevertheless continue to want the option of borrowing a book from the library, or renting a movie that they might watch only once. A brief history of sound recording The earliest experimental devices originated in the U.S. and France. The first recordings were acoustical, and required no electricity. Vibrations made by speech and music were captured in a horn and etched on a soft medium. The process was reversed for playback. Acoustical recordings were made between 1857 and 1923. Two early U.S. acoustical recording devices: Phonograph (Thomas Edison, foil cylinder later replaced with wax) Graphophone (Bell labs, wax cylinder) wax cylinder Edison's Standard Phonograph Each recording was an original; the cylinders could not be duplicated. Emile Berliner developed the first acoustical device for duplicable recordings in 1887. To record, he developed the Gramophone, which etched groves in spinning zinc disks that later could be pressed on a soft medium (like making a waffle). For playback, he developed the Victrola, a windup record player. Impact of the Gramophone and Victrola By 1912 the cylinder was obsolete. A dancemusic craze around the time of World War I helped record sales soar. 1914: $ 27M 1919: $107M 19241929 By 1924, displacement by radio cut in half the sale of both records and record playing hardware. Consumers preferred live music on radio to "canned" music on record. Displacement by radio continued after 1925, the year bettersounding electrical analogue recordings (using microphones rather than horns) began to replace acoustical recordings. The 1930s During the Great Depression, record sales dropped. 1930: $46M 1933: $6M Around the time prohibition was repealed in 1933, large numbers of coinoperated jukeboxes began to appear in bars, cocktail lounges, restaurants, etc. The jukebox craze helped record sales increase to about $28M by 1939. The 1940s The head of the American Federation of Musicians feared that recordings would limit employment opportunities for musicians. Union musicians refused to make recordings for about two years. Radio stations began to emphasize local disc jockeyandrecord programming after World War II. The recording industry developed a symbiotic relationship with radio broadcasters by sending copies of records to radio stations free of charge. The fabulous `50s (a terrific decade for the recording industry) Important social trends: high birth rate (19461964) decreasing median age post WWII economic boom (19461973) Improvements in recording technology: audio tape after WWII hifidelity recordings in `54 stereo recordings in `58 Ramifications for the recording industry: Between 1945 and 1959, the number of record companies increased from 6 to almost 2,000. More on payola . . . . . .an old term derived from the words "pay" and "Victrola" (Berliner's record player). Prior to 1960, financial incentives to disc jockeys in return for airplay were largely undisclosed. A federal probe in late 1959 resulted in legislation proscribing payola. The 1960s Early '60s: The recording industry focused on cleaning up the image of rock `n' roll after the payola investigation and certain artist scandals. Middle '60s: British invasion cassette tape format Late '60s: The industry embraced the counterculture, while making money via the status quo. The 1970s The post WWII economic boom ended with an oil embargo (records were pressed on vinyl plastic, a petroleum product) followed by a period of high inflation. The recording industry slumped as family size shrank. Digital recording began in 1978. The 1980s Music videos and MTV gave the industry a boost. Consumer hardware and software for digital playback (CDs) emerged. The 1990s return to oligopoly sales of CDs peaked in 1999 after the emergence of emergence of portable MP3 players The recording industry today: Four principal divisions Talent identified by demo recordings A & R scouts Most musicians make more money touring than selling downloads and CDs. Executives at Warner have signed about half of the label's artists to "360 deals" in which Warner gets a cut of ticket and merchandise sales, and even fan club dues. Promotion of recordings and talent general merchandising efforts that include packaging of CDs and fanappreciation conferences radio station reps Distribution (study Figure 82, p. 189, 10th ed.) For 100 years technological innovation centered on recording and reproduction. Today, innovation centers on distribution. Traditional brickandmortar retail record stores have been the most adversely affected by disintermediation as recording companies increasingly sell songs directly to consumers online. In 2010 Apple iTunes is the largest online music seller. Mass marketers now dominate CD sales. In 2010, WalMart is the largest seller of recorded music on CD, and largest overall music seller. Retail The music industry has lost billions since the download replaced the CD. Physical CD sales have declined 52% since peaking in 2000. Digital track and digital album sales rose. "Music consumption has never been at a higher clip. It's just a matter of trying to turn it into revenue." (Silvio Pietroluongo, director of charts for Billboard, AP 12/31/08). In 2010, four companies share 85 percent of the market for recorded music. Some smaller labels--among them Sub Pop, Merge, and Matador--are nevertheless selling more records than ever. Why? Indies have small staffs, modest expense structures, and strong relationships with consumers and musicians. Perspective: Most successful indies are purchased by major labels. Industry revenues Of roughly 27,000 new recordings released each year, about 10 percent become profitable. "You have to be really right about your hits... you have to be way more right today than wrong." (Craig Kallman, chief executive of Warner Music Group's Atlantic Records, AP, 12/31/08). The sale of prerecorded CDs peaked in 1999, just before peertopeer file swapping became popular in 2000. Sales of blank CDs exceeded the sale of prerecorded CDs by 2002. Industry managers tried to make new friends via new media. MySpace Music allows consumers to: listen to tunes and watch videos buy merchandise, concert tickets, and music downloads. Audience Because the recording industry is not supported by advertising, the focus has been on overall sales, with most marketing data remaining proprietary. What we know: 90% of American households have the hardware to play a CD or download a song. By 2006, the "over (age) 30" demographic accounted for 55% of sales or prerecorded CDs. Sales to those age 19 and younger dropped to 21% by 2006. even split between men and women consumers Feedback via the Billboard charts (Pre World War II metrics: Sheet music sales, radio airplay) Today's metrics: sales data--from Nielsen SoundScan collected from 14,000 retail stores, mass merchandisers, and online outlets in the U.S. and Canada exposure data--from Nielsen Broadcast Data Systems, which monitors airplay of 1,200 radio stations in U.S., Canada, and Puerto Rico Anybody interested in vinyl? In 2008, more vinyl albums were purchased than any other year since Nielsen Sound Scan began tracking sales in 1991. Most vinyl albums are purchased at independent music stores. When studying this chapter: Figure 81, The RockandRoll Family Tree (p. 184, 10th ed.) will not be covered on the exam! CAREER OUTLOOK Go to for current employment data. ...
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This note was uploaded on 01/19/2011 for the course COM 250 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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