Changes In The Way Music Is Sold Over The Last 30 Years

Artists and bands like Bob Dylan and Pink Floyd established their careers in a very different business climate than acts like Ani DeFranco or Jurassic 5 would do throughout the 90's and into the new millennium. In the early 70's the record industry had just awakened from the psychedelic dreams that that pop music renaissance of the mid to late 60's had brought about. In that era the 'rules' we have today about how to market and sell music were still being written. In those days most record labels believed in staying with new artists and supporting them over several albums, developing them slowly over time.

Times have changed.

Over the decades labels, distributors, and music retailers would be adapting to demographic changes in the youth population, advances in recording techniques (allowing for less expensive ways to record records), and adjusting to the profound impact that digital technology would have on old analog business practices.

The following comparison chart graphically summarizes some of the significant changes that have affected how records were sold in the recent past, and how they are being sold today.

Some Background

THEN NOW
Between 7000 and 8000 new releases a year.
Introduction of CD in '82 causes catalog sales to rise.
In '91-17,000
In '93-26,000
In '97-37,000
2002- 38,000 plus
Records were perceived as a bargain by consumers. Albums had many good songs to enjoy at a good price. Confusion reigns. CDs are thought to be too expensive for what you get... one or two songs of value. Prices vary too much from record club prices to store prices.
LPs and singles ruled, cassettes were just taking hold with the short lived 8 track also competing for awhile. In addition to CDs, there are DVDs, vinyl, cassettes, video tapes, video games, as well as MP3 files and other digital storage technology toys. Cassettes and vinyl less than 5% of the market... combined!
For non-music entertainment, you had movies, board games,
sporting and recreational activities, AM/FM radio, limited TV (no cable channels yet), nightclubs, and books.
Today we have all of these, plus personal computers, satellite TV and radio,
the Internet, home theaters with surround sound and wireless devices galore.
Music was just beginning to become more portable; the Sony Walkman arrived in the early 80's. Music is everywhere. MP3 players are the size of a Palm Pilot (or smaller). Storage of music files is measured in dozens of hours. Streaming music available.
4 main categories for popular music: Country, Pop, Jazz/Blues and Rock. Hundreds of sub-categories of music available. Dozens of styles are now common place. Mixing of musical genre create new dimensions of musical choices. Music styles harder
to define than ever.
Music recognized as art, not 'product'. Emphasis is on 'product'. Art has taken the back seat to marketing.

Music Business Changes

Note: The reaction to the above observations has prompted the businessmen and women behind the scenes at labels, distributors, and stores, to constantly re-evaluate their investments in music, their strategies and tactics for marketing, as well as their business operation policies.

THEN NOW
Artist development at major labels creates a generation of 'classic' artists/bands. Development of an artist's career (except for young pop acts), is left to the individual artist. Labels seek fast sales results from signed acts, or they are dumped.
Record sales and radio airplay charts were created by 'oral reports' from retailers and radio stations. Soundscan (for retail sales) and Broadcast Data Systems-BDS (for radio airplay data) are created in early 90's. Today very accurate data is available for industry to evaluate.
Record sold primarily at department stores, as well as independent record stores. The newer 'chain' stores were established during the 70's/80's. Music retailing has consolidated. Top 10 retailers account for 70% of
sales. Mass merchandisers, rackjobbers and larger chain stores
more important. without them no hit record.
Many regional record distributors (over 200 some 30 years ago). National distributors dominate today. Only a handful of One Stop
distributors exist today. Very hard to get any kind of distributor today.
Major Labels had branch offices across the country. Independents worked their records regionally. Major labels affiliate with more and more Indies over the decades. Consolidation. Only a few big cities have major label branch offices Independent labels proliferate throughout the U.S.
Distributors worked on hand-shake deals. Written contracts the rule. As long as 5 pages (single-spaced) detailing how labels must work with the distributor.
More services, even financial assistance for labels who had a rising hit record and needed funding for pressing more, promotions, etc. Labels expected to be self-financed and be able to take part in store promotions setup by the distributor (listening stations, co-op advertising programs, price and positioning deals.)
The costs of getting media (radio, press) were more affordable. Plus, radio had not consolidated. Radio ownership has consolidated. Plus, high costs of radio promotion, and scandals with various payola-ish policies occur. Commercial radio exposure is usually only available to the well funded labels. However, record sales and profits have not kept up with rising costs of media exposure.
Costs for making (pressing) records was relatively high, and only affordable to legitimate labels. Cheaper to manufacture CDs today, but high costs of marketing have offset any advantage this may have. Also the cheaper pressing costs, coupled with less expensive recording costs has created a deluge of independent releases. Saturation point has been reached. People can absorb only so much 'new' product.
Fewer releases allowed retailers to stock and sell more records. With over 400 releases a week coming out and only a handful of releases accounting for most sales, plus high costs of running a music retailing business, stores are more reluctant to stock product that may not sell.
Most record sales are from brick and
mortar record stores, who get their records
from One Stop distributors, indie distributors
and rackjobbers.
Artists' sale of their own records at live shows more important than ever. Consignment to local stores also very important now. Records today are sold by many types of retailers.
Major labels sold their product directly
to any and all record stores. This policy
stopped in late 70's.
Major labels more selective today. After 20 years of not selling to smaller record stores most labels have re-opened accounts with key mom-and-pop and independent stores.
Major labels sold records at same fair price to all brick and mortar music retailers. Controversial pricing policies by major mass merchandisers caused many store closures in the mid 90's. MAP (Minimum Advertised Price) policy enforced by mass
merchandisers sold CDs for less than they
paid for them. Causes independent store closings (they can't compete with prices.)
Store inventory systems not computer generated. Hand counts and guessing on
potential sales is the order of the day.
Point of Sale (POS) scanning systems allows more accurate tracking of store's inventory. Easier to see what music is popular and selling... harder to convince retailers to carry your record unless you can prove it is selling.
Mail order sales, record clubs, and catalog sales
compliment the brick and mortar record
store sales.
Major labels beginning to get into direct online, Internet-based sales with services like pressplay and Musicnet. Independent services like mp3.com, guitar9.com, cdbaby, and cdstreet up and running for years as a viable way for independent artists to get their music to fans.

Summary

The record industry has grown up. It took until the late 1970's for the sales of records to exceed one billion dollars. Today it is domestically almost a fourteen billion dollar industry. With that rapid a growth it is not surprising to see how necessary it was for the industry... labels, distributors, and stores... to grow up.

Today anyone wishing to sell the 'art' that may be contained on round plastic discs, or contained in compressed audio files, has to rid themselves of any notion that a golden age of popular music (concentrating on the music only) is an age still with us. Today the successful artist is one who marries the two worlds of art and commerce together, and realizes that with all the issues at hand, it is indeed a business that delivers music to consumers.

Throughout his fprty year career in the music business, FourFront Media & Music's Christopher Knab has shared his experience at many industry conventions and conferences, including the New Music Seminar and the Northwest Area Music Business Conference.

Knab was owner of a San Francisco music store, co-owner of the 415 Records label, and station manager at KCMU Radio in Seattle.

He currently provides a unique consultation and education service for independent musicians and record labels. His new book is entitled "Music Is Your Business".

Christopher Knab

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