| Some Background.... |
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| Then |
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Now |
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| Between 7000 and 8000 new releases a year. Introduction of CD in '82 causes
catalog sales to rise. |
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In '91 - 17,000 new releases
In '93 - 26,000
In '97 - 37,000
2006 - 75,000 plus
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| Records were perceived as a bargain by consumers. Albums had many good songs
to enjoy at a good price. |
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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. |
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| LPs and Singles ruled, cassettes were just taking hold with the short lived
8 track also competing for awhile. |
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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! |
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| 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. |
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Today we have all of these, plus, personal computers, Satellite TV and radio,
the Internet, Home Theatres with Surround Sound and Wireless phones and other devices that allow for music to be stored and shared. |
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| Music was just beginning to become more portable. The Sony Walkman arrived
in the early 80's. |
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Music is everywhere. iPods and a ton of MP3 players are the size of a Palm Pilot (or smaller).
Storage of music files is measured in dozens of hours. Streaming music available. |
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| Music recognized as art, not 'product' |
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Emphasis is on 'product'. Art has taken the back seat to marketing. |
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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. |
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| Then |
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Now |
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| Artist Development at Major Labels creates a generation of 'classic' artists/bands. |
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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. |
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| Record sales and radio airplay charts were created by 'oral reports' from
retailers and radio stations. |
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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. |
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| Record sold primarily at department stores, as well as independent record
stores. The newer 'chain' stores were established during the 70's/80's. |
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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. |
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| Many regional record distributors. (Over 200 30 years ago.) |
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National distributors dominate today. Only a handful of One Stop Distributors
exist today. Very hard to get any kind of distributor today. |
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| Major Labels had branch offices across the country. Independents worked
their records regionally. Major labels affiliate with more and more Indies over the decades. |
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Consolidation. Only a few big cities have major label branch offices. Independent
labels proliferate throughout the U.S. |
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| Distributors worked on hand-shake deals. |
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Written contracts the rule. As long as 5 pages (single-paced) detailing
how labels must work with the distributor. |
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| More services, even financial assistance for labels who had a rising hit
record and needed funding for pressing more. |
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Labels expected to be self-financed and be able to take part in store promotions
setup by the distributor (Listening stations promotions, Co-op advertising programs, price and positioning deals.) |
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| The costs of getting media (radio, press) were more affordable. Plus, radio
had not consolidated. |
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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., While 'college or non-commerical radio' is the real power-house for discovering new music. Internet radio broadcasters abound., |
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| Costs for making (pressing) records was relatively high, and only affordable
to legitimate labels. |
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Cheaper to manufacture CDs today, but high costs of marketing have offset
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. |
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| Fewer releases allowed retailers to stock and sell more records. |
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With over 700 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. |
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| Most record sales are from brick and mortar record stores, who get their
records from One Stop Distributors, Indie Distributors and Rackjobbers. |
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Artist's 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. |
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| Major Labels sold their product directly to any and all record stores. This
policy stopped in late 70's. |
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Major labels more selective today. After 30 years of not selling to smaller
record stores most labels have re-opened accounts with key Mom and Pop, and Independent stores. |
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| Major labels sold records at same fair price to all brick and mortar music
retailers. |
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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.) |
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| Store inventory systems not computer generated. Hand counts and guessing
on potential sales is the order of the day. |
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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. |
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| Mail order sales, record clubs, and catalog sales compliment the brick and
mortar record store sales. |
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Major labels beginning to get into direct online, Internet-based sales growing rapidly, but will not replace music retail for another 4 or 5 years. Independent services like CDBaby, and Rapsody up and running for
years and are a viable way for independent artists to get their music to fans. |
