Is this were the Major labels need to go next?

I’m going talk about two long term record industry trends and how they might be heading back to where it all started. It isn’t about the Internet, although that does come into it briefly.

Things don’t happen quickly in society or industry. It took technologists most of the 19th century to get from the principles of recorded sound to a record player in 1895 and another decade to knock out a million seller (Caruso, 1907), then twenty more years before amplified sound in 1925. I’m not going back that far but it’s a good illustration of how progress progresses slowly. A lot of that time—about 90 years—was spent on distractions that went nowhere but that is only obvious with hindsight. Engineers at Edison, working on new phonograph cylinder resins for decades, probably thought they were the cutting edge.

It’s fashionable to say our technological society is moving faster than ever but it isn’t really the case. Someone born in 1905 would have had the passive record player and telephone but by the time they were 20 years old, international air travel, radio broadcasting, amplified music and cinema had arrived, and a world war had taken place. A mere 10 years after that we had TV. Progress only seems slow when we look back, at the time it appears overwhelming but day-to-day changes amount to very little.

So I’m highlighting two trends that are long enough to be real, with early signs they could amount to a new milestone.

Our first trend is independent recorded music, which has a 60 year history of growth. After World War Two a number of things came together: new vinyl formats and multi-track recording became available, and a large number of trained engineers left the armed services. These new resources fed a post-war boom in American recording (Sun, Elektra, etc.) and radio—although BBC radio wouldn’t be challenged until the mid-Sixties. In the following decades independent labels became more common and although they were often bought up by bigger labels, numbers increased. The Sixties pop boom in the UK (Immediate, Charisma, Virgin, etc.), punk in the late Seventies and home recording in the Eighties were all good times for independent labels and by the Nineties (Creation, and others) the independents were firmly established. Now, whether they are one-man DIY operations or multi-national independent groups they are a substantial source of new recorded music.

It’s hard to imagine now that there was a time when a handful of companies owned all the technology and resources for making records and that before 1950 independents were almost non-existent. What’s important about independents is they’re not the same as Major labels. They have a strong connection with artists and audiences the Majors have lost since the post-1970 corporate mergers made investors money rather than making music.

So, our second trend is corporate recorded music, which has a 40 year history peaking around 2000 and declining thereafter. I’m not talking about the original Warner Brother records—which was another kind of corporate—I’m talking about the motley corporations founded around 1970 when Steve Ross’ Kinney cleaning and parking empire bought Warner’s and Elektra. That marked the start of an era when outside investors and shareholders drove Major labels to grow by buying up competitors. They adopted the inevitable trappings of big business: de-risking, repetitive processes, micro-management, limited individual freedom, layers of authorisation, corporate strategy and a mass market mind-set. Their focus was never the artist or the fan.

Whatever age you are and whatever music you’re into you probably know the charts around 1970 were very different from what we have today. There were fewer genres then but a wider range of styles. One week’s top ten albums might include teen pop, soul, heavy rock or blues, prog rock, a stage musical soundtrack, classical, folk and jazz. Fans knew what to expect from the record labels and artists re-invented themselves from album to album. That variety has gone, replaced by safer more predictable output. And whereas 1970’s pop, folk, jazz, musicals and classics sold to all age groups very little of today’s corporate music is marketed to anyone over 35.

The charts matter because that’s where the volume is, and diversity matters because that’s where the audience is.

The reason chart music narrowed is that a smaller number of Major labels now control content. They spend a vast amount marketing their own ideas rather than licensing music, even though innovation is something they don’t do very well. Successful new music is frequently from independent labels and management companies. Narrowing output isn’t just a weakness in the record industry. We see it in cinema, book publishing, radio and TV. Every corporate entertainment giant has the same problem. As Kick Ass says in the independent masterpiece of the same name:

Jesus, doesn’t it bug you? Why do thousands of people want to be Paris Hilton, and nobody wants to be Spiderman?

The corporate record industry has come a long way in the past couple of decades but they still don’t have a strategy for growth—at least not one that shows any sign it’s going to work. As revenues fall year after year UMG’s big idea is that streaming will get thousands of times bigger. In some ways that is wanting to be Spiderman but it’s the wrong fantasy.

So where is the new milestone coming from? Let’s rewind to 1895 for moment. When Berlinner launched his genius spiral track flat disc start-up he didn’t have time to dream up the content as well. His record producers pulled in musicians from music halls, concert halls and dance halls. The art of selling recorded music was making and distributing it, not designing the content. He didn’t have to make his artists popular he just signed artists that were already popular. You might think that approach would be impossible today—if a record company only distributed music how could it make money? Well, the Columbia imprint is 125 years old and now part of Major label Sony—one of its best selling artists is Adele. Adele is not a Columbia act, she’s signed to independent XL. The biggest selling artist of the past few years isn’t a Major label act, so it’s not really far fetched to imagine the Majors could return to their roots.

The upside for Sony would be considerable. Adele came through the door with content and all the other stuff taken care of, all Sony had to do was distribute a licensed package.  Licensing from independents would eliminate a lot of risk—something corporate music doesn’t like—and a lot of overheads. They could jettison large numbers of costly A&R and artist management staff, and cut 100% of the losses on their homegrown flops. Most of the acts launched by Major labels flop apart from the TV show celebrities, and I can’t see the indies fighting to sign them.

The downside is that Adele’s contract is with XL, so Sony couldn’t take 80% of the profits but let’s be clear, the golden age of the record industry is never coming back, this is about survival. Another significant drawback for the Majors is they would no longer own any of the masters for licensing, but most of their licensing is not this year’s model so that wouldn’t be an immediate problem. Of course, demystifying the business would make it hard for the multi-million dollar superstar CEOs and their million dollar minions to justify their pay but you can’t make an omelette without breaking some eggs.