Music industry

As a music industry or recording industry companies are now referred to, produce, promote and distribute the music on recordings. The term includes language that music is produced industrially. Industrial production requires that recordings be mass- produced with standardized, automated processes. The music industry refers to himself as a music business, music industry or music business.

History

The historical and economic development of the global recorded music industry is characterized by inventions and technical innovations in the sector. Relevant pioneers in the first phase of the music industry were the universal inventor Thomas Alva Edison and the German -born Emil Berliner. With the patent application on December 24, 1877 by Edison's " Phonograph " was the basis for the recording industry was created. On July 18, 1877 Edison succeeds the first again audible audio recording of a human voice. The first records developed Emile Berliner on October 25, 1887 wax-coated zinc. On November 8, 1887 Berliner Gramophone be reported on under the patent specification 45048 author in Berlin on May 16, 1888 for the first time before the gramophone and the record of the public in Philadelphia.

The Paris World Exhibition of 1889 was the real beginning of the international music industry. As of July 1890 are founded on May 19, gramophone factory Toys Factory comber, Reinhardt & Co made ​​in the Thuringian Walterhausen the first industrial gramophones. In the same year begin industrial music recordings that are played in the 1889 invented jukeboxes. At the American Berliner Gramophone Company namesake stops just a few shares. Some sources claim that up to the autumn of 1894 about 25,000 records and 1,000 players are said to have left the factory, in 1898 there were already more than 700,000. On November 6, 1898 found Emil and his brother Joseph Berliner in Hanover, the German Grammophon GmbH. Here, the mass production of shellac record begins. On July 16, 1900, the trademark "Nipper ", the mixed-breed dog in front of the gramophone, registered. In 1900, the German Grammophon moved the seat of government to Berlin and is converted into a public limited company, records continue to be manufactured in Hanover.

When the famous Italian tenor Enrico Caruso in 1902 makes the first recordings, the music of sound recordings, is socially acceptable and begins its triumphal march around the world. Soon the capacity in Hanover is no longer sufficient to meet all the orders. 1904, the production will therefore be moved to a larger location. The Hungarian- American physicist Dr. Peter Carl Goldmark invents on 21 June 1948, the vinyl record. The new material, polyvinyl chloride (PVC), enables significantly narrower grooves and thereby improve the quality and durability of the sound recording. In addition, PVC is cheaper than shellac and not so sensitive. The last company provides EMI 1958, the production of shellac records a. The success of the record encouraged to produce other entrepreneurs, boards and players. In Europe, Hannover, Berlin, London, Paris and Vienna to the new industrial centers are. Restaurateurs and cafe owners entertain visitors with recorded music. The plate is also in Asia, Latin America and the Caribbean to the mass product.

Media

The first audio recording in the modern sense probably dated back to April 9, 1860, when a singer immortalized the French folk song Au clair de la lune for 10 seconds on a so-called phono autographs; its inventor Édouard -Léon Scott de Martinville. It then proved impossible to play, requiring a significant recordings property was missing. The then succeeded Edison 1877, when he was his famous, spoken Mary Had A Little Lamb, has long been a first audio recording, made ​​on tin foil.

The National Phonograph Company as a precursor of Edison Records is considered the first record label that began in 1888 with the mass production of cylinders. The with a maximum playing time of 2 minutes designed wax cylinder roller was the first recordings of the music industry. The Columbia Phonograph Co. is since 1881 the first commercial producer of recorded sound carrier rollers; her catalog comprises 1893 total 32 pages. Columbia Phonograph Company set forth from 1890 wax cylinder, Edison bought the company on. Berliner Gramophone Co. merged in 1900 with the Victor Company, which then later evolved to RCA Victor. From 1894 onwards dominate Graphophone Columbia and the American -cylinder market. Berlin finally founded in August 1898 The Gramophone Company in London.

1889 Berlin begins with the production of flat records. The end of 1894 he is the first 7- inch ( 17.8 cm) flat record before of hard rubber. First single-sided shellac discs flat (7 inch) come in 1897 with a playing time of 3 minutes on the market. This game time is (25 cm ) record surpassed in 1902 by the first 10 - inch by 30 seconds. In 1907 Edison Amberol cylinder come on the market that have a playing time of 4 minutes. First electrical recordings created on 21 March 1925. On June 28, 1944, the first stereo tape recording succeeds. In June 1948, the first LP comes with 33 1/3 rpm ​​and a playing time of 23 minutes per side on the market. On June 21, 1948, the first vinyl record is presented. RCA marketed on March 31, 1949, the first 45 rpm singles (17.8 cm ), which had previously appeared as early as 78 rpm. In November 1957, the small label Audio Fidelity Records brings the Dukes Of Dixieland out the first stereo LP, 1958 LPs have already achieved a market share of 6 % ​​in the U.S.. In the same year declared the German Grammophon the stereo method to the standard technique. As early as 1960 had the LP has a market share of 25%.

The market introduction of music cassette (MC ) by Philips began in 1965 MCs reported acoustic advantages over records because frequent use not so much -. Acoustically perceptible - User defects left as vinyl. Which was complemented by the introduction of the Compact Disc (CD) in 1982. It meant a complete departure from analog recording and playback method. The introduction of novel technologies recordings (like from the cylinder to the record, from shellac to vinyl, from the single to the LP, on vinyl for the MC and the MC for CD) helped the record companies each to increased sales through replacement demand demand.

First record companies

On June 27, 1887 is established with the American Gramophone Co. by the emigrated from Germany Emile Berliner, the first record company worldwide. The first three American labels were then Edison Amberol (1888), Columbia Records (1888 ) and Victor Talking Machine Company ( 1901). Edison had introduced in April 1893 all patents associated with music in the United States Gramophone Co., which then has worked with the precursors of the catalog records of the year. On December 6, 1898, Berlin in his hometown of Hanover, the first German record company German Grammophon GmbH. In London, created in 1899 His Master's Voice. On 27 June 1900, the German Grammophon GmbH will be renamed in German Grammphon AG, headquartered in Berlin and leads in 1901, 5,000 titles in the catalog. The German Carl Lindström AG was founded in 1906. On 8 May 1925, the Electrola created as a subsidiary of EMI and Gramophone Co. Ltd.. In February 1929, founding of the British Decca Records, 1934, the U.S. sister Decca follows.

Market

Industry boundaries

The question of the extent of the record or recording industry will be answered by the Federal Statistical Office. The Office aggregated statistics on two levels, namely, " the music industry in the narrow sense " and " phono market and additional branches ", which adds the value " music industry / Phono market together " result. Recording industry in the narrow sense is only the production, duplication and distribution of sound recordings. This achieved in Germany in 2002 with 715 companies almost 1 billion euro revenue, making it one of the smallest sectors in Germany. Among about 350 record labels are represented Bundesverband music industry, according to the.

The broad concept includes today the discovery and production of CDs ( record companies and their record labels, pressing plants and studios ), the advertising and promotion ( in television, film, music videos, radio, print, Internet, and concerts), the distribution and sale (retail, webshops ), the music publishers, copyright and collecting societies (BMI or GEMA ) to the interest groups (IFPI ).

The world's largest markets for recorded music are the IFPI According to the United States ( 642.6 million piece units sold in 2006; 36.2 % global market share ), Japan ( 282.2 million; 16.6%), United Kingdom ( 191.5 Mill. ; 10.2%) and Germany ( 146.2 million; 6.6%). Default value is Germany in Europe in second place with € 1.716 billion behind the UK with € 2.59 billion, making Germany has a European market share of 20.6 %.

Structure

The recording industry is oligopolistic structured world. There are so many large vendors (the " major labels " ) and a number of smaller record companies ( the so-called "Independent Labels "). The de facto dominance goes here from the major labels who have to try to make the most of its revenues on with her ​​stage repertoire. It is more difficult for the major labels, to set its own stylistic or musical trends or develop Stars. This market structure, coupled with the high cost risks and the attempt of cost recovery through economies of scale, facilitates the process of consolidation in the music industry. Financially easier it falls of buying smaller record companies through large, but also the major labels with each other mergers have already accomplished.

Concentration process

Lower concentration is understood that record companies to buy up each other or disappear from the market due to insolvency, so that an ever- diminishing number of labels remains here the trend. The operating companies have two options. By horizontal (acquisition or merger with rival record companies to stabilize or increase the market share ) and vertical integration (acquisition of businesses that operate in a more or less closely related market segment, such as publishers ) is the dominance by a few firms, despite considerable diversification of the offer never been so high. "Apparently, the record industry, at least temporarily, the key has been found that could keep up with the concentration and diversity is at the same level " (as of 1996). Modes of production and market mechanisms were the changing conditions and needs of the end user so adjusted that both capital concentration and market dominance by a few firms are secured.

A first process of concentration took place after the Great Depression in the United States held in the year 1931, when the crisis broke sales up to 90 %. In June 1931 merged existence of reasons, the Gramophone Company and Columbia Graphophone Company to EMI. This left RCA Victor, Decca, CBS and a few smaller ones. After the Second World War, created in 1945, many small independent labels, which could partially achieve great success through good management.

Since 1970, an increasing focus on the global market through mergers of disk labels can be observed. In this way, the mass of scale can be exploited more efficiently, which are necessary in view of the immense investments in artist development and promotion and elaborate productions. The high proportion of fixed costs at record companies force to these steps, so that the break-even point can be reached more quickly. In 1968, had a single in the U.S. and 11,200 pieces of an LP 7,800 copies will be implemented to record the production and fixed costs; this goal had at least 26 % of singles and 39 % of all LPs missed. However, the revenue requirements decreased to a single, with the help of a top position in the charts could be achieved. In the year 1968 750.000 singles were place in the U.S. needed already in 1979 ranged from 50,000 pieces. Of ten CD releases play an average of eight not even a their cost of production. In Germany, only about 10 % of all CDs can be sold to cover costs. It was not until the ninth, but no later than the tenth release must be a hit. This then has to finance the preceding eight flops, so the record company gets into the profit zone. However, suffice 2,000 CDs in Germany to reach higher ranks of the charts. The global recorded music market is therefore still subject to strong concentration tendencies, so that ultimately the oligopoly tends to increase.

As of 1979, the recession forces again to concentrations in the recording industry. CBS - even emerged from a merger - was in the U.S. in 1973, the market leader, followed by WEA (fusion result of Warner Brothers, Elektra and Asylum Records ), and RCA Victor. So MGM made ​​from 1968 threaten the existence of losses and was founded in 1972 by PolyGram - bought - itself a fusion result between Phillips and the venerable Deutsche Grammophon. There were Mercury, Polydor and the major music publisher Chappell Music. MCA Records took over Decca and Kapp Records. 2002 was universal global market leader with a share of 25.9 %, followed by Sony with 14.1%, EMI 12 %, 11.9%, Warner and BMG 11.1%. From the "big six " in 1989 - EMI, Sony, BMG, PolyGram, WEA and MCA - were by the merger of PolyGram with Universal Music Group ( formerly MCA) 1998, the "big five ", and as Sony 2004 with BMG merged, remained only four major labels, though still between 25 % and 28 % market share for independent labels remains.

Once there was the EMI Group since at least 2001, in a structural and later economic crisis in the company, the banking giant Citigroup corporate takeover by the investment fund Terra Firma Capital Partners funded in September 2007 (owned by London's major investor Guy Hands ), which turned out to be a bad investment. Due to the slump in CD sales, EMI recorded a loss before tax of £ 263.6 million in 2007. As a result, the Group takeover approximately £ 28 million should be reduced, especially in the marketing area. The worldwide number of employees of the original 5500 EMI Group should be further reduced. After Terra Firma could no longer afford the loan interest for funding the purchase price, Citigroup took over EMI shares of Terra Firma in February 2011. By loan write-downs, Citigroup (£ 3.4 billion loans originally ), Terra Firma lost 2.2 billion pounds its equity share of £ 1.7 billion. The acquisition of EMI by Terra Firma turned out so as one of the greatest failures of the leveraged buy-outs of financial history. Finally, the Universal Music Group acquired the share package, which was approved by the European Commission in September 2012. The German parts of the EMI label Capitol Records, Blue Note Records and Virgin Records were centralized in May 2013 to Berlin Consequently, the headquarters of the Electrola GmbH was transferred in May 2013 to Munich. The pop and pop- Electrola label was moved to Universal Music Germany GmbH in Munich, where it is the folk music label Koch Universal Music continues as a sublabel since 1 May 2013. Only the label remains Rhingtön - solely because of Kölsch repertoire as the holding company EMI Recorded Music GmbH - in Cologne. After the spectacular fusion of music market is still only three major labels: Universal Music Group, Sony Music Entertainment and Warner Music Group.

The world's three largest major labels

Since such concentrations already large corporations run the risk of further concentration of market power in itself, the planned expansion of market power often failed due to antitrust authorities: thus prohibited the European antitrust 2001, the merger of EMI with BMG, who had withdrawn their application in October 2000. The "Big Three" combined 71.7 % global market share in the plate business up and left to the independent labels only 28.3%. This reflects typical oligopoly structures expressed.

• Market leader Universal Music Group, which has a global market share of 25.5 % (2004 ) with their labels such as Iceland, Polydor, Verve, Motown and Mercury. The group- related Universal Music Publishing since 2006 leader in music publishing. In turn, the leader belongs to Vivendi SA, the French media conglomerate. Market share in Germany (2007): 34.9 %. The subsidiary EMI went in 1931 from the merger of the Gramophone Company and Columbia Gramophone Company produced. 1957 EMI bought the U.S. Capitol Records. Related Labels are next in particular: Electrola, Virgin Records or Intercord. The music publisher EMI Music Publishing was formed in 1972 through the acquisition of Francis, Day & Hunter Music Publishing and managed until 2006 the world's biggest pop and rock catalog with around 1 million copyrights. The world market share of EMI Group was 13.4 %, in Germany 17%.
• Warner Music Group include the label Elektra Records and Atlantic Records (1968), Reprise Records and Rhino Records. Warner merged in 1987 with the Time Corp.. Time Warner that the music business kanad to 2003. Billionaire Bronfman sold. The music publisher Warner Chappell belongs to the Group. World market share: 11.3%.
• Sony Music Entertainment is a subsidiary of Sony Corporation that was entered in 1987 with the spectacular takeover of America's largest record company, Columbia Records in the music business. In 1994, Sony Music Entertainment had $ a world market share of about 18 % and an annual turnover of approximately U.S. $ 5 billion. In August 2004, Sony Music Entertainment and BMG Entertainment merged to form a joint venture. The world market share of Sony BMG rose to about 21.5 % ( Germany: 28.7 %). Four years later BMG got out of the core business of recorded music production, leaving Sony BMG Music Entertainment 's shares. Sony Music Entertainment, inter alia, includes the label Arista Records, Columbia, Epic Records, J Records and RCA Records. In the Group integrated the formerly independent music publishing company ATV Music Publishing.

The major labels are parts of segmented into several categories, media corporations, and can thus also the synergies of its corporations use (such as the title repertory group of associated music publishers ).

Sales development

Generated the highest revenues in the global recorded music market today are Japan, the USA and Germany.

Between 1889 and 1896, 2 million annually plates were produced in the United States. In 1927 there were 104 million panels in 1938 a total of 33 million (75 % RCA and Decca ), alone RCA published in 1941 nearly 127 million records. The Rock & Roll brought in 1955 in the U.S., a jump in sales to 252 million records. In 1921, the sales mark of $ 100 million was in the U.S. for the first time exceeded, great growth with 26% increase to 277 million U.S. dollars was reached in 1955, the one-billion limit was 1.173 billion U.S. dollars in 1967 for the first time exceeded. After launch of the CD in 1983, there was steady, partly considerable revenue growth, which lasted until 1996. But then the replacement purchase Vinyl / CD was completed.

Market for recorded music in Germany

Only in 1919 the threshold of 1 million was exceeded produced plates, for a total of 2.23 million disks were already marketed in the U.S. in 1919 in Germany. In 1924 the German Grammophon produced 2.1 million panels in 1928 already 5.5 million in 1929 with a daily production of 83,000 plates 10 million have been implemented. After establishing the Electrola 1926, the production increased throughout Germany on 20 million records, in 1927 there were 25 million, even 30 million in 1928. From 1925 to 1929 1.5 million gramophones be bought in Germany. The world economic crisis hit the German recording industry with some time delay. In the crisis year 1929 30 million records were sold again, in 1931 only 18 million. In 1933 only 8 million have been sold, low point was in 1935 with 5 million sound recordings. From 1936 also the plate market was consolidated again and recorded an increase to 7 million in 1937 came back 10 million on the market, in 1938 12 million were implemented, and by 1939 it had 14 million. The German separation was also evident in disc sales noticeable, since 1949 in West Germany only 4 million records implemented in 1951 already back 11.7 million.

In 1952 reached the economic upturn and the German record business, with considerable growth rates. Since 1952 the German record companies have their production more than doubled. 1954 about 25 million records were pressed in 1955 there were 31 million in 1956 rising to 36.5 million (90 % dance / entertainment music ), 1957 already 57 million pieces. The proportion of light music is - a worldwide trend following - has grown continuously.

A jump in sales brought the Beatles and other British beat bands starting from the year 1964. Were in West Germany in 1962, was still 40.1 million records sold, there were 1963, 43.2 million. In 1964, then followed by an increase by 10.2% to EUR 47.6 million. The continuous growth rates brought Germany to third place worldwide the list of largest record sales. Japan displaced Germany then in 1979 by the third world market place. This has remained so.

In March 2010, reported the Federal Association of Music Industry ( BVMI ) that the German music industry had come through the crisis of 2009 and further located on consolidation. Support the music market were stable CD sales, the continued high growth in music downloads and the increasingly important new sources of revenue. Including the first time included in the overall statistics revenues from related rights, as well as new revenue sources such as merchandising, artist management and licensing revenue generated the music industry in 2009 total sales of 1.803 billion Euros (2008: 1.842 billion ), representing a slight decrease of 2.1 percent. Something stronger ( -3.3 percent) declined the pure music sales. They fell from 1.582 billion euros in 2008 to 1,530 million euros in 2009.

Crises

A distinction here are general economic downturns or recessions that take more or less evenly all industries, and crises of the record industry is predominantly as an industry crisis only this sector.

For the first time after the Second World War ended, the continuous growth phase of the German record industry in 1979, when sales fell by eleven percent; that was a dramatic decline for that time. The introduction of the CD in 1983 began a strong recovery, as the re- marketing of the already present at buyers repertoire enabled enormous increases in sales in digital form. For the first time in 1988 bought more CDs than vinyl records. The trigger of the world from 1997 incipient crisis in the recording industry, in particular the unauthorized music downloads from the Internet is establishing itself ends that can be burned to CD-R and so also sold illegally apply. The number of blanks has increased since 1999, in Germany from 58 million to 303 million (2004), while during the same period, the number of recorded original CDs declined from 210 million to 146 million. The gap was in 2001, when CD-R ( 182 million ) and pre-recorded CDs ( 185 million ) were roughly on a par; an indication of the growing crisis of the recording industry worldwide. Since 2003 the number of remote CD albums in Germany is relatively stable between only 145 and 150 million units. In the year 2009 147 million music CDs were sold.

New sales opportunities

The recording industry is looking ever since for ways to stop their critical development. On the one hand, she managed to lobbying tightening of the copyright law (but partly also to take from the EU law into national law were ) enforce and strengthen the rights of authors, performers and publishers as well as to provide for a more consistent tracking of unauthorized music downloads. On the other hand, amplifies it focuses on this new distribution channel - the paid music downloads.

With the Internet and in particular the digital audio codec mp3 in 1992 was the first time the efficient separation of music and physical sound carriers which facilitated the spread of digital music. In the area of ​​non-physical recorded music the music industry recorded an increase in the ( authorized ) digital music downloads from online services since 2003; alone in 2008 took legal music downloads by 34 % over the previous year. New revenue sources are beyond the merchandising, artist management, and revenue from concerts and ticketing to reduce unilateral proceeds dependencies. Also, licensing and advertising revenues becoming increasingly important for companies in the music industry in importance.

Another compensation falling income from the sale of records found by the so -called " 360 -degree contracts " instead, with which the recording industry operates on all other income of their artists ( including live - revenue organizations). So, for example, to Sony Music have just been completed since 2008, such all-round contracts with new artists.