Transcript MUSB 1305 PP Ch 13 Record Labelsx

Part 4: The Recorded Music Industry
Chapter 13
Start Thinking. . .
 What does it take to get music recorded and
distributed?
 Who are the different people involved in this complex
industry?
 Are major labels receding in importance?
Chapter Goals
 Acquire an understanding of the history of the record
industry and how it came to its present condition.
 Gain a true picture of the record business by analyzing
it in terms of major versus independent labels.
 Learn how record companies function through their
various structures.
Development of Recorded Music
Late 1800s
early inventions
1900 – 1920s
record sales begin, “commercial” jazz
1930s
Great Depression , jukeboxes
1940s
singles, jukeboxes, one-stops, LPs
1950s
TV, rock and roll, rack jobbing, stereo sound
1960s
social turmoil, retailing, Beatles, major labels
1970s
indie labels, singer-songwriters, crossover recordings
1980s
technological change, CDs, video
1990s
home recordings, DAT, electronic delivery of music
2000s
piracy and P2P file sharing, legal downloads, 360 deals
Perspective
 Major label
 owned and/or distributed by major distribution
company
 Independent label
 indies lack affiliation with a major
 Majors
 dominate sales
 are well funded
Major Labels
 Tremendous investment in recordings required
 Artists attracted to majors
 large advances, prestige, promotion
 stability of established company
 more elaborate recordings
 Advantages in economies of scale
 Maintain inventories for longer periods
 Clear advantage in costly marketing of records
 Push weak recordings to sales success
Independent Labels
 First to find the “next big thing”
 Successful indies may be bought out by majors
 Technology blunted majors’ advantage
 majors focus on most popular + most lucrative
 leaves modest-selling artists + genres to indies
 Develop brand name awareness + consumer loyalty
 Connections at local and regional level
Specialty Labels
 Some of the most successful independents
 classical music
 Some release records “privately”
 Some may limit activities to certain demographic
markets
 Gospel music
 effective promotional methods
 Specialty labels successful
 don’t compete with mainstream music
 don’t rely on traditional or expensive promotion
Record Company Structure
[Insert Figure 13.1]
Record Company Structure
Executive Officers
 CEO, COO, CFO, general manager
 CEO often strong entrepreneur who started label
 Two backgrounds for CEOs:
 lawyer
 producer
 Must know “art of the deal”
 Must have good “ears”
Record Company Structure
Artist & Repertoire (A&R)
 Concerned with finding + signing new talent
 Must keep informed
 Remain involved after signing
 assist artists
 administer production or budget details of album
 act as liaison between artist and label
 Large labels may have separate A&R departments
Record Company Structure
Distribution/Sales
 Convince retailers to order and display CDs
 Get prominent “shelf space” at online stores
 Science in ordering specific quantities of CDs
 don’t want excessive returns
 don’t want empty shelves
Record Company Structure
Marketing
 Product management
 Radio promotion
 heart of marketing
 get airplay and charting
 arrange promotional appearances, interviews, giveaways
 Video promotion
 airplay on TV
 video streaming on the Web
Record Company Structure
Marketing
 Publicity
 media exposure
 less expensive than promotion
 Advertising
 co-op advertising
 trade publication ads
 Creative services
 design all marketing campaign materials
Record Company Structure
Special Products (Catalog)
 Two core responsibilities:
1. handle requests to license masters of older product
2. find new ways to redesign or repackage music



“best of” packages
themed multi-artist compilations
boxed sets
Record Company Structure
International Department
 Oversee foreign sales
 Ensure effective communication between domestic
and foreign affiliates
 Foreign sales may make up more than half of all
revenue
 Foreign territories will maintain their own A&R
operations
Record Company Structure
Business and Legal Affairs
 Industry revolves around contracts and copyrights
 Legal department
 negotiates and drafts agreements
 minimizes litigation
 Larger companies may break these into two smaller
departments
Record Company Structure
Accounting
 Handles a host of financial functions
 recording budgets
 inventory
 manufacturing
 royalties

(may be handled by separate department in larger company)
Record Company Structure
Merchandise
 Historically supported concert tours
 Now handles artist-related merchandise
 360 deals give labels a direct stake in merchandise
revenue
Record Company Structure
Publishing Affiliates
 Labels generally own two publishing companies
 ASCAP affiliate
 BMI affiliate
 Seek publishing rights from artists
 Publishing company
 must show profit from own operations
 may sign artists not on record company’s roster
Trade Associations
Recording Industry Association of America
 Represents both major and minor labels
 Certifies best-selling records
 Lobbies government for label-friendly regulations
 Represents industry to consumers
 Collects industry statistics
 Battles online piracy and CD counterfeiting
 Most prominent force in the big music labels’ drive to
curb piracy
Trade Associations
National Academy of Recording Arts & Sciences
 Hosts Grammy Awards
 Regular membership
 persons professionally active in industry
 Associate membership
 indirectly involved in record production
 Sponsors charitable endeavors
 Offers grants and assistance programs
For Further Thought. . .
 What advantages do major labels have over
independent labels?
 How do you distinguish the difference between
independent labels and specialty labels?
 Why or why not will Do-It-Yourself recording and
distribution make labels irrelevant in the future?