Back to Part I

It’s not the MP3’s stupid! 

The record industry has a long history of resisting new technology and forms of music. Let’s not forget that it was indie labels that launched rock n roll. On the technology side, the industry seems to have resisted every new medium that has come along. In 1948 two new phonogram record technologies were introduced to replace the 78rpm record. CBS introduced the LP which spun at a 33 1/3 rpm and RCA introduced a competing standard with the 45 rpm which came on smaller disc and contained less music. The introduction of two separate standards really hurt the record industry in the late 40’s and early 50’s because CBS and RCA used their standards and not the others and other companies were reluctant to embrace on standard over the other. This of course fixed itself with the explosion of rock n roll which helped mold these two standards into their niche purpose that would be used for the next half century, the 33 1/3 LP would be used for full albums and the 45 would be used for song singles. Unlike the video tape format wars we would see decades later between VHS and Beta, the record buying public eventually embraced both record formats, but it cause a huge problem for the industry until the album and single formats emerged as the answer to the competing formats. 

CD’s emerged as a viable format mostly due to the fact that Polygram was owned 50% owned by Phillips Electronics. Phillips had a vested interest in the new format they had developed because their Electronic components division stood to make quite a profit from sales of Phillips CD players. So they used Polygram to introduce the format in 1979, it took a few years for the other labels to follow along although Warner Brothers actually embraced the format early on and was the first to license the technology from Polygram. 

The introduction of other formats however didn’t go quite as smoothly. The introduction of the cassette tape as a replacement for the 8track was meet with strong resistance from the record companies, who felt that the recording capability of cassettes in such an inexpensive vehicle would hurt record sales. But as we saw in the 80’s with the adoption of these two new formats, CD’s and cassette tapes the industries profits skyrocketed. 

Another format introduced in 1986 called Digital Audio Tapes or DAT’s. A new format that allowed for almost CD quality copies of music to be made, which sent the record industry on the warpath. After failing to have Congress lobby a tax on blank cassette tapes, the record industry really saw DAT’s as a major threat and CBS records head Walter Yetnikoff went as far as to say that CBS would not release any albums in the new format unless the player manufactures included “spoilers” in their hardware that made making copies of digital tapes impossible. In the end, the record industry succeeded in killing the DAT as a mass consumer format. 

MP3’s have a lot in common with DAT’s, in that you are able to make a near perfect copy of music with an added headache to the record companies because they are so easily traded between fans. But like the Wind-up example used before, the fact that a quality mp3 copy of Creed and Drowning Pools single were freely available online did not keep those albums from selling millions of copies, in fact it could be argued that they helped promote the CD’s and thus generated more sales. If anything with the demise of the 45, singles are no longer a hot selling item in the CD format. Why doesn’t the record industry treat MP3’s as singles and offer them as downloads for a couple of dollars a piece? Sure many people may opt to get the one song they like and know from a full length instead of the entire CD, but there is a large cross section of people who may be willing to pay a couple of bucks for one song but would NEVER shell out the close to $20 for a full length CD. 

So there you have it. 

While diversifying their rosters and utilizing the internet more effectively may not solve all of the problems plaguing the industry at the moment, it would go a long way towards alleviating the current decline. It does appear that we might be in the midst of a repeat of the late 70’s music industry crash. The music industry should have learned from their past mistakes and not put all of their eggs in one basket, but they have not and they are paying the price for it with the burst of the “pop music” bubble we are now seeing. When something dies, it has to be replaced with something else and I think if the record companies would set their sites on bringing out some new and innovative artists or giving greater exposure to some artists on their roster that fall outside of the “popular” norm, they may touch off a new music style revolution, all it takes is one innovative band to break through. That coupled with the record companies changing their attitude toward the Internet and begin to utilize it’s full promotion potential would go along way towards rescuing them from the current decline. But will they do it? That remains to be seen.