6.4 Current Popular Trends in the Music Industry
Learning Objectives
- Assess the influence of the major record labels in the music industry.
- Describe the role played by independent labels in the music industry.
In Weezer’s 2008 song “Pork and Beans,” vocalist Rivers Cuomo sings, “Timbaland knows the way to reach the top of the charts/Maybe if I work with him I can perfect the art (AOL Music Sessions).” The lyrics, a reference to hip-hop producer Timbaland’s multiple high-profile collaborations, refer to a tense meeting between Cuomo and record executives at the band’s Geffen label. During the meeting, the executives told the band members they needed to write more commercial material, prompting a defiant (though commercially successful) response (Reesman, 2008). The incident reflects the balance between commercial success and artistic expression in the music industry. Record labels need artists who inspire the record-buying public, while artists need the financial backing and expertise of record labels and their marketing teams. Tensions between artists and their labels remain heightened by the cost-cutting measures that have taken place at many companies due to the impact of online file sharing on profits.
The Influence of Major Record Labels
During the 1990s, the record industry experienced a boom. Music lovers replaced their cassette tapes and vinyl records with CDs, and sales numbers skyrocketed. In 1999, the total revenue from music sales and licensing peaked at $14.6 billion (Goldman, 2010). Ten years later, record label executives had seen revenue plunge to $6.3 billion, with the Recording Industry Association of America (RIAA) reporting declining revenue in nine of the 10 previous years, with album sales dropping an average of 8 percent every year (Goldman, 2010). Why the drastic decline? Experts agree that the growing popularity of digital music, which initially began through peer-to-peer file sharing—the process of swapping media files over the Internet—such as the Napster service, has led to this decline.
Despite a massive loss in profits over the past decade, the global music business still comprises a powerful oligopoly—a market condition in which a few firms dominate most of an industry’s production and distribution. The global reach of these few companies means that they have the promotion and marketing muscle to determine which types of music reach listeners’ ears and which become obsolete. Each of the major record labels has a strong infrastructure that oversees every aspect of the music business, from production, manufacture, and distribution to marketing and promotion.
Between 1950 and 1980, a large number of major record labels and numerous independent labels competed for a share of the musical pie. Gradually, the larger labels began buying up the independent labels, and then started trying to purchase each other. By the late 1990s, only six major labels remained: Warner, Universal, Sony, BMG, EMI, and Polygram. In 1998, Universal acquired Polygram, and six years later Sony and BMG merged. Sony later bought out BMG to obtain sole ownership of the company. Currently, the music industry is dominated by the so-called Big Three: Sony Music Entertainment, Universal Music Group, and Warner Music Group. The Big Three control over 85 percent of the U.S. recording music industry (Copynot).
Universal Music Group
Universal Music Group is one of the leading global music companies, operating in a rapidly evolving industry. The company’s history dates back to the merger of PolyGram and Universal in 1998, which created the largest music company in the world. Since then, Universal Music Group has continued to expand its reach through acquisitions, partnerships, and strategic investments, including subsidiary labels Capital, Def Jam, Island, Geffen, and Virgin.
Today, Universal Music Group represents a diverse roster of artists across various genres and cultures. The company’s catalog includes some of the most influential and beloved albums in music history. Notable artists signed to Universal Music Group include Taylor Swift, Post Malone, Nicki Minaj, Rihanna, Luke Bryan, and Selena Gomez.
EMI Group
EMI’s rich history dates back to its formation in 1931. Known for its iconic artists and groundbreaking contributions to the music industry, EMI has played a pivotal role in shaping popular culture, most notably the discovery and development of The Beatles. The band’s success propelled EMI to international prominence and cemented the company’s reputation as a music industry powerhouse.
Over the years, EMI has represented a diverse roster of artists across various genres, including Pink Floyd, Coldplay, Lily Allen, and many more. The company’s catalog includes some of the most influential and beloved albums in music history.
In 2012, the Universal Music Group acquired EMI. This acquisition has strengthened Universal Music Group’s position in the global music market and has provided EMI with access to greater resources and opportunities.
Sony Music Entertainment
Sony Music Entertainment is one of the leading global music companies, operating in a rapidly evolving industry. The company has a rich history dating back to the merger of Sony Music Entertainment and BMG Entertainment in 2004, which formed Sony BMG. Since then, Sony Music Entertainment has continued to expand its reach through acquisitions, partnerships, and strategic investments.
Today, Sony Music Entertainment represents a diverse roster of artists across various genres and cultures. The company’s subsidiary labels include Arista, Columbia, Epic, Legacy Recordings, RCA, and Provident Label Group. Notable artists signed to Sony Music Entertainment include Flo Milli, Lil Nas X, Celine Dion, Doja Cat, Bryson Tiller, and Tyla.
Warner Music Group
Warner Music Group is a leading global music company with a rich history dating back to its founding as Warner Bros. Records in 1958. Known for its iconic artists and groundbreaking contributions to the music industry, Warner Music Group has played a pivotal role in shaping popular culture.
Over the years, Warner Music Group has represented a diverse roster of artists across various genres, including Led Zeppelin, Madonna, Green Day, and many more. The company’s catalog includes some of the most influential and beloved albums in music history.
In 2011, Access Industries, one of the largest private investment firms in the world, acquired the Warner Music Group. As the music industry continues to evolve, Warner Music Group remains committed to supporting artists and preserving musical heritage. The company’s legacy is a testament to its enduring impact on popular culture.
Independent Record Labels: A Smaller Share of the Pie
In addition to the four major record labels, independent production companies, or indie record labels, operate without the financial assistance of one of the Big Three (although in recent years, the definition has shifted to incorporate indies that one of the major labels partially own). Ranging from small grassroots or garage labels to large, profitable businesses, indie labels typically produce less commercially viable and more eclectic music than those produced by the larger legacy media companies.
Indie Origins
Independent labels have played a small but significant role in the music industry for as long as people have purchased recorded music. When patents held on sound recording technologies entered the public market in the 1920s, opportunities arose for small recording companies to enter the business. To avoid competing with larger firms such as RCA and Edison, the new independent companies focused on neglected areas of the music industry, such as folk, gospel, and rural blues. When the major labels decided during World War II to abandon then-unprofitable music recorded by Black artists, the independent labels quickly rushed in to fill the void, enjoying a boom during the rock and roll era when R&B music soared in popularity. Between 1955 and 1959, the U.S. market share of the major companies had dropped from 78 percent to 44 percent, while the market share of independent companies rose from 22 percent to 56 percent (History Of Rock, 2009). Sun Records played a particularly important role in the development of both rock and roll and country music by releasing records by Elvis Presley, Jerry Lee Lewis, Johnny Cash, and Roy Orbison.
During the 1970s punk era, indie labels profited from the antimainstream, anticorporate attitude of many punk rock bands, which disassociated themselves from the major labels. The indie-rock movement grew throughout the 1980s and 1990s, with labels such as Matador Records, I.R.S., and Epitaph and epitomized by the music of the Smiths, the Stone Roses, R.E.M., and the Jesus and Mary Chain. This movement, sometimes referred to as underground or “college rock,” would later become reclassified as alternative music. However, as alternative rock grew in popularity, grunge bands such as Nirvana, Soundgarden, and Pearl Jam broke into the mainstream. This attracted the attention of major record labels, which began to look at the music with a commercially oriented approach. Many artists found themselves faced with a dilemma: stay true to their indie roots or “sell out” to a major record label in the hope of financial gain.
The Pressure to Sell Out: Nirvana
Seattle grunge band Nirvana began to achieve success in the late 1980s when they signed to independent label Sub Pop. Popular among college students, the band’s 1989 album Bleach sold well enough for the band to consider moving to a bigger label. Amid rumors that Sub Pop planned on signing as a subsidiary of a major record company because of financial difficulties, the band decided to cut out the middleman and seek a new contract itself (Norris, 2004). Nirvana had options, but in the end, chose to sign with DGC Records (an imprint of Geffen) based on the company’s signing of the respected underground band Sonic Youth. Nirvana released Nevermind in 1991 and found itself thrust into the mainstream. Within 9 months of its release, the album had sold more than 4 million copies (compared to 30,000 copies of Bleach), knocked Michael Jackson’s Dangerous from the top of the Billboard chart, and placed Nirvana at the forefront of public attention.
For Sub Pop, Nirvana’s success was both a blessing and a curse. Under severe financial stress, the label began layoffs in the spring of 1991, reducing its staff of 25 to a core group of five employees (Sub Pop Records, 2008). With the royalties it received from Nevermind, along with the buyout from Nirvana’s contract, and potential royalties from any future albums, Sub Pop got pulled back from the brink of collapse. However, the carefully crafted niche that Sub Pop had found in the music industry vanished. Eager to discover the next big thing in grunge, major labels began scoping out Seattle bands, offering them large advances against which the smaller independent companies could not compete. Sub Pop chief Bruce Pavitt said of one band, “I was told by our head A&R agent that they would be happy with a $5,000 advance. Two months later we were giving them a check for $150,000 (Sub Pop Records, 2008).” In 1995, the company sold 49 percent of its shares to Warner Bros in exchange for financial backing, but it later bought back this stake in 2000, regaining full independence.
Nirvana had equally ambivalent feelings about the transition from a small independent label to a major record company. At a concert shortly after the band signed their deal with DGC, lead singer Kurt Cobain declared to the crowd, “Hello, we’re major-label corporate rock sellouts (Kunkel, 2007).” Having spent several years among the anticommercial, do-it-yourself grunge crowd in Seattle, the band’s members became uncomfortable with their new position as wealthy rock stars.
Advantages of Indie Labels
Although they frequently lose their talent to industry heavyweights, indie labels hold several advantages over major record companies. They generally run smaller operations, enabling them to respond to changing popular musical tastes more quickly than large companies with more cumbersome processes and procedures in place. This enables them to pick up on emerging trends and bring them to market quickly. Although unable to compete with the distribution and promotion power of the major labels, indie labels can focus on niche markets, tapping into regional trends. For example, hip-hop’s initial commercial successes in the late 1970s and early 1980s came through small independent labels such as Tommy Boy and Sugar Hill. Realizing that record executives would find the raw street version of hip-hop unworkable, the labels came up with the idea of using house bands to play with emcees to improve the commercial viability of the genre, a process the Sugarhill Gang used for “Rapper’s Delight,” which would become a worldwide hit (Anderson, 2006).
The nature of the independent production process may also prove advantageous. A shorter path from the creation of the music to distribution and promotion makes it easier to maintain the artist’s original vision. For this reason, many artists prefer to work with independent labels. Fans of independent labels, who trust companies that only produce one brand of music to adhere to a consistent sound and musical style, often find these labels provide more authentic musical experiences.
