The popular music industry, and associated distribution/promotion/radio outlets, sell over a billion tapes/discs annually in 60,000 music stores; about 20% of that music is rock, 13% is African-American oriented contemporary music, and 14% is country (Baran, 2002, p. 251).

Four major conglomerates dominate the industry, controlling 90% of the market (Baran, 2002, p. 251):

• SONY (Columbia/Epic Records)
  

• BMG (owned by Bertlesmann: RCA/Arista)
  

• Universal Music (owned by Vivendi: MCA)
  

• Warner/AOL (Atlantic, Electra, Warner, EML)

Stanley Baran (2002) identifies three problems with the domination of the industry by these conglomerates (problems that also parallel those of the film industry, also dominated by a few conglomerates):

• “cultural homogenization:” derivative, predictable, manufactured groups such as ‘N Sync of the Back Street Boys are favored over seeking out and developing new, original local bands.

• “dominance of profits over artistry:” to pay millions of dollars for superstar performers, less-well-known groups are eliminated or not signed, particularly controversial groups, creating “infringement of artistic freedom.”

• “promotion overshadows the music:” groups that marketable and have corporate sponsorship can go on tours to attract a fan following. Without fans, groups have difficulty obtaining sponsorship. The industry also controls radio playlists, promoting only their own groups whom they have selected to market.

These large conglomerates can only control the industry through how they produce and market CDs, which have relatively high profit margins. They also can afford to sign up major stars and therefore control copyright access to these stars older songs, which are re-released in the form of “biggest-hits” CDs. These copyright profits also include uses of songs on the radio, in advertising, or in films, which are also often produced by the same conglomerates, an example of the cross-promotion synergy that exists within the multiple units within a larger mega-conglomerate (O’Sullivan, Dutton, & Rayner, 2003).

The PBS Frontline program, The Way the Music Died, (click here for a video of the entire program) documents the ways in which the conglomerate music industry owners focus primarily on marketing the music as product through the appearance of the musician on an MTV video or album cover photos, as opposed to concern about the quality and originality of the music.

It posits that the decline in album sales (from $40 billion in 2001 to $28 billion in 2004), while influenced by free downloading, is also influenced by a decline in the music quality given this focus on marketing big hits by familiar “big name” musicians, as opposed to searching out and fostering new, original talent. The program tracks the development of a new, young singer, Sarah Hudson, by a small company, as contrasted with the expensive promotion of a new band, Velvet Revolver, made up of musicians from Guns N' Roses and Stone Temple Pilots and sponsored by RCA Records. In the end, a Velvet Revolver, thanks to large-scale promotion, is on the top of the Billboard chart, while the Sarah Hudson song does not make the chart.

Music industry promotions

A Chum Television Study Guide: The Recording Industry

The video Money for Nothing: The Business of Pop Music examines the following question: “Of the thousands of musicians who perform music today, why do some of them become stars and have their music heard by millions, while others don’t?” The video also examines the ways in which the industry controls four primary gateways to consumers: radio, television, touring and retail (from the curriculum guide):

1. Radio:
   

   • The 1996 Telecommunications Act removed restrictions on the number of radio stations any one company could own and accelerated the trend of a small number of companies owning the vast majority of stations.
     

   • Because three super “corporations” own almost all of the radio stations in the country, the system is closed: independent music is shut out, and the result is that deejays have no power and big-market stations around the country all sound the same.
     

   • Major labels have a huge influence on what records radio stations play: they work closely with radio stations and pour substantial amounts of money into them to assure that their music is played.
     

   • In the 1950s, Congress conducted hearings into “payola” scandals involving record deejays who took money under the table from record executives in exchange for playing the company’s music.
     

   • Today the scenario is much the same, except that it’s become legal and no longer triggers public discussion about “musical or artistic integrity.”
     

2. MTV:
   

   • MTV has immense power to advertise music by broadcasting videos that reach 320 million houses in 90 countries on five continents.
     

   • MTV is essentially a 24-hour infomercial, virtually all of its content designed to sell the products of their parent company or the paid advertisers with whom they do business.
     

   • The major record labels have extremely close ties to MTV — the two feed off one another.
     

   • MTV’s Total Request Live, perhaps the most influential television show in the music industry, is live, but in reality limits what can be “requested” to a very slim, carefully crafted roster of corporate-approved choices. To even be in a position to be “requested,” an artist needs plenty of promo money, connections and tie-ins – by definition excluding truly alternative choices.

3. Touring:
   

   • Corporate control is also central when it comes to the business of touring.
     

   • If artists, even alternative artists who gain popularity without corporate backing, want to play large venues, they must pass through the corporate gates.
     

   • This control amounts to huge touring costs, which translates into further debt for artists and high ticket prices.

     Webquest: On Tour
     

4. Retail:
   

   • Three companies exercise inordinate control over the retail music industry: Walmart, Best Buy and Transworld.
     

   • These three companies account for the majority of retail music business, which gives them tremendous influence over the kinds of music that are produced.
     

   • If Walmart, who alone accounts for almost 10% of all music sales, decides it will not carry a record because of objectionable content, this exerts huge pressure on the major labels to change musical content rather than retailers.
     

   • Similarly, with sales at the Walmarts of the retail world determining the national taste for music, more diverse tastes are crowded out because they are considered too expensive and risky – threatening the livelihood of an entire generation of artists and an entire generation of independent music store owners.

     Webquest: music copyright
     
     
     

Control of CD content/distribution

In a study by Arbitron and Edison Media Research, as of Summer 2003, an estimated 103 million Americans age 12 and older have ever used Internet audio or video broadcasts. The study reveals that the percentage of all Americans who currently use Internet audio or video (44 percent) is nearly twice the size of what it was three years ago (24 percent). For a PDF copy of the study: http://www.arbitron.com/home/content.stm

One of the major challenges facing the music industry is the large-scale down-loading and sharing of CD content on the Internet — a process originated by Napster. Click here for a 2000 PowerPoint presentation on the nature and issues associated with uses of Napster.

When the conglomerates argued that downloading their music represented a form of illegal piracy of copyrighted material and were successful in shutting down Napster, other Napster substitutes for free downloading quickly arose:
 
KaZaA
Gnutella

Universities are (as of 2003) under pressure to stop their students from using university computer server space for downloading music.
they attempted to create their own on-line distribution retailers that would provide custom-made collections, such as Musicmaker.com.

Other commercial outlets also provide sites for pay-for-music. The Apple site (at $ .99 a song) has been particularly popular.

Other commercial download sites:
mp3.com
MTV.com
Lycos.com

The Recording Industry Association of America [industry organization]

Media Awareness Lesson: Teaching About Napster

Webquest: the downloading issue

The New Music: The Future of Music [ A Chum Television Study Guide: deals with the issues of downloading ]

Webquest: TeenMusic [ use of the Internet in studying music ]

Promotion/distribution of music by the music industry

Most of the recorded music available commercially does not succeed in making a profit. This is particularly the case with less-well known groups or groups who record on independent labels. In 2002, there were 30,000 CDs released, but 25,000 of those CDs sold less than 1,000 copies. Only 404 albums sold more than 100,000 copies. These tended to be “big name” superstars who are familiar, often non-controversial, and widely promoted by the industry. This means that many new, alternative, or controversial musicians are not able to make a living from recording music. Moreover, many have difficulty making money in playing in local clubs or venues, because the larger venues or halls are controlled by the same conglomerates who are promoting them.

The extent to which a single or group musician is successful is often a function of the marketing and distribution provided by large companies who can afford such promotions of CDs. One key strategy in doing so is to promote one particular hit song on that CD through releasing that song to radio stations prior to release of the CD, particularly on the stations “A list” — of more than 30 times a week. It is here that the cross-promotion within corporations such as Clear Channel become important because Clear-Channel-owned radio stations can select those songs it wants to promote by artists whom it is also promoting for its own tours in its own concert venues.

In 2000, Clear Channel bought SFX, one of the world’s largest live music promotion organizations, which owned 120 venues in 30 of the top 50 American markets. This meant that Clear Channel now controls not only the promotion of musicians on its radio stations, but also on its venues. As the Clear Channel web site notes:

Clear Channel Entertainment is the power of live entertainment:

As the world’s leading promoter and marketer of live entertainment, Clear Channel Entertainment is about providing fun and exciting experiences to millions of entertainment and sports lovers the world over. From the Backstreet Boys and U2 to *N Sync and Madonna ... from Scooby Doo Live, and David Copperfield to The Producers, and Sweet Smell of Success ... Supercross and Monster Trucks to the International Hot Rod Association ... everybody plays a Clear Channel Entertainment stage. Clear Channel Entertainment’s unparalleled array of events attracts the best and brightest performers on the planet, from the most celebrated international superstars to the most innovative new talent.

Clear Channel Entertainment, formerly known as SFX, is a subsidiary of Clear Channel Communications, Inc. Clear Channel is a global leader in the out-of home advertising industry with radio and television stations, outdoor displays and entertainment venues in 63 countries around the world. Including announced transactions, Clear Channel operates approximately 1,213 radio and 19 television stations in the United States and has equity interests in over 240 radio stations internationally. Clear Channel also operates approximately 770,000 outdoor advertising displays, including billboards, street furniture and transit panels across the world.

Musicians whose CDs are perceived as “controversial” are not promoted by Clear Channel. Clear Channel radio stations were encouraged to stage pro-war rallies during the Iraq War.

All of this increased concentration of ownership was fostered by the 1996 Telecommunications Act, which deregulated ownership rules to allow companies to own more radio stations. In an analysis of the impact of these deregulation, Jenny Toomey, writing in The Nation (December 23, 2002)
notes that:

The 1996 act opened the floodgates for ownership consolidation. Ten parent companies now dominate the radio spectrum, radio listenership and radio revenues, controlling two-thirds of both listeners and revenue nationwide. Two parent companies in particular — Clear Channel and Viacom — together control 42 percent of listeners and 45 percent of industry revenues...

Still, from 1996 to 2000, format variety — the average number of formats available in each local market — actually increased in both large and small markets. But format variety is not equivalent to true diversity in programming, since formats with different names have similar playlists. For example, alternative, top 40, rock and hot adult contemporary are all likely to play songs by the band Creed, even though their formats are not the same. In fact, an analysis of data from charts in Radio and Records and Billboard’s Airplay Monitor revealed considerable playlist overlap — as much as 76 percent — between supposedly distinct formats. If the FCC or the National Association of Broadcasters are sincerely trying to measure programming “diversity,” doing so on the basis of the number of formats in a given market is a flawed methodology...

Musicians are also suffering because of deregulation. Independent artists have found it increasingly difficult to get airplay; in payola-like schemes, the “Big Five” music companies, through third-party promoters, shell out thousands of dollars per song to the companies that rule the airwaves. That's part of why the Future of Music Coalition undertook this research. We at the FMC firmly believe that the music industry as it exists today is fundamentally anti-artist. In addition to our radio study, our projects — including a critique of standard major-label contract clauses, a study of musicians and health insurance, and a translation of the complicated Copyright Arbitration Royalty Panel proceedings that determined the webcasting royalty rates — were conceived as tools for people who are curious about the structures that impede musicians' ability to both live and make a living. Understanding radio deregulation is another tool for criticizing such structures. We have detailed the connections between concentrated media ownership, homogenous radio programming and restricted radio access for musicians. Given that knowledge, we hope artists will join with other activists and work to restore radio as a public resource for all people.

Another key factor is the ability to distribute CDs through large retail outlets such as Wal-Mart, Sam Goody, Musicland, as well as on-line retailers, Amazon.com and clubs such as Columbia House or BMG.

One issue with distribution through Wal-Mart is that they will not distribute songs with lyrics they perceive as offensive, leading some musicians to change their songs to avoid not being distributed by Wal-Mart.

Another key factor in promotion are the popularity ratings for songs as evident in various ratings charts, such as the Billboard ratings.

These charts are driven by the relationship of purchases as well as what is mostly frequently played on radios — two factors that can also influence each other. Thus, the degree to which the industry can encourage stations to play their songs can influence sales, which is turn influence what songs are selected for the station’s playlists. Stations themselves are concerned about their own Arbitron popularity ratings which influence charges for advertising, ratings they know are based on their ability to play popular songs.

Control of promotion/playlist by Clear Channel

One example of the corporate control over what music is played is best illustrated by Clear Channel Corporation, headquartered in San Antonio, Texas. The company owns nearly 1,200 radio stations and effectively controls the rock radio market. It also owns SFX Entertainment, the nation’s dominant concert-venue owner and touring promoter, which also controls bookings at the Target Center. And, as noted on the Clear Channel web site:

Clear Channel’s Premiere Radio Network syndicates more than 100 programs to more than 7,800 radio stations total. Premiere reaches 180 million listeners a week with its network of top #1 names including Rush Limbaugh, Dr. Laura Schlessinger, Rick Dees, Casey Kasem, Jim Rome, Carson Daly and Art Bell. Premiere also broadcasts Clear Channel Entertainment concerts and new CD debuts, enhancing the synergies between divisions.

In the Twin Cities, Clear Channel owns seven radio stations: KDWB, KEEY (K102), KFAN, KFXN, KQQL (KOOL 108), KTCZ (Cities 97), and WLOL. Disney/ABC own KQRS and 93X. They control the playlist, which rarely includes local bands such as Big Wu, Mason Jennings, Atmosphere, and Dillinger Four.

In a series of articles on Clear Channel in Salon.com, Eric Boehlert notes the following:

“They’re definitely bullies, no question about that,” says Ed Levine, chairman of Galaxy Communications, whose stations compete with Clear Channel in several upstate New York markets. “They've truly become the evil empire. Like everything else, Clear Channel has gone too far, gotten too greedy and too powerful. As a broadcaster who grew up in the business I don't believe their overall net effect for radio has been positive."….

It’s not just the sheer number of stations that upsets so many people. Thanks to laissez-faire regulators in Washington, Clear Channel quickly has put together a stunning piece of vertical integration in big-money pop culture. Last year, the company spent $4.4 billion to purchase SFX Entertainment, the nation’s dominant concert venue owner and touring promoter. Clear Channel also owns a radio research company, a format consultancy, regional radio news networks, an airplay monitoring system, syndicated programming, radio trade magazines like the Album Network, 19 television stations and 700,000 outdoor billboards worldwide. With so many resources at hand, the company has all but cut off its business with outside vendors….

Since concert fans listen to the radio a lot, there has long been a symbiotic relationship between concert venues and local radio stations. Ceaseless radio promotion helps sell concert tickets; and association with the hottest concert tours gives the stations concert tickets to give away and valuable P.R. identification with the best shows in town. Clear Channel, the company’s critics say, has been using its size to wrestle away tours from competitors by leveraging its size against record companies and artists.

And in “Pay for Play” Boehlert details the new payola — the complex arrangements under which the world’s major record companies pay for virtually every rock song broadcast on commercial radio.

Standing between the record companies and the radio stations is a legendary team of industry players called independent record promoters, or “indies.”

The indies are the shadowy middlemen record companies will pay hundreds of millions of dollars to this year to get songs played on the radio. Indies align themselves with certain radio stations by promising the stations “promotional payments” in the six figures. Then, every time the radio station adds a Shaggy or Madonna or Janet Jackson song to its playlist, the indie gets paid by the record label...

There are 10,000 commercial radio stations in the United States; record companies rely on approximately 1,000 of the largest to create hits and sell records. Each of those 1,000 stations adds roughly three new songs to its playlist each week. The indies get paid for every one: $1,000 on average for an “add” at a Top 40 or rock station, but as high as $6,000 or $8,000 under certain circumstances.

In a Pioneer Press article, by Jim Walsh and Brian Lambert, “Clear Channel’s reach is a concern” (7/9/02) noted that attempts are being made in Congress limit the control of these conglomerates:

In the meantime, the musicians are caught in the middle, not knowing how to make money in a system in which they have very little control. One organization, The Future of Music, is a coalition of interest groups that is attempting to educate policymakers and the public about in the influence of the industry on the distribution and promotion of their music. In their “manifesto,” they note:

Manufacturing and distribution monopolies concentrate the power of over 90% of music sold into the hands of five labels. With huge media mergers continuing to consolidate the decisions of what to play and promote, it becomes more and more difficult for artists to gain exposure through the few remaining coveted radio spots.

Historically, musicians have had one of two unattractive choices:

1. Align themselves with major label exploiters and agree to unfair compensation in the hopes of one day reaching a national audience; or
   

2. Resign themselves to working with indies and a life in the shadows.
   

The Good News
Recent advances in digital music technology are loosening the stranglehold of major label, major media, and chain-store monopolies. Digital download and online streaming technology offers musicians a chance to distribute their music with minimal manufacturing and distribution costs, with immediate access to an international audience. Songs that would never be programmed through currently-existing narrow commercial channels are slipping through the radio industry programming stranglehold and gaining exposure, thanks to the new breed of file-sharing programs.

The Bad News
As these technologies advance, their very accessibility threatens many of the traditional revenue streams (like mechanical royalties) which compensate musicians, often without substituting new payment structures.

Webquest: Radio Production [ students must create a playlist for a radio station ]

For further reading:

Foust, J. (2000). Big voices of the air: The battle over Clear Channel radio. Ames, IA: Iowa State University Press.

Goldberg, J. (2003). The ultimate survival guide for the new music industry: A handbook for hell. New York: Long Eagle Press.

Howard, G. (2003). Getting signed!: An insider’s guide to the record industry. Berklee Press.

Negus, K. (1998). Music genres and corporate cultures. New York: Routledge.

Spellman, P. (2002). The musician's Internet: Online strategies for success in the music industry. Boston: Berklee Press.

Thall, P. (2002). What they'll never tell you about the music business: The myths, secrets, lies (& a few truths). New York: Watson-Guptill.

Module 9: Word document

The Value of Studying Popular Music

Purposes for Studying Popular Music as Media

Development of Recorded Popular Music

Different Music Genres

Rock

Jazz

Soul/Motown

Blues

Hip Hop/Rap

Punk

Folk

Country

Cajun/Zydeco

The Music of Protest

Music Videos

Film Music

The Economics of the Popular Music Industry

Studying Radio

Teaching Activity

References