Phonograph Records and Prerecorded Audio Tapes and Disks

SIC 3652

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing phonograph records and prerecorded audio tapes and disks. Establishments primarily engaged in the design, development, and production of prepackaged computer software are classified in Computer Programming, Data Processing, and Other Computer Related Services, and those reproducing prerecorded video tape cassettes and disks are classified in the Motion Picture Industries.

Industry Snapshot

In the early 2010s, the business of recording and selling music was an international industry worth billions of dollars. However, the first decade of the 2000s had been rocky for the industry. Forrester Research reported that U.S. music sales and licensing dropped steadily through the decade from $14.6 billion in 1999 to just $6.3 billion. The Recording Industry Association of America (RIAA) reported that sales declined an average of 8 percent annually through the decade. Analysts from the International Federation of the Phonographic Industry (IFPF) reported the overall value of music shipments in 2010 fell 11 percent. Although digital formats grew overall, the distribution of physical formats, including CDs for music, dropped 20 percent.

Although a handful of major companies dominate the industry, the nature of the music business has always guaranteed a place for the small record company attuned to new forms of popular music and specialized interests. The rise of digital music and digital music services, such as Spotify, as well as online file sharing networks that allowed consumers to obtain popular music for free, albeit illegally, were eating away at the industry's financial health. While industry leaders debated how to address the issues of piracy and its actual role in the industry's financial ill-health, there was consensus that CDs were losing considerable ground in the digital age.

Organization and Structure

The business of producing recorded music is like digging for gold because a record company has to pan many streams before it hits the jackpot. The principal work of each recording company consists of locating promising musical acts, producing them commercially, promoting them to fit into a rapidly changing market, producing the recording, and providing efficient distribution. Record companies lose money on recordings that do not sell as well as anticipated, but those that become hits provide such immense profits that they make up for the failures.

Industry Organization.
The Recording Industry Association of America (RIAA) represents over 1,600 member labels, which are private corporate entities like record labels and distributors, and which collectively create and distribute about 90 percent of recorded music sold in the United States. The largest and most influential of the members are the "Big Four" of EMI, Sony Music Entertainment, Universal Music Group, and Warner Music Group. The total retail value of recordings sold by members of the RIAA was reported to be $6.3 billion at the end of 2010, a decline from a high of $14.6 billion in 1999.

Recording companies are often referred to as "labels," although that term became less accurate when large companies began marketing music under several different labels or brands. Originally, the label was synonymous with the company because each recording company had one label that identified its records. Over the years, however, big companies bought little companies, and single firms acquired several smaller companies and their labels. When CBS bought the American Record Corporation in 1938, for example, it acquired both the Brunswick and Vocalion labels. After the very large corporate mergers and buyouts of the late 1980s and early 1990s, each one of the five companies that dominated the market owned many labels. For example, PolyGram had 27 labels and Sony had 25. The industry's dominant companies are known as the major labels or "the majors." Many of the individual labels owned by a large corporation retain their own staff, which enables the large companies to maintain better and more personal relations with the artists, who record on only one label. Independent record companies are usually identified with a single label and are referred to as "the independents" or "the indies."

Single labels often produce only one kind of music. For example, Deutsche Grammophon is a classical music label, Mercury carries country-western music, and Motown is a rhythm and blues (R&B) label, yet all are owned by UMG. Occasionally, a major label will create, rather than buy, a new label to produce one specific genre, such as Warner's Warner Western label that was introduced in 1992. However, not all labels are so limited, including Koch International, an independent label that produces classical, country, pop, and jazz.

Company Organization.
The first job of any recording company is to sign musicians. This is handled by the Artists and Repertoire (A&R) department, which in the first few decades of the industry hired singers, found new songs for these singers to perform, and produced the record. In the twenty-first century, A&R scouts for talent, coordinates the signing of contracts with new talent, finds them songs if they do not write their own, and finds the right producer to oversee their records. These functions make the A&R department one of the largest and most powerful in any recording company.

Rock and roll music changed much of the music industry and affected A&R departments more than any other type of music. Rock musicians often wrote their own songs and found their own producers. The role of the A&R department subsequently became much more limited and relied heavily on the independent producer for the sound of the final product.

The producer of a record, as the name implies, oversees the production of the master recording. The producer serves as the artistic director and business manager for the recording. The record company, through the A&R department, contracts with the artist and producer and provides the advance money for both. The producer then handles the main business aspects of recording the record. These tasks include budgeting for the project, arranging the copyright licenses when necessary, booking the recording studio, and hiring any extra musicians and equipment as needed. While recording companies frequently own studios, independent studios are also used for a variety of reasons, including recording the local musical styles of an area. Most records are still made in one of the three major musical cities--Los Angeles, New York, and Nashville--but studios in small cities with unique musical roots are often hired for their particular sounds.

The producer also oversees the rehearsing, recording, and mixing of the musical tracks. Depending on the musicians involved, the producer sometimes has an enormous artistic role in the recording. The producer may hire out or write an arrangement, making a choice in the sound of the accompaniment. Working with the musicians in rehearsal, the producer frequently contributes to the musical interpretation. Regardless of the size of the group, each instrument and voice is recorded separately on its own track. The producer oversees the "mixdown" of the tracks, combining the individual instruments into the final ensemble sound. The final balance of instruments and voices, as well as the use of different electronic effects, such as tone-quality filters, reverberation, delay, and echo, is determined by the producer. Musicians who want complete control over their artistic productions sometimes produce their own work, but many recordings are coordinated by producers who are trained in sound engineering.

After the master recording is made and delivered to the record company, the production and promotion departments take over. The production department makes the recording and the packaging, which are the physical items that the consumers buy. The producer and the promotion department may both have roles in the artwork for the packaging. A given music video (music videos are a major form of promotion on music television networks) may have the same producer as the recording.

Because the ultimate goal of record companies is to sell records, marketing is frequently the largest and most important department. In this intensely competitive industry, promotion and marketing play a large part in the final success of any recording. Marketing departments use two primary avenues of publicity: radio promotion and media advertising.

Airplay is the most effective form of promotion for any popular recording, whether it is on radio or television, so having a new record programmed onto the playlist is the goal of all promoters. While there are several thousand music format radio stations across the United States, only several hundred are important. Record promoters may send promotional copies to all stations, but they concentrate their efforts on the important few that determine the poll lists in the trade publications, such as Billboard's Top Ten. Most radio stations, however, usually play fewer than 40 songs in rotation in a week. Because the recording industry produces several hundred new recordings each week, the competition is fierce for places on the playlist. In the early 1960s, "payola," or money paid to radio stations to play music, was outlawed, but legal giveaways to radio station program directors and other personnel include records, T-shirts, concert tickets, and invitations to press parties. Music television works much the same way. To become a hit, a song must be played on the radio and be shown in video format on television.

Since 1957, when Dick Clark introduced hit after hit on his dance show, American Bandstand, television has been an effective promotional tool to supplement radio. In 1981 Warner Amex Cable Communications, which became Time Warner, introduced rock music programming to cable television in the form of MTV, and music videos revolutionized the industry. During the first few years, when not every pop musician made videos, MTV provided an avenue for new artists to reach audiences. By the middle of the 1980s, however, MTV became as playlist oriented as radio, and competition to have a video shown became as fierce as on any top-40 radio station. Other channels have also shown music videos, including VH-1, the adult-oriented MTV spin-off; Video Music Channel; Country Music TV; the Nashville Network; and NBC's Friday Night Videos. Videos have become essential to music promotion.

Publicity and advertising departments also cultivate the popular music press when releasing records. Press kits for new artists include carefully prepared biographies presenting the most profitable image for the artist. Both established and beginning artists go on publicity tours, although the rising costs of concert tours have kept record companies from providing full financial support for this form of publicity. In the late 1980s, retail outlets started sponsoring in-house concerts of relatively unknown artists as part of the promotional package. National and local radio and television interviews help to publicize new releases, and music critics receive advance copies of the new records with the hopes that favorable reviews will sell disks. Music trade publications carry much advertising for artists and their recent releases.

Large companies have distributed their records through branch distributors, independent distributors, and mail-order record clubs. In major music cities, branch offices of the recording company distribute their recordings locally in conjunction with local promoters and advertising specialists. In small areas not covered by branch offices, record companies use the services of independent distributors, one-stops, and rack jobbers, who deal with many different record companies and distribute to record stores, department stores, and other record outlets (see SIC 5735: Record and Prerecorded Tape Stores). While retailing is considered a different industry altogether, some major labels own retail outlets. However, they do not limit their distribution to these stores.
The record club was the first company-owned retail venture, pioneered by Columbia Records when it formed Columbia House in the mid-1950s. RCA soon followed, and both have remained the biggest sponsors of direct-mail distribution. Because direct mail avoids middleman costs, the companies continue to make high profits while giving consumers a discounted price. From their inception, record clubs proved profitable for the majors. Shortly after Sony bought CBS Records in the late 1980s, it entered into an agreement with Time Warner, owner of Warner Records, to jointly operate Columbia House Records. In 1993, the two conglomerates announced a new joint ownership and operation of two other direct-mail operations, Warner's Music Sound Exchange for the U.S. market and Sony's Music & More in Germany.

Corporate Structure of Independents.
Independent labels, while varying greatly in size and complexity, generally have few of the administrative capabilities of the major labels. Their strong point is signing and producing new or special interest music, and they often contract out other elements of their business. Small companies like rap music label Flavor Unit Records, which released its first recording in December of 1992, have a skeletal administrative and production staff. Major label Epic Records agreed to promote and distribute Flavor Unit's records. The small company benefits from such an arrangement by gaining access to the publicity power of a major label, while the large company reaps the benefits of an expanding market without much company investment. Small labels that do not connect with major labels often hire out for such services, contracting with independent public relations firms, distributors, studios, and disk factories.

Background and Development

A few years after Thomas Edison invented phonograph recording using wax cylinders in 1877, Emile Berliner developed the disk format of recording. These two formats competed in popularity for a few years, but by the beginning of the twentieth century, the disk format had won. The earliest music recorded was classical, opera, popular Tin Pan Alley music, and Broadway songs. In 1917 the first jazz recordings were made, and in 1920 the first blues were recorded. These recordings signaled the industry's discovery of music performed by and for African Americans, which influenced the industry and U.S. popular music greatly throughout the century. By the 1940s, the genre was universally known as "rhythm and blues."

From the outset, the industry has been dominated by a few large companies. The two earliest recording companies have remained among the majors. The Victor Talking Machine Company, formed as an offshoot of the English Gramophone and Typewriter Company in 1901, eventually became RCA records, and the Columbia Gramophone Company became Columbia Records in the late 1930s. Together, RCA and Columbia have shared the majority of the market for decades. They continue to belong to the majors in the twenty-first century even though they were owned by different corporations by the early 1990s. The industry grew rapidly after 1900, peaking in 1921 with sales of $106 million. However, by 1922 radio had destroyed the market with the free music it offered over the airwaves. Sales fell throughout the entire decade, and when the stock market crashed in 1929, most of the small companies either went out of business or were bought by the two large companies.

Although radio almost destroyed the industry in the 1920s, it saved the industry in the 1930s. The two rival radio networks, Radio Corporation of America and Columbia Broadcasting System, bought the rival record firms, Victor and Columbia Gramophone, respectively. The large profits from the radio industry financed recorded music. New technologies developed for radio, such as the electronic microphone, enhanced music recording as well. Record stars became radio stars, and radio became the main promotional tool for selling records. In the mid-1930s when Jack Kapp, of the newly-formed independent label Decca, reduced the price of records from 75 cents to 35 cents, so people could afford to buy them again, the demand for recordings began to grow. Popular music of the late 1930s and early 1940s included big-band jazz as well as popular Broadway and movie songs and, in limited but growing regional markets, country music and rhythm and blues. The record format during these early years was the shellac disk playing at 78 rotations per minute (rpm) with only one song on each side, dubbed a "single."

The social and economic changes that occurred during World War II created changes in the music world that would impact the industry forever. Because of war-induced shortages of shellac, RCA and CBS limited their record production to mainstream popular music, ignoring the R&B and country markets. Small independent labels grew to fill the gap left by the majors.

Radio also filled the gap between supply and demand. Some stations began programming R&B between the pop music programs, some began to program country music, and some new stations were launched to play only R&B or country. While R&B and country records had previously sold only in small, isolated areas of the country, both could be heard everywhere on radio in the 1940s. A few companies, such as Capitol Records, continued to produce both R&B and country, which extended this music into the pop market. The market diversified as young people, mostly teenagers, began buying all three, R&B, country, and pop. Record formats changed from the 78 rpm single to the 45 rpm single with better sound, and the 33-1/3 rpm long-playing album (nicknamed the "vinyl") started gaining popularity as well, especially for classical music.

The kids who listened to a variety of popular music in the 1940s became the musicians of the 1950s, who played a new kind of music that synthesized all three: rock and roll. Elvis Presley's "Heart Break Hotel," an early rock and roll hit, topped pop, R&B, and country charts. This new music drew increasingly large teenage audiences who, in the affluence of the 1950s, were able to spend more on luxuries like records than were their predecessors. Sales soared. The new music, with its stronger rhythms and lyrics than Broadway show tunes, scandalized conservative critics and frightened the major labels. Independent labels, which were becoming more numerous and growing larger, cashed in on the new music while the majors tried to control the market by making records of their contracted popular crooners singing the new hits. By the end of the decade, the frenzy for rock and roll subsided, and the majors moved back onto the charts with watered-down versions of the rock songs, thanks in part to Dick Clark and his dance show, American Bandstand, which captivated thousands of teenagers by bringing the recording stars into their homes through the medium of television.

The arrival of The Beatles in the early 1960s injected a new fever of activity into the industry, benefiting both the independents and majors. Independent producers, who seemed to understand the new music better than the staff producers of the major companies, became the "wizards" of the industry, discovering and recording the new talents that fed the business. Sales patterns began to change as well. Albums began to replace singles as the dominant format. A wide spectrum of popular musical styles flourished, and FM radio grew in popularity as it played and promoted different types of rock and pop.

Even with the economic recession of the 1970s, which slowed record sales and bankrupted many of the smallest independents, the market continued to grow after the advent of rock and roll. In an effort to produce something for everyone at great profits, record companies expanded the types of popular music available. This effort was especially prevalent during the 1980s, when many new music categories emerged. As the decade progressed, some of these categories splintered further. For example, dance included rap and hip-hop, while rock included acid, punk, techno, and fusion.

The introduction of the compact disc (CD), with its greater durability and improved fidelity, brought new profits to the industries. Sales jumped as consumers began to replace their vinyl collections with the better sounding product, and new markets for older records opened as companies began to re-issue old albums in the new format. By the end of the 1980s, sales of vinyl records almost completely died, and most companies stopped producing the older format altogether in the early 1990s.

During the late 1980s and early 1990s, the biggest independent companies were absorbed into huge conglomerates as large electronics firms bought record labels. Sony Corporation started the trend in 1987 when it bought CBS Records for $2 billion, an unheard of figure. Two years later, EMI, Philips, and Bertelsmann Music Group led bidding wars for the largest independent labels, such as A&M and Motown, which eventually became part of the PolyGram division of Philips. By 1996, six conglomerates controlled the major labels--Time Warner Inc., Sony Corp., Philips N.V., Thorn/EMI, Bertelsmann A.G., and Seagram (MCA).

After several years of sluggish sales due to economic recession, record industry sales figures began to recover in 1992. While unit sales were down 7.5 percent in 1991, they rose 6.7 percent in 1992, with total gross income up 11 percent, which was the strongest gain since 1987. Strong growth continued through 1993 and 1994, with sales in 1994 leaping more than 17 percent over 1993 figures. Industry euphoria was short-lived, however. U.S. music sales for 1995 were an estimated $11 billion, up slightly from 1994 sales. Time Warner's labels (including Warner Brothers, Elektra, and Atlantic) grabbed the lion's share of the market, taking 21.6 percent, followed by Sony Music with 13.9 percent, and PolyGram with 13.5 percent. German-based Bertelsmann A.G.'s Columbia Records came in fourth with 12.4 percent, followed by Thorn/EMI with 9.8 percent and MCA's UNI with 9.7 percent.

Overall, music sales growth was expected to slow between 1995 and 2000. The anticipated slowdown was based on over-expansion of the retail sector and the maturing of the CD format. Much of the growth of the previous decade had come as the result of consumers replacing their libraries of vinyl and cassette albums with high-priced CD versions. CDs were the dominant recording medium in 1995 and 1996, accounting for an estimated 70 percent of industry revenues with an 11 percent increase in the number of CDs sold in 1995 from 1994 sales. The volume of pre-recorded cassettes dropped about 16 percent, causing some analysts to assert that the high retail cost of CDs limited sales to younger consumers. As the CD market became more dependent on sales of current releases in the late 1990s, this price factor was expected to start hurting the industry.

Another threat to new CD sales came from the fast-growing used CD market. Because of the CD's durability and high price tag in relation to previous records and cassettes, several of the largest music retail chains in the United States began to sell used CDs. Previously, only small local stores sold used products. Industry leaders fought back by withholding cooperative advertising dollars rather than lower CD prices as retailers had been requesting for years. They thought this action would be effective because distributors and retailers share some publicity costs at the local level. Artists began to get involved in the dispute. For example, country music superstar Garth Brooks, who had the best-selling country albums at the time, declared that he would refuse to distribute his albums to any store selling used CDs. However, such tactics were ineffective. Independent record retailers responded by filing lawsuits against the four major distributors that instituted the punitive policies at about the same time as the Federal Trade Commission announced it was launching an investigation into the policies. The distributors quickly retreated from their hard line stance, ending the confrontation.

Growth in sales of CD singles were strong in the mid-1990s. The price of a CD single dropped to slightly more than $5 in 1995, putting it well within the budget of the younger consumer. Sales increased more than 84 percent.

In 1999 the industry shipped $4.4 billion in goods and reported 27,053 employees. The recording industry suffered in the early years of the first decade of the 2000s. Unit shipments fell more than 10 percent in 2001, dropping from 1.08 billion in 2000 to 968.58 million in 2001 according to the Recording Industry Association of America (RIAA). Conditions remained bleak in 2002 when Billboard reported that total "album" sales fell 11 percent.

Early in the first decade of the twenty-first century, cassette tapes continued to lose market share to CDs. According to the RIAA, unit shipments of cassette tapes fell almost 42 percent from 2000 to 2001. At the same time, CDs continued to gain a strong market share. CDs increased from 87 percent of industry shipments in 2000 to 91 percent in 2001.

According to some industry observers, rising Internet connectivity and the pervasiveness of digital technology, especially writable CD drives and MP3 players, had much to do with the industry's troubles. In January 2003, Internet Business News reported that the number of Web pages and peer-to-peer applications devoted to file sharing had increased 300 percent from 2001 levels. Forrester Research reported that about 27 percent of Americans downloaded music by the early years of the first decade of the 2000s. Referring to May 2002 survey results from Peter D. Hart Research Associates, the RIAA indicated that "by a more than two-to-one margin, consumers who say they are downloading more also say they are purchasing less." While these findings seem to put considerable blame on file sharing, others argue that many consumers who download music also buy more and that other factors, including a weak economic climate and the popularity of DVDs and video games, have just as much to do with the industry's woes.

Regardless of the cause, by 2003 the major recording companies were struggling to stay afloat amid bleak industry conditions. Companies shipped $4.1 billion in products that year, well below previous years, which translated to approximately $11.2 billion in retail sales, according to the RIAA. This increased slightly to $11.4 billion in 2004.

The industry took a number of different measures to address piracy in the early years of the first decade of the 2000s. One tactic involved putting greater pressure on hardware manufacturers to implement anti-piracy technology. While this protection action was called for in proposed legislation like the Consumer Broadband and Digital Television Act, it led to wrangling between players in the electronics and recording industries. In addition, both domestic and international recording companies were calling for Internet service providers to take measures to stop music piracy by monitoring their networks. Other tactics included making CDs that were not playable, and thus not recordable, on personal computers, as well as other technology that prevented consumers from copying CDs.

The recording industry also moved toward "legitimate" digital music subscription services, which allowed consumers to download music for a fee. In a similar move, six of the leading U.S. music retailers established a service called Echo. However, such services usually limited downloaded music to one device or medium, which irritated many music lovers. Although a shift to digitally distributed music would represent a dramatic change in the industry's business model, these types of limitations were major roadblocks.

By the end of the first decade of the 2000s, legal downloading and purchasing was increasing while traditional sales in retail stores were down. Physical sales of non-digital music, such as albums and CDs, were down more than 31 percent in 2008. However, 492 companies remained in the industry in 2007, according to the U.S. Census Bureau. These companies reported 20,111 employees, with 15,369 classified as production workers, earning wages of $501 million. The industry spent slightly more than $1.8 billion on materials and shipped more than $3.69 billion in product, which fell to $3.6 billion in sales in 2008.

Current Conditions

According to the RIAA, digital musical sales reached 47 percent of U.S. music shipments in 2010, up from just 9 percent in 2005. With an estimated 50 billion mobile devices expected to flood the market by 2020, digital music was well established and growing, promising to leave CDs behind as CDs had replaced the vinyl album and the cassette tape. Industry advocates were quick to blame piracy, offering evidence that both digital and CD sales were harmed significantly by wide scale theft of copyrighted material. According to the IFPI, the digital music industry grew more than 1,000 percent between 2004 and 2010 but revenues from recorded music fell more than 30 percent over the same time, primarily due to illegal downloading of pirated copies of music files.

Although illegal sharing of digital music clearly had a negative impact on the recorded music industry in the early 2010s, some noted that the physical formats of music distribution, particularly CDs, had simply come to an end of their life cycle. A blogger for Zeropaid.com wrote in May 2011, "The real reason for the decline in CD sales is evolving consumer tastes. Is there anything more unsightly or cumbersome than a physical CD? I admittedly even look at people that lug the things around a bit differently. Don't you? It's not like vinyl which has a distinct and warm sound, they're cold silicon discs that have outlived their usefulness."

The number of CDs shipped in 2010 totaled 225.8 million units (worth $3.36 billion), down from 292.9 million units ($4.27 billion) in 2009, representing a decline of 22.9 percent (21.4 percent in total retail value). Music videos units fell from 11.8 million units ($212 million) to 9.1 million units ($178.8 million), representing a 22.6 percent (15.7 percent) decline. DVD music videos units fell from 11.2 million units ($206.9 million) to 8.7 million units ($175.3 million), representing a 22.4 percent (15.3 percent) decline. CD single sales jumped 31.2 percent in unit sales, from 900,000 in 2009 to 1.2 million in 2010, but revenues increased only 7.2 percent, from $3.1 million to $3.3 million. Although vinyl singles dropped roughly 4 percent in unit sales and 9 percent in dollar value between 2009 and 2010, LP/EP sales were the only bright spot in the physical format music sector. While LP/EP unit sales jumped 25.9 percent, from 3.2 million in 2009 to 4 million in 2010, their dollar value jumped 44.4 percent from $60.2 million to $87 million. Overall, the physical distribution of music in the United States in 2010 was 212.4 million units, with a total retail value of $3.52 billion for a decrease of 21.8 percent, down from 271.7 million units in 2009, and a 19.6 percent decrease in total retail value, down from $4.38 billion in 2009.

Industry Leaders

In the first years of the 2010s, the industry was dominated by a handful of huge conglomerates called "the majors." Each owned many different record labels, and each produced hundreds of new potential "hit" records each month.

Universal Music Group.
In the early 2010s, the largest domestic and international distributor of musical recordings was Universal Music Group (UMG), a subsidiary of the French company Vivendi Universal. In 1998, when former Universal parent company Seagram acquired PolyGram and combined the two recording companies, the result was Universal Music Group. By the early years of the first decade of the 2000s, the company had established itself as a market leader in more than 70 percent of the markets in which it conducted business. The company's record labels included Decca, Deutsche Grammophon, Interscope Geffen A&M, Island Def Jam Music Group, MCA Records, MCA Nashville, Mercury Nashville, Polydor, Universal/Motown Records Group, and Verve Music Group. Artists affiliated with UMG included Bryan Adams, Beck, Sheryl Crow, Vince Gill, and Sting. In 2010 the New York City-based company reported sales of $53 million.

Sony Music Group.
Sony Corp., one of the best known names in consumer electronics, was established shortly after World War II. Its early products, which included tape recorders and transistor radios, sold well. In the 1960s, the company led the international electronics industry with its miniaturized products based on the transistor. Increasing competition caused faltering sales growth in the mid-1970s, but Sony dominated the market again in 1978 when it introduced its portable stereo system, the Walkman. Within three years, the company again broke ground when it developed and introduced the CD in conjunction with Dutch electronics firm, Philips.

Sony established itself as the largest record producer when it formed the Sony Music Entertainment International subsidiary and bought CBS Records in 1987. By producing the hardware (equipment) as well as the software (recordings), Sony planned to have better control over the sales of new formats.

The Columbia Broadcasting System, which had been formed in the late 1920s as a separate entity from Columbia Phonograph, entered the record business in 1938 when it purchased the American Record Corporation. The new record division became Columbia Recording Corporation, or Columbia Records. The record group remained a profitable arm of CBS and a major presence in the industry for decades. In the 1980s, when CBS began losing television ratings and revenue, the company sacrificed its record group to Sony Corp., although it was the best-selling U.S. record company.

In the early 2010s, Sony Music Entertainment Inc. was the second-largest global music company. In 2004 Sony merged with BMG Entertainment to form Sony BMG Music Entertainment. As of 2010, the company was functioning as Sony Music Holdings and operated as a subsidiary of Sony, headquartered in Tokyo, Japan, with 2010 revenues of $86.7 billion.

Warner Music Group
Warner Music Group (WMG) was the world�s third-largest record label in the early 2010s. WMG's businesses included both producing recorded music and music publishing. The company was for much of its history a working segment of the Time Warner Inc. conglomerate, but was sold to a group of equity investors for roughly $2.6 billion in 2004. WMG maintains about 35 record labels and holds more than 1 million copyrights from about 65,000 songwriters. In mid-2011, WMG was acquired by Access Industries.

EMI Group Ltd.
The fourth-largest player in this industry was EMI Group Ltd., headquartered in London. It owned the rights to more than 1 million songs, and its main labels included Capitol Records and Virgin. The company is owned by financial giant Citigroup.

Research and Technology

Because the industry is highly reliant on electronics technology, research and technological development in the electronics industry has a large impact on the recording industry. The developments with the greatest impact have been electronic formats with improved sound fidelity.

In the early 1990s, the mini-disc and the digital compact cassette (DCC) formats were introduced. Both formats brought CD quality fidelity to home recording. Industry analysts in 1992 claimed the new formats would benefit long-term growth prospects, encouraging customers to replace their older recordings with the new format. Many in the industry were concerned about the new formats. Recording artists, as well as recording companies, feared the loss of copyright revenues from home recordings because piracy has always been the major form of income loss. However, the consumer electronics industry negotiated compromise legislation in 1992 with government and industry leaders that provided compensation for prospective copies done on the digital machines by imposing royalty fees on the equipment sales. By early 1993, both formats had been released. Due to high initial equipment costs, sales started slowly, but analysts agreed that once prices came down, both formats would do well. While many agreed that one format eventually would dominate, no one could predict which format would win.

As it turned out, such speculation was moot. Consumers once again confounded the experts by failing to show any interest in the new formats. As with the earlier digital audiotape format (DAT), sales languished and consumer enthusiasm was lukewarm at best. The failure of the digital compact cassette (DCC) particularly came as a surprise, because this format at least offered backward compatibility with conventional analog cassettes, allowing users to play their old tapes on their new digital decks. Nevertheless, consumers seemed to be more interested in convenience and affordability than in improved quality, staying away from the new formats in droves. The failure of these formats was puzzling to many in the industry, given the success of CDs. The success of the CD, however, probably had as much to do with its convenient small size and durability as with its improved sound quality. Many audiophiles continued to insist that the analog sound on vinyl records was superior to digital sound.

In the early years of the first decade of the 2000s, the home computer operator could easily become his or her own independent label, thanks to recordable and erasable CDs. Recordable CDs (called CD-Rs) and recording units were first widely marketed in 1996, although the recorders took some experience to operate because they depended heavily on the type of source material. Assuming the source had digital optical output, it could be recorded as input and dubbed much like an audiotape. Erasable CDs first appeared on the market in 1997, but were initially too expensive for the average individual. Erasable or rewritable CDs (CD-RWs) were useful for data storage because old data could be erased and overwritten. Similarly, in music applications yesterday's hits could be erased and replaced with the latest hot tunes.

By the early 2010s, technology was the very thing that was threatening to make CDs obsolete. While millions plugged in their portable devices to download their music, the widespread availability of broadband and wireless networks made downloading music to portable devices faster and more convenient. Automobile models were introduced with a standard audio jack for easy access to plug an iPod or other media/mobile device into the car's stereo system. Using music services like Spotify and Pandora, consumers were able to stream music directly through their computer or portable device without purchasing cuts of their favorite music. CDs were no longer even necessary for "back up" because numerous services offered "cloud" computing, which allowed users to store their data on the Internet, where it was easily accessible from multiple locations.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

News and information about Phonograph Records and Prerecorded Audio Tapes and Disks

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...namely, tapes, phonograph records, discs, prerecorded audio or audio-visual data...carriers, prerecorded magnetic data...blank magnetic disks, prerecorded...music; blank records for phonograph record players, prerecorded...
USPTO ISSUES TRADEMARK: GIRLS GIRLS GIRLS
US Fed News Service, Including US State News; April 13, 2011; 298 words
...Prerecorded phonograph records, prerecorded audio cassette tapes, prerecorded CD's, prerecorded...prerecorded audio-visual records in analog...analog magnetic tape and digital...prerecorded laser disks, prerecorded ...
USPTO ISSUES TRADEMARK: ACM 1899
US Fed News Service, Including US State News; May 23, 2011; 700+ words
...CASSETTE TAPE PLAYER AND...TELEPHONES; RECORD PLAYERS; PHONOGRAPH RECORDS FEATURING MUSIC; PRERECORDED AUDIO TAPES FEATURING...COMPACT-DISKS FEATURING...PLAYERS; PRERECORDED VIDEO TAPES...OPTICAL RECORD READERS...
Uspto Issues Trademark: B-Girl Records
US Fed News Service, Including US State News; September 1, 2017; 627 words
...trademark B-GIRL RECORDS (Reg. No...recordings; Phonograph records featuring...music; Audio tapes featuring music...downloadable audio and video recordings...downloadable audio and video recordings...downloadable audio files, ringtones...tapes, laser disks ...
Uspto Issues Trademark: Laser Native
US Fed News Service, Including US State News; December 3, 2017; 700+ words
...recordings, namely, phonograph records, prerecorded audio cassettes, prerecorded digital audio tapes, audio...prerecorded audio tapes, prerecorded...digital audio tape, prerecorded...tapes, video disks, ...
Uspto Issues Trademark: The Bu Life
US Fed News Service, Including US State News; April 28, 2014; 700+ words
...telephones and wireless devices; prerecorded clips, CDs, video tapes, laser disks, DVDs, audio cassette tapes, phonograph records and audio-visual, digital, electronic...electronic game programs that are prerecorded or for downloading and streaming...
Uspto Issues Trademark: I Am Hd
US Fed News Service, Including US State News; June 18, 2014; 700+ words
...telephones and wireless devices; Prerecorded clips, CDs, video tapes, laser disks, DVDs, audio cassette tapes, phonograph records and audio-visual, digital, electronic...electronic game programs that are prerecorded or for downloading and streaming...

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