Global Music Industry Insights
Global Music Industry Insights
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Arthur Bernstein
Liverpool Institute for the Performing Arts, UK
Naoki Sekine
Epic Records Japan, Inc.
Dick Weissman
University of Colorado - Denver, Emeritus
Routledge Routledge
Taylor & Francis Group Taylor & Francis Group
270 Madison Avenue 2 Park Square
New York, NY 10016 Milton Park, Abingdon
Oxon OX14 4RN
No part of this book may be reprinted, reproduced, transmitted, or utilized in any form by any electronic,
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Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are
used only for identification and explanation without intent to infringe.
Bernstein, Arthur.
The global music industry : three perspectives / Arthur Bernstein, Naoki Sekine,
Richard Weissman.
p. cm.
ISBN 978-0-415-97579-7 -- ISBN 978-0-415-97580-3
1. Music trade. I. Sekine, Naoki. II. Weissman, Dick. III. Title.
ML3790.B39 2007
338.4’778--dc22 2006039004
1 Introduction 1
Index 271
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ABOUT THE AUTHORS
Arthur Bernstein is American born but has lived in Europe since 1976.
A professional musician, he has worked as a guitarist and bassist in the
United States and Europe playing pop, rock, jazz, blues, folk, country,
and show music on guitar and bass. In 1978 he cofounded the “L’Aula de
Música” in Barcelona, Spain. This was the first private music school of its
type in Spain, with a curriculum focusing on contemporary pop music. In
1995 Bernstein was appointed head of music by the newly founded Liver-
pool Institute for Performing Arts (LIPA) in Liverpool, United Kingdom.
LIPA is an innovative, world-class, university-level arts institution, whose
lead patron is Sir Paul McCartney. An active international education con-
sultant, he has been an adviser to industry and government bodies such
as the European Music Offce and the European Commission on matters
relating to music, training youth, and the music industry. He is a found-
ing member and vice president of the Brussels-based European Modern
Music Education Network.
Naoki Sekine is Japanese but studied music business at New York
University. He works for Epic Records Japan, Inc., and is a company liai-
son to ten Asian countries, including China, India, and South Korea. In
this capacity, he is deeply involved with contemporary music styles in Asia
in a company that has a worldwide presence. He has written an extensive
paper on the Asian music industry for the United Nations Educational,
Scientific, and Cultural Organization (UNESCO). He can be reached at
neokis@[Link].
Dick Weissman has an extensive background in studio work, record
production, songwriting, and music business education. He was a mem-
ber of the folk-pop group The Journeymen and has also recorded numer-
ous solo instrumental albums. He has worked in the industry in New York
and Los Angeles and is probably the most published American author
writing about the music industry. This is his twelfth book on music and
the music industry. His Web site is [Link].
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CHAPTER 1
Introduction
lence. Of course in popular music this had always been the case to some
extent, but it was accentuated in rock-and-roll records. In the early Elvis
Presley records, for example, the musical content of the recordings is gen-
erally simple, but the energy and emotion communicated are profound.
As a consequence the music began to be recorded in places such as Mem-
phis or New Orleans, cities large enough to have recording facilities but
far from the headquarters of the major record companies. Initially rock
and roll was primarily an American phenomenon, but the British bands,
notably the Beatles, the Rolling Stones, and Led Zeppelin, quickly con-
verted what was a phenomenon based on a marriage of American roots
music styles into what by now is a worldwide vocabulary.
By the end of the 1960s the smaller early American music centers had
declined, and the American music business was headquartered in New
York and Los Angeles, with the relatively new country music center of
Nashville on the rise. Although many British rock-and-roll bands came
from such cities as Liverpool and Newcastle, in England the London stu-
dios prevailed. In India the music scene became, and to a large extent
remains, connected with the “Bollywood” movie industry, which centers
in Mumbai (Bombay).
Each country or area of the world has its own indigenous musical styles
and tastes. One of the many revolutionary aspects of the Beatles’ music
was that they brought Indian music to worldwide attention. The Rolling
Stones and Led Zeppelin also plowed this ground, integrating Middle
Eastern and North African music styles into their music. At the same time
some new pop music styles arose and spread far beyond their origins. Reg-
gae, born in Jamaica, was one example. One man, Chris Blackwell, was
largely responsible for the spread of the music, turning Jimmy Cliff and,
even more notable, Bob Marley into worldwide superstars. Many of the
sidebars of rock and roll, such as art rock and punk rock, owe their origins
to British rock bands. Salsa is a musical style that arose in New York and
resulted from the large Puerto Rican and Cuban exodus to New York
City and Miami. Heavy metal music developed in New York and Lon-
don, and Bhangra rock is a musical style that fused rock-and-roll music
with Indian musical idioms. It is particularly popular in London and has
been exported to India. Bhangra is also partly a function of the large-scale
4 The Global Music Industry
immigration from India and Pakistan to England. Dance music has been
particularly popular in Germany, and Europe in general has been active
in the electronic pop music, which is synthesizer driven.
African American musical styles became increasingly important not
only in the United States but also internationally. Among these styles were
rhythm and blues, which evolved out of a combination of folk-blues and
band styles, followed by soul music, which added gospel music vocal styl-
ings to the mix. During the 1980s rap music began to emerge as an impor-
tant musical style, which remains today. Rap music has developed in many
seemingly unlikely places. In North America there are American Indian
rap groups, Chicano rap groups, and even Chinese rappers. Of course
foreign-language rappers have appeared in various parts of the world.
Experiments in integrating the music of different cultures into pop
music were occurring as early as the Weavers’ folk-pop recordings of the
early 1950s, notably the South African song “Wimoweh,” a hit recording
not only in their version but also in a slightly rewritten American version
called “The Lion Sleeps Tonight.” Paul Simon’s Graceland album of 1986
integrated South African music into American pop, with worldwide suc-
cess and repercussions. Peter Gabriel and David Byrne each started record
labels devoted to world music styles, and world music assumed a place in
record bins and record-company advertising. It has never been entirely
clear what world music is; as publicized it appears to involve integrating
the music of various cultures into a pop framework, so that musicians
from different cultures play their musical styles together. Musical styles
that were once restricted to a particular area and culture, such as Hawai-
ian slack-key guitar, become combined with other musical styles in a way
that might have been regarded as unimaginable twenty years ago. Ameri-
can musicians such as Bob Brozman, Ry Cooder, Corey Harris, Henry
Kaiser, Taj Mahal, and David Lindley have played with musicians from
Africa, Norway, Hawaii, and India.
The emergence of musical hybrids is a never-ending process, and the
latest flavor is reggaeton, a Panama-originated fusion of reggae, Jamai-
can dancehall, American rap, and varied helpings of other Latin rhythm
patterns.
Introduction 5
There have always been a few large record companies that dominated the
production and distribution of records. Independent companies have peri-
odically arisen in various countries that reflect cutting-edge musical styles
that originated in these countries. Starting in the 1980s many of these
independent labels were purchased or absorbed by the large multinational
record companies. By the 1990s these companies began to affiliate with
one another. At the present writing there are only four large companies
that are left. The 1990s and early 2000s saw the demise of such large
independent labels as A&M, Chrysalis, Virgin, and Zomba Records.
The ownership patterns of the companies also became transformed at the
same time. The bulk of the large companies—Columbia, Decca, and then
MCA, RCA, and Warner Brothers—were American owned. Only Capi-
tol, a subsidiary of British-owned EMI, was not an American-owned com-
pany. Columbia was subsequently bought by Sony of Japan, MCA was
acquired by Vivendi, and RCA was bought by the German Bertlesmann
Music Group. RCA and Sony are in effect one company, operating under
a joint ownership agreement. Universal, the successor of MCA, swallowed
up many companies. It is currently owned by what was originally a French
sewer and water exploration company, Vivendi. Warner Brothers is the
8 The Global Music Industry
only American-owned company left of the major labels. For several years
now it has been anticipated that Warner Brothers and EMI will merge,
and as we conclude this book in the summer of 2006, each company has
offered to buy the other one. So far neither one has accepted the other
one’s offer. Vivendi and Sony BMG are so much larger than the others
that this merger seems to be a natural outcome of all of this merger mania.
The future of BMG is also cloudy, and there have been numerous conflicts
between BMG and Sony over how the joint venture should be operated.
BMG is in the process of selling off its music publishing operation, and
it is conceivable that it will eventually divest itself of the record company
as well.
A Korean IT company recently purchased more than 50 percent of
a local Korean record company. The Korean music industry is by far the
world’s leading market in digital music distribution. In 2004 nonpack-
aged sales exceeded package sales by 60 percent. Given the growth of the
market, further Korean acquisitions appear likely.
transmission of music, and we can expect that the RIAA will be tak-
ing action against them. This in turn has led to many debates about the
future of copyright and the right to use the Internet freely. We will take
up some of these issues later in this book. The most recent data, revealed
by Big Champagne, a company that monitors file sharing on the Internet,
indicate that the RIAA’s various legal challenges have not in fact reduced
illegal downloading of recordings.
The consolidation that we have described is not limited to record com-
panies. The world’s two largest publishers, EMI and Warner Chappell,
control hundreds of thousands of copyrights. Over the years each com-
pany has acquired numerous publishing catalogs that originally belonged
to other companies. Even in the business of printing sheet music, there are
only a handful of companies that control most of the written music pub-
lished in the world. Alfred Music, an independent music print publishing
operation, recently acquired the print division of Warner Chappell, and
Hal Leonard and Music Sales have gobbled up various music publishing
companies over the past ten years. As is the case with record companies,
there are few independents of any consequence left. All of these compa-
nies sell sheet music around the world.
simply buys into an existing distribution company and will even funnel
some of its own records through it. For example, Sony recognizes that
Caroline, which it partly owns, is better equipped to distribute alternative
rock music than the mother label is.
There are several other strategies that the majors have employed. One
is to become involved in the ownership of independent labels. Warner
Brothers bought a stake in Sub Pop, the label that was the pioneer in the
marketing of the Seattle sound. It then bought the rest of the company
but retained its Seattle headquarters. Another ploy is for record compa-
nies to go into business with an artist or producer and to give that person
their own imprint. In such instances the large company usually finances
the label and offers promotion, manufacturing, and distribution help.
Madonna’s Maverick Records was an example of such an alliance. Mav-
erick had great early success through the recordings of Alanis Morissette,
but eventually Warner Brothers bought her out of the label after a series of
disagreements. There are a number of instances where the labels discover
successful artists but do not always have the business acumen to operate a
label or make commercially valid choices of the artists that they sign.
The other method used by the majors is called upstreaming. In
upstream deals the major picks up recordings from an independent label,
either based on a specified sales figure or through some sort of option
deal. Upstream deals provide an independent label with better promotion
and financing. In return the major gets cut in on the profits. This follows
a fairly common attitude of the large labels. They often prefer to let the
independent stake a risk on new musical styles or controversial artists,
stepping in only when these artists become proven sellers.
An interesting change has been taking place in the way that major
labels operate their businesses. During the 1970s and 1980s record compa-
nies acquired more and more music-related businesses. Columbia Records
owned Steinway Pianos and Fender Guitars for a time, as well as the New
York Yankees baseball team. All of the major labels owned record-pressing
plants, and many of them, such as Polygram and RCA, were active in the
electronics business, and RCA was involved with the defense industry.
Record companies were also involved in the ownership of radio networks,
all of which have now been liquidated. A similar situation occurred with
Introduction 11
cable television. Some multinationals were also involved in the film busi-
ness, but Sony is the only company still active in this area. Bertlesmann
is the largest book publisher in Western Europe and also owns Random
House. Current unsubstantiated rumors indicate that the Random House
operation may be sold off from the rest of the operation.
The current trend is for the majors to sell off many of these assets.
They are doing this because they want to get cash for their assets and
because they are discovering that operating multiple businesses under the
same managerial umbrella is sometimes a distraction from focusing on
music. At present all of the majors still own their own music publishing
operations, although as we have already mentioned Warner Brothers has
retained its copyrights but sold its print division. Warner Brothers was the
only major record company that was active in the print business. Should
Warner Brothers and EMI reach an agreement to amalgamate, there is a
strong possibility that one or the other company will have to liquidate its
music publishing operation, because many industry observers believe that
the European commission that regulates monopoly would balk at seeing
the creation of a single music publishing operation that is several times the
size of the next largest company.
The most current development in terms of the industry-wide trend
to consolidate is that the European regulatory commission has decided
to look into the Sony BMG agreement. This agreement was approved by
the commission in 2004 but is being reviewed once again at the request
of European independent record labels. The prevailing industry senti-
ment is that the commission will not rescind its approval, but nevertheless
this development has put something of a damper on the EMI–Warner
Music negotiations. At the time of this writing, BMG had sold its music
publishing division to Universal. If the European Anti-Trust Commis-
sion approves the sale, Universal Music Publishing will become the largest
music publishing company in the world.
Table 1.1
Comparison of Record Sales in Various Countries
Market Trade Value
Position Country in Millions of US$
1 United States 7,011.9
2 Japan 3,718.4
3 United Kingdom 2,162.2
4 Germany 1,457.5
5 France 1,248.3
6 Canada 544.3
7 Australia 440.0
8 Italy 428.5
9 Spain 368.9
10 Brazil 265.4
11 Mexico 262.7
12 The Netherlands 246.3
13 Switzerland 205.9
14 Russia 193.7
15 Belgium 161.8
16 South Africa 158.8
17 Sweden 148.2
18 Austria 138.7
19 Norway 133.1
20 Denmark 113.1
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