Back in time (III)

That kind of domination led to big profits – but also a vulnerability to the Next Big Thing, which arrived in the 1950s in the form of rock ‘n’ roll. At first the big companies simply didn’t take the genre seriously. It seemed to be a fad, after all, and one that would appeal only to teenagers, a small niche audience with little money to spend. “It will pass,” an expert on child development told the New York Times after describing what had happened with the Charleston and the jitterbug, “just as the other vogues did.”

Mainstream audiences were unimpressed by the quality of rock ‘n’ roll, too. “It does for music what a motorcycle club at full throttle does for a quiet Sunday afternoon,” Time commented. Frank Sinatra felt even more strongly. “Rock ‘n’ roll smells phony and false,” he told a Paris magazine. “It is sung, played and written for the most part by cretinous goons, and by means of its almost imbecilic reiteration, and sly, lewd, in plain fact, dirty lyrics… it manages to be the martial music of every sideburned delinquent on the face of the earth.”

Sinatra wasn’t alone in perceiving rock ‘n’ roll as immoral. Channeling questions being asked around the country, the New York Times asked: “what is this thing called rock ‘n’ roll? What is it that makes teenagers – mostly children between the ages of 12 and 16 – throw off their inhibitions as though at a revivalist meeting? What – who – is responsible for these sorties? And is this generation of teenagers going to hell?” The Times went on to give some credit for this rock ‘n’ roll’s “Negro” roots, which, it explained, provided the music with a “lustier” beat that had a “jungle-like persistence.”

In the South, segregationists seized on this idea, one claiming that the music was a “Negro plot to subvert God-given values.” In the north, one prominent psychiatrist described it as a “cannibalistic and tribalistic” form of music and a “communicable disease.” Community leaders around the country called for boycotts of radio stations that played rock ‘n’ roll, and government officials banned concerts, worried about the hysteria they brought on. “This sort of performance attracts the troublemakers and the irresponsible,” Mayor John B. Hynes of Boston, declared. “They will not be permitted in Boston.”

Not everybody agreed. The disc jockey Alan Freed defended and promoted the music, arguing that it had a natural appeal to young people, who, he claimed, were better off in theaters, listening and dancing and letting off steam, than out on the streets making trouble. “I say that if kids have any interest in any kind of music,” he told the New York Times, “thank God for it. And as they grow up, they broaden out and come to enjoy all kinds of music.”

Freed was more prescient than the big record companies, which worried that if they were to embrace rock ‘n’ roll they would alienate their main audience and tarnish their reputations. Given what they perceived as the music’s niche appeal, inferior quality, and culturally threatening aura, they decided to stick with the cash cow they had been milking for years: the adult market.

That was a big miscalculation, of course. Rock ‘n’ roll took off. Small and nimble independent recording companies with little to lose stepped in. By 1962, forty-two different labels had records on the charts. The big companies finally woke up to their mistake and began playing catch-up by making big deals with rock ‘n’ roll performers (RCA signed Elvis Presley and Decca signed Buddy Holly), but their moment of blindness proved costly: in the second half of the 1950s, 101 of the 147 records that made it to the Top Ten came from independent companies. Temporarily, during the 1950s and the 1960s, the majors lost control.

But ultimately they won it back, because the economic structure of the music business favored concentration. Big companies were simply better equipped than small ones for long-term survival in the industry, which, as it grew in size and complexity, increasingly required an ability to leverage economies of scale in the market. Larger firms could more easily front the high fixed costs necessary to record music and promote artists, they could share overhead and pool risk across multiple projects, and they could leverage their size to exert bargaining power over promotional channels, distribution channels, and artists. Thus, as radio became an important means of promotion, the big companies had a distinct advantage. They had the power – and could arrange the payola – to guarantee that their music dominated the airwaves.

By the mid-1970s, the big companies had re-established themselves as the dominant force in the middle of the market, once again exerting upstream control over artists and downstream control over a diffuse network of relatively powerless distributors and promoters. During the 1980s and 1990s, they gobbled up many of the smaller labels. In 1995, according to the Harvard Business School case study cited previously, almost 85 percent of the global recording market was controlled by the six “majors”: BMG Entertainment, EMI, Sony Music Entertainment, Warner Music Group, Polygram, and Universal Music Group.

As the 1990s came to a close, business was booming in all the creative industries. In music, records and tapes had given way to CDs, which turned out to be hugely profitable. How profitable? At the end of 1995, the International Federation of the Phonographic Industry reported that “annual sales of pre-recorded music reached an all-time high, with sales of some 3.8 billion units, valued at almost US $40 billion.” “Unit sales are currently 80 percent higher than a decade ago,” the report continued, “and the real value of the world music market has more than doubled in the same period.”