University of Toronto Communications Discussion

Pose a question, share a quote, or make a comment about something you found interesting, confusing, etc. in Each of the readings that I provide. Each around 100 to 150 words. And each Independent.

Did you find it interesting? Boring? Outdated? Prescient? Contemporary? Relevant? Alarmist? Confusing? Impenetrable? Condescending? Persuasive? Why or why not? Feel free to draw connections between an idea or example from the reading and your own experiences, either to confirm or challenge what the author(s) have argued, or to express confusion or disagreement with the substance, form, or even style of the readings.

Questions and comments will be graded for completion, but only if they pertain to the assigned readings and exhibit some engagement with their letter and spirit.

330
Janet Wasko
McDonald, P. and Wasko,]. (eds) (2008) The Contemporary Hollywood Film Industry. Blackwell,
Malden,MA.
Meehan, E. (2005) Why Television is Not Our Fault: Television Programming, Viewers and Who’s
Really in Control. Roman & Littlefield, Lanham, MD.
Miller, T., Govil, N., McMurria,]., and Maxwell, R. (2001) Global Hollywood. British Film
Institute, London.
MPAA (2009a) MPAAhails WTO ruling. Press Release, December 21. Online athttp://www.
mpaa.org/resources I ce952425-86fd-485a-a}71-db59ac867b17.pdf (accessed October 8,
2010).
MPAA (2009b) Theatrical market statistics 2009. Online at http://wwwmpaa.org/policy/
industry I 091af5d6-4f58-9a8e-405466c1c5e5.pdf (accessed October 8, 2010).
Pendakur, M. (1990) Canadian Dreams and American Control: The Political Economy of the.
Canadian Film Industry. Wayne State University Press, Detroit, MI.
Rodowick, D. N. (2007) The Virtual Lije of Film. Harvard University Press, Boston, MA’
Ryoo, W (2008) The political economy of the global mediascape: The case of the South
Korean film industry. Media, Culture & Society, 30, 873-89.
Sandoval, G. (2009) End of the world as Hollywood knows it. cnet.com. October 20. Online
at http://news.cnet.com/8301-3100l_3-10378654-261.html?part=rss&subj=news&
tag=2547-1_3-0-20 (accessed October 8,2010).
Scott, A.]. (2002) Hollywood in the era of globalization. Online at http://yaleglobal.yale.
edul content/hollywood-era-globalization (accessed October 8, 2010).
Silver,]. and McDonnell,]. (2009) Hollywood dominance: Will it continue? Paper presented
at What is Film? conference, Pordand, Oregon, November 7.
Taylor, T. (1999) The Big Deal: Hollywood’s Million-Dollar Spec Script Market. HarperPerennial,
New York.
U.S. Immigration and Customs Enforcement (ICE) (2010) ICE hosts motion picture industry summit on fighting film piracy. News Release, January 26. Online at http://www.
ice.gov I pi!nr 11001 I 100126washingtondc.htm (accessed October 8, 2010).
Verrier, R. (2009) 3D technology firm RealD has starring role at movie theaters. Los Angeles
Times, March 26.
Vonderau, P. and Snickars, P. (eds) (2010) The YouTube Reader. National Library of Sweden,
Stockholm.
Wasko,]. (1982) Movies and Money: Financing the American Film Industry. Ablex Publishing,
Norwood, NJ.
Wasko,]. (2003) How Hollywood Works. Sage Publications, London.
Waters, D. (2009) Countdown to Pirate Bay verdict. Online at http://news.bbc.co.uk/1/
hi/technology/8002171.stm (accessed October 8,2010).
Wilkerson, D. B. (2010) Disney CEO: iPad could be a game changer. MarketWatch, February
9. Online at http://www.marketwatch.com/story I disney-ceo-ipad-could-be-a-gamechanger-201O-02-09 (accessed October 8, 2010).
Yar, M. (2005) The global “epidemic” of movie “piracy”: Crime-wave or sodal construction? Media, Culture & SOciety, 27, 677-96.
15
The Political Economy
of the Recorded Music
Industry
Redefinitions and New
Trajectories in the Digital Age
Andre Sirois and Janet Wasko
The fact of the matter is that popular music is one of the industries of the country.
It’s all completely tied up with capitalism. It’s stupid to separate it.
Paul Simon
Introduction
Media and communication scholars often overlook the study of recorded music,
so it may not be surprising that those who study the political economy of communications may neglect it as well. Yet recorded music is a significant component
of the culture industry, providing entertainment and leisure activities for audiences
and contributing to other media and cultural production. We need to understand
how this cultural form has developed as a commodity and an industry. This chapter suggests a political economic approach to studying the recorded music industry
that emphasizes history and technology. A review of various approaches to studying recorded music is presented, followed by an overview of the history of the
recorded music industry. The current industry is briefly outlined, with possible
future business models considered.
Of course, music has not always been a commodity. Before musical labor WaS
incorporated into a tangible thing – what Attali has called an “immaterial pleasure
turned commodity” (1985, 2) – it was consumed as representation without a
The Handbook of Political Economy of Communications, First Edition.
Edited byJanet Wasko, Graham Murdock, and Helena Sousa.
© 2011 Blackwell Publishing Ltd. Published 2011 by Blackwell Publishing Ltd.
332
333
Andre SiI’ois and Janet Wasko
Political Economy of Recorded Music Industry
distinct form. Marx (1863) thought that musical performance was an instance
where labor did not result in a tangible commodity for sale, observing that: “the
service a singer performs for me satisfies my aesthetic needs, but what I enjoy
exists only in an action inseparable from the singer himself, and once his work,
singing, has come to an end, my enjoyment is also at an end; I enjoy the activity
itself – its reverberation in my ear.”
With the introduction of recording technologies, however, music did become
commodified and the recorded music industry grew to become a formidable component of the cultural industries. This history will be summarized later in this
chapter. But it is important here to emphasize that a political economy of culture
framework is appropriate for understanding this cultural form. According to
Golding and Murdock (2000, 70), this form of analysis “sets out to show how different ways of fmancing and organizing cultural production have traceable consequences for the range of discourse and representations in the public domain and
for audiences’ access to them.” As Hesmondhalgh (2007, 12) notes, the “music
industries” are one of the core cultural industries that “deal primarily with the
industrial production and circulation of texts.” And while many studies of cultural
industries have focused on commodified texts, it is important to remember that
recorded music is both text and commodity. The focus here is on the commodity
that is produced by the recorded music industry, not necessarily the text or the
musical content itself.
The study of the political economy of recorded music draws on the theoretical
foundations of political economy and its application to media and culture. The
study of political economy is about how societies are organized and controlled,
and thus involves the analysis of power. The study of political economy of the
media is about the production, distribution, and consumption ofmedia. Importantly,
the approach is interested in how the media are organized and controlled within
the larger political economy. In other words, it is concerned with who has power to
make decisions about the media, and who benefits from these decisions. It is about
understanding how power relations actually work within and around the media.
More specifically, the study of political economy of the media entails the historical
analysis of media commodities, industries, and institutions, including but not limited to corporations. The roles of labor and the state are fundamental components
of political economic analysis, as well as issues relating to globalization.
Thus the study of the political economy of recorded music is concerned with
the production, distribution, consumption, and reproduction of various forms of
recorded music. While the “music industry” is composed of many related industries, the focus here is on recorded forms of music, which means a special interest
in recording and distribution technologies. We suggest that the political economy
of recorded music should be understood through its historical development as a
commodity and the evolution of an industry through all its stages of production
to consumption to reproduction. We also stress the technologies involved in the
recorded music industry, arguing that recorded music has been more about
technology and less about art/ music from its inception. In other words, historically, technology has made music into a commodity.
The Study of the Recorded Music Industry
“Music is spiritual. The music business is not”
Van Morrison
When analyzing the industry that produces music as a commodity, few studies
have explicitly linked critical political economy with recorded music. The brief
review of literature that follows will hopefully provide a framework for how the
recording industry has been studied, focusing especially on the ways that political
economic analyses have been applied.
Many scholars agree that there is a dearth of serious writing about this industry
(e.g., Gronow 1983, Chanan 1995) and that academic research in general has “shown
little systematic interest in popular music” (Burnett 1996, 3). McQuail (2005, 36)
notes that “little attention has been given to rriusic as a mass medium in theory and
research.” Malm and Wallis (1992, 15) also point out that until the late 1970s
“remarkably few studies of the socia-economic aspects of the industrial processing
of music” have come from communication scholars. Nevertheless, there still is a
body of work that examines music and the recorded music industry, and may
contribute to an understanding of the political economy of recorded music.
Classic studies of music
In his historical treatment of western classical music, Attali traces music’s transfor-
mation from a social experience as representation to its repetitive function as commodity. For Attali, music “became an industry, and its consumption ceased to be collective”
(1985,88, original italics) as people began the individualized act of stockpiling music
commodities. The historical development of recording, which was a means of social
control, pushed music into background noise as “a factor in centralization, cultural
normalization, and the disappearance of distinctive cultures” (1985, 111).
Weber (1958) suggested that western music itself was the product of capitalist
institutions, highlighting how seemingly “irrational” cultural production could
become rationalized. However, Frith (1988, 12) later warned that industrialization
doesn’t happen to music – a problematic argument “which fuses (and confuses)
capital, technical, and musical arguments” – but instead, recorded music is the
fmal product of that process.
Benjamin (1969 /1936) considered the potential emancipatory effects of mechanical
production on artworks, arguing that this historicai development democratized
access to, and critical thinking toward, cultural objects and destroyed the social
334
335
Andre Sirois and Janet Wasko
Political Economy of Recorded Music Industry
control Caura” and “authenticity”) of works of art that existed in a specific time and
place. On the other hand, Horkheimer and Adorno (2001/1947,95) argued that a
monolithic”culture industry” logic existed which then transmuted art into”a species
of commodity,” while earlier work by Adorno (1990/1941) tackled the standardized
production/ consumption of popillar music. Adorno wasn’t concerned with industry structure, but how popillar music applied an ideolOgical “mechanical schemata”
to its production, which promoted an audience who passively listened with rhythmic
obedience as the commoditized and reified music maximized economic dividends.
as a symbol of intellectualism. While George’s (1988) polemic explores how the
white music industry transformed black culture into an exploitable commodity,
Kelley (2005), in his poignant edited volume, explores how white-owned entertainment conglomerates have profited from a “structure of stealing” from the
black community. Another important contribution includes Kofsky’s (1998) political economic analysis of how jazz musicians work and are explOited under
capitalism.
Sociological studies of music
Critical theory and Marxist approaches
In an argument reminiscent of Benjamin, Theberge (1997, 185) contends that,
with the advent of the mechanical production/reproduction of sound, a “new
relationship between technology, musical practice, and the capitalist organization
of production began to evolve.” Breen (1995,501) points out that the record business is just another element of corporate structure, and therefore, “Institutional
economics is a valuable tool in deSCribing the historical development of popillar
music within corporate society.”
Chapple and Garofalo (1977) apply an economic analysis to rock and roll,
highlighting how capitalist corporations who control the means of production
determine the actual music (as commodity and content) that consumers get.
However, Garofalo (1986, 83), in some ways, rejects his initial assertion with Chapple,
arguing that “there is no point-to-point correlation between controlling the marketplace economically and controlling the form, content, and meaning of music.”
More recent Marxist works on recorded music include Callahan (2005, 58), who
believes the industry feeds consumers corporately controlled and homogenous
“anti-music” produced by “the labor of the musician.” In a business concerned
only with “money derived from the exploitation of musicians and copyright” (228),
the industry ‘1ords it” over musicians: “Within the capitalist market system, the
productivity of [the musician’s] labor is not in the artistic creation, per se, but in
the profit it generates for the record company or publisher through mass production, promotion and sales” (199). Eisenberg makes a Marxist argument that the
music commodity transforms both the musician and consumer into a fetishist:
“The musician need never see the working man behind the money; the listener
need never see the working musician behind the vinyl” (2005, 20).
Studies of music genres
Other political economic analyses of specific genres within the recording industry
include Hobart’s essay, “The Political Economy of Bop” (1981), which examines
the contradictions of musical idiom between bop’s origins in the black ghettos and
There has also been a considerable amount of SOciological research on the industry with foci on the production, content, and reception of recorded music. For
example, Frith (1981) makes an argument (sirnilClI to Benjamin) that corporations
don’t necessarily co-opt popillar cillture as they tend to follow; rather than lead, in
trends; therefore, the record industry has developed strategies for market control
simply because they do not control the market. According to Dowd (2003) these
genre-based markets are in fact manufactured by the industry itself to maintain as
much control as possible (of the music and its consuinption).
Keith Negus (1992, 1996, 1999) has made similar arguments about corporate
control within the industry and of its market. Negus suggests that there is a corporate “machine” but also that we shoilld consider the “human beings who
inhabit the machine” (1996, 36) – those who make creative decisions and not just
fmancial ones throughout the entire corporate structure. This idea is elaborated
upon when Negus looks at the sometimes awkward interplay between economics and cillture in the record business – a concept where “an industry produces culture and culture produces an industry” (1999,14, italics in original). Swiss et al. (1998)
refer to Negus’s concept as a “production-text-consumption” model where the
industry affects musicians, marketing and genres, technology, and broadcasting,
as well as musical aesthetics and meaning. Similarly, music commodities have a
symbolic Significance and thus two parallel economies are operating in the
recorded music business: “the economy of use and the economy of exchange”
(Storey 1996, 98).
Other SOciologically grounded studies have looked at the tension between major
and independent companies, which Negus (1999) suggests is based on distribution
and not production. For instance, Hesmondhalgh (1998a) looks at the underground
British dance music industry as one that, while pursuing profit and sometimes
conforming to the capitalist system in order to reach a wider audience, may trilly
offer alternative messages/lifestyles. Other work by Hesmondhalgh (l998b, 1999)
uses specific case studies of independent companies and genres (mainly punk) to
demonstrate the tensions between the institutional politics of the recording industry and oppositional cultural forms. And, fmally, Lee (1995), using Wax Trax!
Records as a case study, examines “independent” as an industry concept.
Andre Sirois and Janet Wasko
Political Economy of Recorded Music Industry
Other sociological perspectives focus on the “empirical” relationship between
market concentration and diversity (Peterson and Berger 1971, 1975, Peterson
1976, Lopes 1992, Dowd 2004) and organizational structure (Scott 1999, Huygens
et al. 2001). These studies suggest that market concentration corresponds to homogeneity while competitive markets lead to diversity; however, Lopes (1992) contends that diversity and innovation depends more on the operations of companies
and market structure than merely levels of concentration.
American industrialized music has affected music produced outside of the US
(e.g., Robinson et al. 1991). Burnett (1996,6) looks at how the Internet is helping
the record business create a globalized cultural economy, suggesting that “the
music industry, like others, constantly tries to develop new ways to control both
supply and demand….” Looking at the interaction between music in the mass
media and the larger musical activities in society – specifically in the context of
the Caribbean, Africa, and Europe – Malm and Wallis claim that the record
industry has been at the forefront of the “global standardization of cultural
products” (1992, 7).
336
337
Legal studies of the music industry
Many scholars argue that, in order to properly understand the recording industry
as a capitalist enterprise that exploits commodified labor, a political economic
analysis of this industry should emphasize copyright (e.g., Fabbri 1993, Cvetkovski
2007, Hesmondhalgh 2007). Fabbri believes that researchers must explore copyright because a “considerable part of the overall turnover of the music industry is
based on the exchange of immaterial items” (1993, 159).
Sanjek (1998) argues that music is no more than a “rights package” and thus we
should examine the recording industry on two interrelated levels: (1) the “corporate regime” of mergers and influence in production and consumption; and (2) the
‘1egal-legislative regime” of ownership deregulation and the increased scope and
duration of intellectual property rights. According to Cvetkovski (2007, 27),
“Copyright should be considered as the common thread that binds the entire
industry … without it, there is no music business.”
While Lessig (2005,2008) and Bollier (2005) argue that copyright’s scope and
duration have deviated from its constitutional framing in favor of corporate
interests, other discussions by McLeod (2001,2005) and Vaidhyanathan (2001)
demonstrate how the music industry, as part of the “copyright cartel,” privatizes culture and chills creativity. Other interesting research has looked at how
the recording industry has relied on copyright law to curtail digital sampling,
as well as addressing the cultural and economic tensions surrounding this issue
(e.g., Demers 2006, Hesmondhalgh 2006, Toynbee 2006). Frith’s edited volume,
Music and Copyright (1993), contains studies from international perspectives
and serves as a strong point of departure from analyses of the American copyright system.
International studies of music
While many of the previously mentioned studies of the recording industry have
focused on the US market, there are sources that focus on other markets (e.g.,
Gronow 1983, Manuel 1993, Taylor 1997), as well as how the hegemony of
Studies of digital music
There is also a growing body of research examining the music business and its
challenges in the era of digital capitalism and technology (e.g., McCourt and
Burkart 2003, Katz 2004). Alexander (2002) offers a helpful exploration of the relationship between market structure and digital distribution, as well as how the
recording oligopoly’s dominance is fading along with its long-established distribution stronghold. In Burkart and McCourt’s (2006) historically grounded analysis,
the authors document how the Internet has untied the industry’S physical business
model in an age of the “celestial jukebox” where music commodities are instantly
available.
Although the current economic outlook for the recording industry may be precarious, some authors have suggested future models for market capitalization (e.g.,
Fox 2004, Kusek and Leonard 2005). Interestingly, while the record industry has
essentially criminalized its own market, Kusek and Leonhard (2005, x) suggest that
the industry may have to accept a model “where access to music becomes a kind
of ‘utility.’ Not for free, per se, but certainly for what feels like free.”
Popular sources for studying the music industry
While most of this literature is academic, more popular publications also provide
important sources for understandipg the recorded music industry. For instance,
both Dannen’s Hitmen (1990) and Elliot’s Rockonomics (1993) are excellent accounts
of the relationship between money and power within the industry during the
1970s and 1980s. Furthermore, since the music business itself is bound by legalityon both creative and financial ends – then who better to learn from than the entertainment lawyers who are involved in these processes? Therefore, “how-to” books
(e.g., Passman 1997, Lathrop 2003, Rudsenske and Denk 2005) provide interesting
insider accounts of how the recording industry operates, not only legally, but also
through its stages of production and distribution.
338
339
Andre Sirois and Janet Wasko
Political Economy of Recorded Music Industry
The History of the Recorded Music Industry
tangible digital era (roughly 1983-2000). This historical account will ultimately
lead us to the present age of digital capitalism and its crowning format – the MP3.
We find that, as in otherfields, capitalism has created the most magnificent apparatusfor the production, distribution and consumption of music that the world has ever
seen: yet this apparatus is so riddled with contradictions basically economic in origin
that it negates its own potentialities and is rapidly becoming unable to fUnction.
Composer, Elie Siegmeister, Worker’s Music Association, 1938
By reviewing the technological history of the recorded music industry, we fmd,
much like Marx, that the present condition can be illuminated by examining the
past. While historically new recording technologies, companies, and artists have
come and gone, the prevalent logic of this industry and the music commodity
itself has remained – capital. The history also reveals an ongoing battle between
playback formats and the companies that produce them, the inevitable movement
toward consolidation and conglomeration, and the tensions between recording
companies and the consumers who have demanded cheap or free music.
Technology has been a major historical contradiction within the industry as it has
both helped to propel the music commodity to the far reaches of the globe, while
simultaneously seeking to destroy it from its material core.
In other words, while the development of recorded music has been”completely
carried out within the capitalist structure” (Chapple and Garofalo 1977,300), the
history of the recorded music industry is fundamentally about technology, as
recorded music is very much the product of science. Millard writes, “This is a story
primarily of change, for the industry built on the phonograph was driven by the
constant disruption of innovation … one invention after another arrived to upset
the fragile balance between the great companies and change the relationships of
the old power with the new” (2005, 5-6).
In one of the most detailed technological histories of recorded sound and
business, The Fabulous Phonograph, Gelatt (1977, 11) writes that a “history of the phonograph is at once the history of an invention, an industry, and a musical instrument.” Kenney (1999, 44) argues that a critical-cultural history of the phonograph
“demonstrates the important ways in which economic and cultural forces have
shaped technological inventions.” To analyze the record business through its history, Frith (1988, 13) suggests three specific issues: (1) the effects of technological
change; (2) the economics of popular music; and (3) a new musical culture as technology transforms musical experiences, thus leading to “the rise of new sorts of musical
consumption and use.” As these three scholars suggest, any historical analysis of the
recorded music industry should consider the relationship between technologies,
culture, and economics, as well as evolving modes of production and consumption.
Thus the history of the recorded music industry presented here is divided into
four eras marked by different methods of recording and playback: the acoustic era
(1877-1923), the electrical era (1924-1960s), the cassette era (1970-82), and the
The acoustic era
Shordy after Thomas Edison patented his phonograph in 1878, a device that used
a vertical method for cutting sound onto a cylinder, the “talking machine” business
was born and thus “music began to become a thing” (Eisenberg 2005, 13). At fIrst,
there was a proliferation of companies interested in recorded sound.
by
the turn of the twentieth century – a time marked by competition for hardware
development and sales – three dominant companies emerged in the us: Edison’s
National Phonograph Company, the Columbia Phonograph Company, and the
Victor Talking Machine Company. These “Big’]bree” companies dominated the
early industry because they were large enough to manufacture and market their
products on a large scale, support research laboratories, and control,almost every
important patent for talking machines and records (Chanan 1995, Morton 2000,
Coleman 2003, Millard 2005).
While Columbia was the fIrst to release prerecorded music, initially all cylinder
recordings were “original,” as no method for mass duplication existed until
Berliner’s lateral gramophone discs were released in 1894. This is when the recording process became separate from the reproduction stage (Day 2000) as eventually
discs would be reproduced using a gold master disc to stamp copies.
The disc was also important because, unlike Edison’s or Columbia’s devices that
allowed consumers to record sound on cylinders, the gramophone was playback
only, thus allowing for a one-way flow of musical content. While the earlier technologies were intended as dictation devices, Berliner’s disc recordings “would be
made solely by manufacturers, not by consumers” (Morton 2000, 32). The mass
production of discs ultimately lowered production costs and allowed for mass consumption; thus Berliner’s invention ultimately set the stage for the recorded music
industry as we now know it.
The introduction of the disc also initiated the perpetual format war in the
recording industry and the struggle for industry standardization. The disc forced
Edison and Columbia to adapt in order to compete in the market, bur because of
the lack of industry standardization the disc initially confused consumers (Steffen
2005, 33). According to Millard (2005, 213), “standardization of recorded sound
products is an invisible technology” – it can only be heard. Throughout the twentieth century, many sound delivery technologies would be released, but the successful ones were those that would achieve industry-wide standardization.
In 1897, 500,000 records were sold; two years later, that number increased to 2.8
million. Sometime between 1901 and 1903, Berliner sold his interests in the gramophone to Eldridge johnson, a skilled inventor and an exceptional businessman,
and the Victor Talking Machine Company was born.
340
341
Andre Sirois and Janet Wasko
Political Economy of Recorded Music Industry
By 1902 Victor was valued at $2.7 million, and through reinvestment into
research and development, the company’s value increased to $12 million in 1905.
This jump in value may have been due to the 1903 patent pool between Victor and
Columbia. Because Victor developed the use of wax recordings and Columbia
implemented the disc format (both clearly infringed on each other’s patent rights),
this cross-licensing agreement virtually left Edison’s company and the cylinder in
the dust.
Johnson realized that the phonographs of the early 1900s were, like most developments ,of modernity, aesthetically industrial. Thus by 1906 the Victor gramophone had become the Victrola, the fIrst mass-market record player. This new
playback device acted as “Victorian camouflage for the industrial machine” (Kenney
1999,51) as it hid the mechanics within a wooden cabinet. By Johnson advertising
the device as “a standard musical instrument,” the Victrola fostered the industry
ideology that “phonographs should look as little like phonographs as possible”
(Gelatt 1977, 192). While early recordings were used to sell playback hardware by
displaying its technical virtues and the inventor’s genius, by 1907 the inventor had
been replaced by the opera star as the selling point of the record (Millard 2005, 61) the “moment at which one might pinpoint the remcation of music” (Eisenberg
2005, 13). Because of the highbrow tastes of the men owning the Big Three, the
music produced by their record companies reflected such values (Morton 2000, 29) signaling that even in the early days of the record business, those in control of material production also had an influence on the ideological production of the era.
Before the prominence of musical recordings, the act of producing and consuming music relied on the sale of composers’ sheet music by publishers, as well
as live performances of those compositions. In the same year that music “remed,”
American composer and conductorJohn Philip Sousa wrote his famed essay, “The
Menace of Mechanical Music” (1906), decrying the talking machine business and
its”canned music.” Sousa’s piece demonstrated the tensions between different levels of musical production as he criticized the phonograph for victimizing the
“moral rights” of composers’ musical works, as well as for encouraging a passive
relationship to the world of music by transferring the human quality of music to
a soulless machine.
By 1910 a mass market for recorded music was flourishing as Victor sold 94,557
machines (compared to 7,570 in 1901). Edison realized that grooved discs were the
way of the future, and in 1913 released Edison Diamond Discs – a blatant rip-off
of the Victrola – which faired poorly in the market. In 1914, the same year that
ASCAP (American Society of Composers, Authors, and Publishers) formed to protect the publishing copyrights of Tin Pan Alley’s composers used in mechanical
recordings, the Big Three controlled a market in which18 recorded sound companies brought in a total of $27 million in profIts. While Victor’s value grew to $33
million in 1917, most of the basic patents for the phonograph and gramophone
expired that same year, thus opening the market in 1918, when 166 recorded sound
companies made $158 million in profit (a 500% profIt increase in just four years).
“The economics of record production during this period are easy to comprehend.
The low cost of entry into the business stimulated new labels, catering to relatively
small markets, thus a distinction appeared between independent companies and
the majors” (Chanan 1995, 54).
With a surge in postwar consumption, Edison’s company experienced its best”
year in 1920 with $22 million in profIts. However, this success would be short-lived
as the sales of radio sets in the US nearly doubled from 1921-2, which cut into the
record industry’s sales – a mere $106 million during that same period. Hit by falling
sales and overproduction, as well as the new radio technology that provided music
to consumers for free, the 1920s was a decade in which the recording industry felt
its fIrst real economic hardship.
The electrical era
The electrical era, represented by the shellac 78rpm disc and eventually transistor
technology, is characterized by technological innovation, as well as increased
industry concentration brought on by the Great Depression in the US. It is important to note that the dominant fIrms in the music business in the early twentieth
century were not vertically integrated and the industry as a whole was quite fragmented. Hobart (1981) observes that four distinct forms of capital existed in the
early twentieth century, each exerting its own pressures and priorities upon the
character of music, its production and reprodUCtion: publishing,
broadcasting, and sound recording. During this period, these discrete activities became
controlled within vertically integrated recording companies.
By 1924 Western Electric had patented its electric sound recording microphones;
before this recording development, sound was collected acoustically by a horn and
piped to a diaphragm which vibrated the cutting stylus. This “acoustic process of
recording therefore limited what music could be attempted, it affected how the
musicians performed in various ways, and it seriously distorted the sounds they
actually made” (Day 2000,11). The new electric recording process (then known as
Orthophonic recording) was able to capture the musical energy lost through the
inefficient acoustic process.
In 1925 Victor was still trying to sellits stockof acoustic machines, but announced
that November 2, 1925, would be “Victor Day” – the day they would release the
fIrst consumer phonograph, the Orthophonic Victrola, that would play electrically
recorded discs. A week after “Victor Day,” there was more than $20 million in
orders for Orthophonic Victrolas.
Throughout the late 1920s, profIts for the industry remained steady at around
$70 million yearly, but radio was cutting into the business and the record industry
had to compete with broadcasting or join it. Finding a market for the sale of
records when consumers could get the music free from radio proved to be a challenge. Victor had reached an agreement with RCA to incorporate Radiolas into
343
Andre Sirois and Janet Wasko
Politioal Eoonomy of Re(Jorded Musio Industry
Victrolas by 1925, and, a year later, with many profitable years behind him,
Johnson sold his company for over $28 million to two New York banking houses.
Johnson’s Victor Talking Machine Company had also successfully “reinforced the
upper and middle levels of an American musical hierarchy in recorded music”
(Kenney 1999, 64). In 1927 Columbia invested in United Independent Broadcasters
to get airtime to promote its records, which signaled a convergence between
industries and technologies. By 1929, RCA had completed its buyout of Victor to
create the RCA-Victor subsidiary, had taken over Victor’s Camden, New Jersey,
factory, and stopped manufacturing talking machines in order to start mass producing radios. RCA not only eliminated a major competitor from outside the
burgeoning radio industry by absorbing all of Victor’s assets, but gained “an
extensive plant and a well-organized system of distributors and dealers” for its
radios (Gelatt 1977, 247).
Although the Depression affected the radio industry, it “decimated the record
business” (Kenney 1999, 158) as record sales dropped from $75 million in 1929 to
$16.9 million two years later. The early 1930s, then, marked the most “doleful
phase” for the recording industry as both the sales of discs and phonographs plummeted (Gelatt 1977, 255). During the decade, new strategies developed between
the radio and recording industries as the various mergers and acquisitions reflected
a shift in power from record companies to large entertainment corporations. “They
were now empires of sound,” writes Millard, ”huge, integrated business organizations based on the reproduction and transmission of sound” (2005, 175). In this
phase of recoq:led music’s history, the importance of the inventor was eclipsed by
the business-oriented CEOs of these new sonic empires.
By 1931, UK Columbia merged with the Gramophone Company to create
Electrical and Musical Instruments (EMI) – a deal that gave EMI licensing rights to
the popular HMV record label in Europe – thus making it the largest record company in the world. After purchasing American Columbia in 1932 and selling six
million units, the American Record Company (ARC) was the largest record company in the US and was the leader in the inexpensive record market. In 1936, two
years after the incorporation of American Decca (another producer of cheap
records) by Jack Kapp, more than 50 percent of the records being produced were
destined for jukeboxes across America. Indeed, the 13 million discs used yearly by
jukeboxes actually saved the music industry. American Decca was not only the fIrst
record company to create economies of scale through aggressive marketing
schemes and jukebox sales, but they also introduced the star system within the
recording industry (Sanjek and Sanjek 1991).
By the end of the 1930s, recorded music was no longer a distinct business, but
was part of the integrated entertainment industry as a new Big Three had emerged:
RCA-Victor, Decca, and Columbia. At this point, radio was king, and, in an effort
to promote regional music (“hillbilly” and “race” records) while serving the local
stations that ASCAP had largely ignored, radio broadcasters formed a rival performance rights organization in 1939, Broadcast Music, Incorporated (BMI).
While only 100 million discs sold in the US prior to entering World War II, military research and the US forces’ capture of Radio Luxembourg’s magnetic taping
technology on September 11, 1944, as well as postwar consumerism, fueled the
sale of 350 million records in 1946. However, as industry sales rose to $89 million
and recording companies began shilling their focus toward instant successes in the
form of the pop record, the lion’s share went to Columbia, Decca, RCA-Victor,
and Capitol (85% or 300 million records).
In 1948 the music industry met another foe, television. But instead of succumbing to the new technology, as it had done with radio, the music industry fought
back with a weapon of its own: the long-playing microgroove record (LP).
Invented by Dr Peter Goldmark at CBS, the LP extended recording time to a half
hour, and in its first year on the market the format topped $3 million in sales.
RCA-Victor would not be outdone, so in 1949, after a $5 million marketing campaign, they debuted the 7inch 45rpm single dis.c – a four-minute format that was
perfect for the pop single. Because CBS didn’t want to delay the release of the LP
until it had a player, and perhaps learning from the past failures of delivery technologies that were introduced into the marketplace without industry-wide
standardization, they developed an adapter that would play LPs on existing
phonographs.
By the early 1950s, however, RCA-Victor began producing LPs and CBS 45s,
once again proving that industry standardization between hardware and software
was key to financial success. It is interesting to note that the industry move to the
LP also encouraged record manufacturers to buy new pressing machines. In turn,
the old machines were bought by people who used them to make bootleg copies
of records produced by the industry. In 1952, the RIAA (Recording Industry
Association of America) formed to set a technical standard for recording and playback on vinyl records and to lobby in Washington on behalf of its members in
the recording industry, but also partly in response to the new rash of LP piracy
(Morton 2000).
Moving into the 1950s, the recording industry again experienced a flurry of
independents (similar to the indie proliferation in 1918). With magnetic tape dramatically lowering recording costs, and LPs and 45s being relatively cheap to press,
the barrier to entering the market decreased rapidly. However, the major players
solidifIed their dominance through full vertical integration. The major companies
“owned their own manufacturing plants and directly controlled their distribution
outlets in addition to simply producing records” (Chapple and Garofalo 1977, 15)
and were designated as “majors” because they did their own nationwide distribution (Dannen 1990, 112). Previously, market control had come from technological
innovation and musical production, but, by the end of the 1950s, market domination was firmly in control of those fIrms with distribution power. Thus controlling
the means of production was no longer enough; instead, the most profItable companies controlled distribution – the means by which a recording made its way to
retailers and ultimately into the hands of the consumer.
342
345
Andre Sirois and Janet Wasko
Political Economy of Recorded Music Industry
From 1955 to 1959 record sales nearly doubled to $511 million, largely due to
the rise of big-box store retailers such as Sam Goody; as well as the new”one-stop”
distributors who would buy from the major distributors and sell to small independent stores. Undoubtedly; records were fmding their place in a national market
and were not limited to regional distribution. While the Big Four had a 75 percent
share of the $277 million US market in 1955, by 1959 this share dwindled to a mere
34 percent of the booming $603 million market. The indies were producing most
of the popular and profitable music and were marketing their records through
radio disc jockeys. However, independent retailers and distributors began disappearing as the major companies controlled most distribution outlets and started
their own record clubs for direct sale, and the big-box stores expanded. In addition,
people who rented space in department stores to sell popular records, known as
rack-jobbers, grew to become more important, accounting for more than half of
US record sales at this time (Gelatt 1977).
During this era of consolidation, sales jumped from $600 million in 1960 to
$1.2 billion by the decade’s end. Record companies were looking like enormous
cash cows, ready for conglomerate slaying. The independents were introducing
new popular music through radio, but in order to sell those records they relied on
the major companies who had complete control over the channels of distribution.
Instead of taking over the independents, the major companies made arrangements
to invest in them and handle their distribution, but it wasn’t a big step to fully take
over, as the majors “squashed the entrepreneurialism by putting it in the structure
of a conglomerate” (Callahan 2005, 9). By 1967, the market was controlled by CBS
Records, RCA-Victor, and Capitol, each with a 12-13 percent share of the US market. Behind the “independent” labels were a small number of integrated entertainment corporations; thus the multitude of independents was merely an “illusion”
(Millard 2005,333). By the end of the 1960s, the American market had attracted
foreign companies, such as EMI, which took over Capitol, and the PolyGram group,
whichbought MGM, Verve, and the UnitedArtists distribution system. Competition
for the acquisition of independent record labels also began to heat up between the
major companies. And, as these companies became further horizontally integrated,
‘1abel federations” developed. What we now refer to as “music groups” involved
loosely affiliated labels that set up divisions (usually genre-based) within major conglomerates. This strategy offered the major companies a way to cope with market
uncertainty by spreading their risks, and to reap synergistic benefits by creating
company-wide manufacturing in order to exploit economies of scale.
Overall, these new highly diversified corporations became adept at promoting
and distributing products. Equipped with music publishing arms and vertically integrated labels, the Big Six (CBS, Warner Bros, RCA, Capitol-EMI, PolyGram, and
MCA), as well as a half dozen smaller companies, dominated the market. In the
1970s and into the 1980s, these media conglomerates grew even bigger, making
independent production and distribution a thing of the past. In addition, many
observers have argued that the logic of the corporation took over the creative logic
of music-making (Chapple and Garofalo 1977, Chanan 1995, Morton 2000, Coleman
2003). According to Chapple and Garofalo, the merger movement of the 1960s was:
344
a “natural” process of centralization in which the successful companies joined to
save expenses, to control prices and the market more effectively; and to amalgamate
companies specializing in different types of music into one corporation that provided greater fmancing and Simpler, central distribution…. Because the music business had become so profitable and because as part of the entertainment industry it
was a high growth field, outside conglomerates looking for new acquisitions found
music corporations attractive. (1977, 82)
The cassette era
While radio popularized the notion of free music in the 1920s, the cassette took
this consumer empowerment to a whole new leveL Philips, a Dutch electronics
company; began the manufacture and sale of compact cassette tapes in 1963 (selling them under the Norelco brand in the US), and, by 1965 polls showed that
40 percent of the people buying tapes were doing so to make copies of LPs. This
implied that record labels were coming up short and “did not satisfy the demands
of consumers” (Morton 2000, 137). Nevertheless, cassette tapes did not produce
major consumer waves until the oil crisis of the 1970s caused a shortage in the
vinyl used to manufacture LPs. As Japanese manufacturers (Sony and Matsushita)
began incorporating cassette players into home stereos that could rival the reel-toreel format, the sale of blank cassette tapes soared to 125 million in 1970. After
complaints of piracy by the RIAA and its representatives, Congress enacted the
Sound Recording Act of 1971 to finally give mechanical recordings federal copyright protection.
With the growth of cassette piracy; music was for the first time circulated en
masse outside of its market. Although Dr Peter Goldmark predicted, “The disc
and tape will exist side by side” (quoted in Coleman 2003, 62), Americans spent
$861 million on tape players and only $577 million on record players in 1973. The
recording industry still raked in $2 billion as “Records were sold like toothpaste”
(Gelatt 1977, 336), despite an estimated $200 million in losses from the sale of
bootlegs. With the Big Six controlling more than 80 percent of the US market,
sales of recorded music grew to $4.1 billion through 1978. 1978 was also the year
that PolyGram had over $1.2 billion in sales – the first recording company to top
the $1 billion mark. The constant market growth made the major record companies an attractive investment to large multinationals, an interest Signaled when in
1979 Thorn Electrical Industries, a highly diversified British conglomerate, merged
with EMI to form Thorn EM!. (This merger eventually allowed Thorn EMI to
make a number of acquisitions – most notably the eventual high-profile purchase
of Richard Branson’s Vrrgin Records in 1992.)
347
Andre Sirois and Janet Wasko
Politioal Eoonomy of Recorded Musio Industry
Nevertheless, 1979 proved to be problematic for the recording industry; with an
11 percent decrease in sales from the previous year – the first such decline since
World War II (Dannen 1990). The major companies were forced to restructure,
including cutting back on marketing and promotions, as well as the development
of new talent. In the early 1980s tape sales were almost equal to LPs, but by 1986
the sale of prerecorded cassettes surpassed records and most home stereos came
equipped with two cassette decks. Thus a CBS study claimed $700-800 million in
losses to piracy, while the RIAA declared billions. Though radio and fIlm had been
the main conduit for music promotion for nearly 60 years, the introduction of
MTV and the music video format in 1981 proved a far more effective marketing
tool, reaching over 56 million homes by the end of the decade. As one observer
noted, the major companies had become “too big for their own good, they never
know where and when the next trend is going to emerge because they are not
really in touch with the audience” (Chanan 1995, 156). It was at this point that the
economic downturn really began to hit the music industry.
The recording industry; however, would not go down without a fight over piracy.
Although Philips and Sony had released the compact disc (CD) as early as 1978, the
industry didn’t begin to support the new digital format until 1982. Not only would
the record industry see this new format as a way to curb piracy, but the CD encouraged market growth as consumers started to replace their LP and cassette collections with CDs. The introduction of the CD also led to an industry revelation:
exploiting copyrights attached to old recordings could be very profitable. Because
of this epiphany, the large entertainment conglomerates realized the inherent
value of owning large back catalogs of music. Thus many of the mergers that took
place in the 1980s were partly motivated by the profitable promise of acquiring
extensive copyright catalogs. Not only did major companies become interested in
owning the rights to sound recordings, they also began to purchase publishing
companies so that they could fully exploit music through television, radio, and
fl1m, as well as license those rights to their competitors. According to Callahan
(2005, 228), the record business became interested in “money derived from the
exploitation of musicians and copyright.”
success as well. During the same year that cassettes eclipsed LPs in sales (1986), the
CD had its first big year with 50 million sold. While CBS and RCA battled over
formats in the late 1940s, Philips and Sony were able to use piracy as the motivation for the Big Six recording companies to swiftly make the digital move – one
that would give an industry lead to the two non-US-based consumer electronics
346
The tangible digital era
While the CD was slow to fmd a market, the recording industry went to great
lengths to make sure that the format would succeed by quickly phasing out LPs
and later cassettes (LP sales fell 80% in the 1980s). In addition, the CD signaled a
return to a familiar format, as Steffen (2005, 30) argues: “The shape of recorded
music that we are still most familiar with is the disc … the stamped record has
been a mainstay delivery system of recorded music.” The CD’s similarity to
Berliner’s disc may have contributed to the format’s consumer appeal; however,
the “superior” sound quality of the CD and digital recording contributed to its
companies.
While the 1980s was a decade marked by technological innovation, it was also
an era filled with a series of mergers and acquisitions fueled by easy money and lax
regulation. In 1988, Sony bought CBS Records for $2 billion, an acquisition that
gave the electronics company a roster of artists and a back catalog. Three years
earlier, GE had purchased the RCA Corporation, then sold its 50 percent interest
in RCA Records and its subsidiaries to Bertelsmann (soon renamed BMG Music).
Thus three of the six leading major record companies in the US were owned by
international media conglomerates.
‘”
According to Frith (1988) and Dannen (1990), the increased consolidation of the
1980s had its effect on musical diversity as fewer titles were being released into the
market (in the 1970s, 4,000-5,000 titles were released yearly, while in the 1980s that
number dropped to about 2,000). Gronow (1983) observed that the industry’S corporate structure and mode of operations in the early 1980s were similar to that of
the early 1900s. These large sound empires had spent the better part of the century
swallowing up smaller competitors, and the 1990s would be no different as “this
feeding continued at a faster pace in the digital era” (Millard 2005,367).
With an increasing number of new releases available only on CD or cassette,
record stores dropped LPs and 45s from the shelves. In 1989, vinyl sales dropped to 6
percent of the recorded music market, while CD sales rose to 200 million and cassettes to 450 million. By 1991, vinyl records had vanished from most stores. The CD
had cut manufacturing and distribution costs dramatically, but as those costs
decreased the retail price of CDs remained much the same through the early 2000s.
With 20 million CD players in use by 1990, the industry experienced a steep rise
in sales of prerecorded CDs – an increase that happened to coincide with the rapid
sale of blank cassettes. While the cassette had, in some ways, liberated consumers
from the structure of the LP, the CD suggested a return to the “one-way, monopolistic, homogenizing tendencies” of the LP format (Manuel 1993, 15). With the
flurry of formats and speeds introduced in a relatively short period of time, it is no
wonder that consumers experienced confusion as technological innovation continued to change how consumers experienced music (Frith 1988).
In 1990, the Japanese electronics manufacturer Matsushita paid $6.13 billion in
cash for MCA Inc. Thus by 1995 Sony, Matsushita, and Philips were the modern
equivalent to the original Big Three as these companies developed hardware,
software, and talent. However, in 1998 Seagram, in what was then the largest
merger in the industry’S history, bought PolyGram for $10 billion. Two years later,
Vivendi bought Seagram’s entertainment assets for $34 billion, and the PolyGram
and MCA family of labels eventually became the Universal Music Group.
348
349
Andre Sirois and Janet Wasko
Political Economy of Recorded Music Industry
As the new millennium approached, the US recording industry was worth
$13.7 billion, while the global market was valued at $38.1 billion. In early 2000,
the Big Six of the 80s had morphed into the Big Five (UMG, BMG, EMI, WMG,
and Sony), an oligopoly accounting for about 95 percent of all records sold globally in 2000. Consumers paid roughly $16 per CD for the format’s fIrst two decades, but once they were able to buy blank CD-Rs and duplication hardware and
see how cheap it was to produce music CDs, it became obvious how the industry
had taken advantage of the market. The digital CD’s advantage of eliminating
piracy disappeared as consumers gained access to duplication media and again
music circulated outside the commercial market. While consumers used blank
CDs for perfect replication of prerecorded discs, the industry was becoming
involved in another format battle – actually, this time a war. The struggle would
not occur between any of the major players as it had in the past – this time war was
waged by the industry on its consumers and their new format: the MP3.
accusations of copyright infringement from the recording industry. The Napster
company was decried and then sued by the RIAA, its members, and several megarecording stars for direct and contributory copyright infringement. The recording
industry won the suit, thus forcing Napster to shut down its operations and move into
bankruptcy. However, the company was resurrected two years later as Napster 2.0, an
ala carte and subscription service, which was then purchased by Best Buy Co.
With the recording industry emerging as victors, the Napster case set a precedent for future suits against p2p services (e.g., MGM v. Grokster in 2005). But despite
the concern over lost revenues and various legal measures taken, the recording
industry remained blind to evolving distribution platforms, customer demands,
and supporting technologies in the early 2000s. The industry won several court
battles, thousands of legal settlements, and the right to preserve its “properties”
through an economy of scale production model and physical distribution infrastructure. In the process, however, it lost its
an increasingly volatile market.
While the major recording companies fought illegal fIle-sharing, they failed to
develop and implement digital distribution into their repertoire; therefore, many
musicians and labels (independent or otherwise) successfully filled the void. Digital
technology reduced both production and distribution costs, and, according to Fox
(2004, 205), diminished the industry’s control over music production and “the
major labels’ historical hegemony over traditional distribution methods.”
Finally, in 2009, the recording industry began to capitalize on digital distribution another obvious example of how major record companies follow trends rather than
set them. While physical distribution was giving way to new digital models, Roberts
(2005,38) notes that the recording industry is still “dominated by entities that control distribution and are less focused on production,” thus distribution should be
understood as the key to generating profIt and market power in the digital age.
Typically, recording artists work for spedflc record labels, which are owned
mostly by major entertainment corporations. Corporate labels are able to draw on
extensive capital resources to market and promote new albums, as well as to front
large advances to recording artists, who must pay back these advances from the
royalties they receive from album sales. In other words, an artist must pay all of the
expenses associated with the production of the album (from sound engineers to
licensing), as well as expenses involved in producing music videos, and so forth.
Thus the label’s only risk in producing an album is fronting the money for marketing and promotion, which is typically recouped from sales.
After an album is recorded, the label arranges for manufacture and then focuses
on distributing it through the company’s own distribution network. Distribution is
not only the key to the success of the company’s labels, but also attracts products
from independent labels that employ these distribution networks. A strong distribution network will ensure that an album will end up at retailers and then fmally
in consumers’ hands. Therefore, control over distribution leads to control of the
market and the industry. Thus the major companies are currently trying to fmd
ways to dominate channels of digital distribution.
The contemporary recorded music industry
The music business is a cruel and shallow money trench, a longplastic hallway where
thieves and pimps run free, and good men die like dogs. There’s also a negative side
Hunter S. Thompson
For the fIrst 110 years of recorded music, the primary commodities produced by
the industry were physical objects, which allowed the major companies to maintain control over the material production and distribution of records. By 2009, the
recorded music industry was in disarray – the CD format dying and the physical
distribution model crumbling, forcing the major recording companies to restructure and try to adapt to consumer demands. More than ever, the industry was
being forced to follow trends rather than set them.
A review of MP3 technology illustrates some of the dilemmas facing the
recorded music industry. It might be argued that the MP3 has been at the heart of
the industry’s woes. The format was originally designed to compress video fIles in
the early 1990s, and has been spreading on the web since 1994. Unlike many of its
predecessors – from the phonogram to the CD – MP3 technologies were not introduced by the recording industry itself. Rather, the software and hardware used in
the playback of digital music were developed and marketed by huge computer
technology corporations (e.g., Apple and Microsoft) – companies with little interest in the production or marketing of recorded music.
The MP3 and music piracy became part of popular discourse because of the extensive media coverage surrounding the 2001 A&M Records, Inc. v. Napster, Inc. case,
which pitted a successful recording company against the fIrst popular peer-to-peer
(p2p) fIle-sharing network. Napster enabled people to make copies and distribute
MP3s, allowing music to circulate outside the market, which, of course, drew
351
AndIe Sirois and Janet Wasko
Political Economy of Recorded Music Industry
In the industry, a record label is considered independent if it self-distributes or
goes through an “independent” distributor (e.g., ADA, RED, Caroline, or E1
Entertainment Distribution). Therefore, a label owned by the Big Four may utilize
independent distribution and thus claim to be independent (e.g., Zomba). It is
interesting to note that both EMI and WMG are no longer owned by transnational
entertainment conglomerates. WMG was bought from Time Warner in 2004 by
an investment group (led by Edgar BronfrnanJr. of Seagram fame) for $2.6 billion,
and, after an appalling fmandal year in 2006, the private equity fIrm Terra Firma
Capital Partners bought EMI for £3.2 billion.
Since 2000, when the overall market in the US was $14.3 billion ($36.9 billion
globally), revenues to $8.3 billion in 2008, an 18 percent decrease from 2007. Trade
assodations around the world blame illegal downloading for the loss in revenues.
The International Federation of the Phonographic Industry (IFPI) estimates a 20
to 1 ratio of illegally to legally downloaded music fUes, which is supported by a
recent study by the Institute for Policy Innovation estimating that global piracy
took a $12.5 billion slice out of the US economy, displaced 71,000 jobs and $2 billion
in wages. These fIgures, however, have been created by the recording industry to
paint itself as the victims and derive its estimates by equating illegal downloads of
CDs to physical theft from a retailer. It is relevant to point out, though, that MP3
fUes are nonrivalrous goods, meaning that the consumption of an MP3 by one
does not prohibit its consumption by others (nor does its theft).
While revenues have shrunk signillcantly according to RIAA data, the sale of
product has increased dramatically: in 2008, 1.85 billion units were shipped, which
is 730 million more than in 1999, one of the best years for industry sales. While the
physical distribution model yielded more profIt, digital distribution sold more
product with less payoff – what NBC Universal’s CEO Jeff Zucker has referred to
as “trading analog dollars for digital pennies” (quoted in Arango 2008).
The lion’s share of the US music market is controlled by Universal Music Group
(30.2%), Sony Music Entertainment (28.58%), Warner Music Group (20.55%), and
the EMI Group (9.2%), while the rest of the market goes to “indie” labels (11.47%)
(Nielsen SoundScan 2009). These figures represent the production sector of the
recorded music industry. In terms of distribution, the Big Four control approximately 95 percent of the music being shipped to physical and digital retailers.
The industry is finally restructuring itself to meet the consumer demand for
cheap, and now even free, instant, and intangible recorded music, and has started
to monetize legal digital distribution. Record companies are now exploiting new
music through digital sales, including satellite radio and webcasting, ringtones
and ringbacks, iTunes sales and subscription services. But they are also recycling
old content sold as MP3s. Back catalogs can make up more than 40 percent of
sales and 70 percent of profits for a typical major label (Singh 2001, 4). With new
digital platforms, labels are looking at more than album sales as the barometer
of success. Rio Caraeff, an executive at UMG, said, “We look at the total consolidated revenue from dozens of revenue lines behind a given artist or project,
which include digital sales, the physical business, mobile sales and licensing
income” (quoted in Sisario 2008).
In 2008, 32 percent of overall US sales were digital (compared to just 9% in
2005), while digital sales accounted for over 20 percent of the world market. Total
phYSical units shipped were down 26 percent in 2008 in the US market (12% globally). With such a decrease in phYSical sales, big-box stores such as Wal-Mart and
Best Buy (the second and third largest music retailers behind iTunes), which have
typically accounted for 65 percent of all retail purchases, have sharply reduced the
floor space allotted to recorded music (although Best Buy is now trying to sell
vinyl records at some of its stores). However, in 2008 one phYSical format did
exceptionally well: the EP /LP, which saw a 124 percent increase in units shipped
from 2007. Conversely, while over one billion singles were downloaded in 2008, in
the same year a mere 400,000 12 inch vinyl singles were shipped (down from 5.4
million in 1 9 9 9 ) . .
The industry has started to embrace and capitalize on new digital distribution
models, from ala carte MP3 stores (e.g., iTunes, where singles/albums are sold) to
subscription services (e.g., Napster 2.0, where monthly fees are paid for unlimited
downloads) to advertising-based sites (e.g., MySpace Music and YouTube, where
“free” music is supplemented by advertising sales). However, many signs within
the industry are pointing toward a model where music is “free” for consumers as
they pay for recorded music indirectly, which is a model gaining momentum in
Europe. Mark Mulligan, an analyst at Forrester Research, explainS that the industry is shifting to its “Plan B”: “The record companies have realized that the only
way they can fIght free is with free itself” (quoted in pfanner 2009).
The goal of these “free” models is to fmd new ways to connect music to consumers. One model, called “Comes With Music,” involves electronic devices, such
as cellular phones, that include musical content. “Music can become an important
element that enhances the value of consumer electronics devices, providing consumers with a very complete and satisfying experience,” said Thomas Hesse, an
executive at Sony Music (IFPI 2009,8). Record companies are also trying to fmd
ways to connect their music with advertisers and speooc campaigns, essentially
branding a band and a product simultaneously.
In addition, the industry is increasingly exploring licensing deals with video
games, as well as developing other models such as the “multiple rights” or “360”
contracts. These deals focus less on the sale of recorded music and the need to quickly
recoup label investments in advances and promotion, and more on how record companies can capitalize on a recording artist as a whole – from concert tickets and
merchandise to fragrance and clothing lines. While 360 deals may allow (or force)
labels to develop not only talent, but a coindding fan-base, artists’ ancillary income
also could potentially offset future declines in album sales. “We don’t sell records any
more, we act wherever people experience music,” said Ello Leoni-Sceti, an executive
at EMI, “Our role is not to put phYSical discs on the shelf but to reach consumers
wherever they are” (IFPI 2009,5). In other words, the major recording companies
350
Andre Sirois and Janet Wasko
Politioal Eoonomy of Reoorded Musio Industry
are scrambling to monetize the music they produce by further exploiting artists and
copyrights in a desperate attempt to maintain their market hegemony.
Meanwhile, recent figures show an increase in the sale of concerts tickets in North
America (accompanied by consolidation in the live music performance business).
The future of recorded music is indeed in a precarious state. AB the market for
digital music continues to grow; the industry is likely to respond with both promises and threats in attempts to monetize its assets and regain control of the market.
While we can’t predict the future of this volatile industry, we can certainly look to
the past to understand and possibly even predict how the recorded music business
may adapt to new technologies. We suggest issues relating to this industry should
be explored further through critical political economic analysis – issues which
could be, as Smythe (1960) suggested, addressed in dissertations and other academic publications for decades to come.
352
Conclusion
Music is everybody’s possession. It’s only pUblishers who think that people own it.
]ohnLennon
This chapter has looked at the historical relationship between technology and
music, a somewhat antagonistic connection that has created the contemporary
recorded music industry. Through critical historical analysis, we have noted the
cyclical nature of this industry, as well as how such an analytical framework may
help to explore contemporary market conditions.
For nearly a century, as this chapter reveals, the major players in the recorded
music industry have profited by creating artificial scarcity of the commodities they
produced, using an economies of scale model, as well as by controlling physical
distribution networks. While the industry struggled to standardize and control its
playback formats and hardware, current problems facing it are not only because
recorded music is circulating outside its market, but because the industry has lost
much of its control over hardware production to companies in other industries. The
MP3 format has in many ways destroyed the recorded music industry’S production
and distribution models as very little is physically produced and thus made scarce.
However, the industry is increasingly realizing that it can make even intangible
commodities such as MP3s scarce, and thus valuable, through the continued
exploitation of the copyrights attached to music. It could be argued that the MP3
in reality merely represents, and in fact is, a copyright for which consumers pay (or
do not pay). Indeed, recorded music itself is actually becoming a secondary commodity; that is, much as in the early 1900s, recorded music is being used to sell
hardware and other commodities. This is evident, for example, in the licensing of
its music for video games and ringtones, for use in branding other commodities, or
to be included with hardware. In other words, we suggest that the industry will
stay afloat by licensing its copyrighted music to other cultural industries or other
corporations, based on nothing more than a legal process. In other words, copyrights may end up being the industry’s only valuable commodities.
It is interesting to note several signs indicating that the industry’s woes may possibly lead to a more “profitable” state of music as an art form. First, with digitization,
more music is being produced, distributed, and consumed, but at a significantly lower
rate of profit. Music is recorded, produced, and distributed much easier in the digital
age and may free musicians from the control of major labels. This may be good for
the art of music, but clearly not as beneficial to the business of music. Second, other
indicators of musical experiences have been observed. For instance, Callahan (2005)
notes that the sale of musical instruments recently has increased exponentially.
353
References
Adorno, T. W. (1990/1941) On popillar music. Simpson, G. (trans.). In: Frith, S. and
Goodwin, A. (eds), On Record: Rock, Pop, and the Written Word. Routledge, New York.,
pp.301-14.
Alexander, P. J. (2002) Peer-to-peer file sharing: The case of the music recording industry.
Review of Industrial Organization, 20, 151-6l.
Arango, T. (2008) Digital sales surpass CDs at Atlantic. TIle New York Times, November 25.
Online at http://www.nytimes.com/2008/ 11 I 26 Ibusiness I medial 26music.html
(accessed April 14, 2009).
Attali, J. (1985) Noise: The Political Economy of Music. Massumi, B (trans.). University of
Minnesota Press, Minneapolis.
Benjamin, W. (1969 11936) The work of art in the age of mechanical reproduction.
In: Benjamin, w., fllmninations: Essays and Reflections. Arendt, H. (ed.). Schocken,
New York., pp. 217-5l.
Bollier, D. (2005) Brand Name Bullies: TIle Quest to Own and Control Culture. John Wiley &
Sons, Inc., Hoboken, NJ.
Breen, M. (1995) The end of the world as we know it: Popillar music’s cilltural mobility.
Cultural Studies, 9(3), 486-504.
Burkart, P. and McCourt, T. (2006) Digital Music Wars: Ownership and Control of the Celestial
Jukebox. Rowman & Littlefield, Lanham, MD.
Burnett, R. (1996) The Global Jukebox: TIle International Music Industry. Routledge,
New York.
Callahan, M. (2005) The Trouble with Music. AK Press, Oakland, CA.
Chanan, M. (1995) Repeated Takes: A Short History of Recording and its Effects on Music. Verso,
London.
Chapple, S. and Garofalo, R. (1977) Rock ‘n’ Roll is Here to Pay: TIle History and Politics of the
Music Industry. Nelson Hall, Chicago.
Coleman, M. (2003) Playback: From the Victrola to MP3, 100 Years of MllSic, Machines, and
Money. Da Capo Press, Cambridge, MA.
Cvetkovski, T. (2007) The Political Economy of the MllSic IndllStry: Technological Change,
Consumer Disorientation and Market Disorganisation in Popular MllSic. VDM Verlag Dr.
Milller, Saarbriicken, Germany.
Andre Sirois and Janet Wasko
Politioal Eoonomy of Reqorded Musio Industry
Dannen, F. (1990) Hitmen: Power Brokers and Fast Money Inside the Music Business. Times
Books, New York..
Day; T. (2000) A Century of Recorded Music: Listening to Musical History. Yale University Press,
New Haven, CT.
Demers, J. (2006) Steal This MltSic: How Intellectual Property Law Affects MltSical Creativity.
University of Georgia Press, Athens.
Dowd, T. J. (2003) Structural power and the construction of markets: The case of rhythm
and blues. Comparative Social Research, 21, 147-201.
Dowd, T. J. (2004) Concentration and diverSity revisited: Production logics and the U.S.
mainstream recording market, 1940-1990. Social Forces, 82(4), 1411-55.
Eisenberg, E. (2005) The Recording Angel: Music, Records and ClLlture from Aristotle to Zappa,
2nd edn. Yale University Press, New Haven, CT.
Elliot, M. (1993) Rockonomics: The Money Behind the Music. Carol Publishing Corporation,
Secaucus, NJ.
Fabbri, F. (1993) Copyright: The dark side of the music business. In: Frith, S. (ed.), MltSic
and Copyright. Edinburgh University Press, Edinburgh, pp. 159-63. .
Fox, M. (2004) E-commerce business models for the music industry. Popular Music and
Society, 27(2), 201-20.
Frith, S. (1981) Sound Effects: Youth, Leisure, and the Politics of Rock ‘n’ Roll. Pantheon,
New York..
Frith, S. (1988) MlLsic for PleaslLre: Essays in the Sociology of Pop. Routledge, New York..
Frith, S. (ed.) (1993) MltSic and Copyright. Edinburgh University Press, Edinburgh.
Garofalo, R. (1986) How autonomous is relative: Popu1ar music, the social formation, and
cu1tural struggle. Popular Music, 6(1), 77-92.
Gelatt, R. (1977) The Fabulous Phonograph: 1877-1977, 2nd edn. Macmillan Publishing,
New York..
George, N. (1988) The Death of Rhythm &’ Blues. Pantheon, New York..
Golding, P. and Murdock, G. (2000) Cu1ture, communication and political economy. In:
Curran, J. and Gurevitch, M. (eds), Mass Media and Society, 3rd edn. Edward Arnold,
London, pp. 70-92.
Gronow, P. (1983) The record industry: The growth of a mass medium. Popular MltSic, 3,
53-75.
Hesmondhalgh, D. (1998a) The British dance music industry: A case study of independent
cu1tural production. The Britishjournal of Sociology, 49(2), 234-51.
Hesmondhalgh, D. (1998b) Post-punk’s attempt to democratise the music industry: The
success and failure of rough trade. Popular Music, 16,255-74.
Hesmondhalgh, D. (1999) Indie: The institutional politics and aesthetics of a popu1ar music
genre. Cultural Studies, 13,34-61.
Hesmondhalgh, D. (2006) Digital sampling and cu1tural inequality. Social &’ Legal Studies,
15(1),53-75.
Hesmondhalgh, D. (2007) The Cultural Industries, 2nd edn. Sage Publications, London.
Hobart, M. (1981) The political economy of bop. Media, Culture, and Society, 3(3), 261-79.
Horkheimer, M. and Adorno, T. W. (2001 I 1947) The cu1ture industry: Enlightenment as
mass deception. In: Durham, M. G. and Kellner, D. M. (eds), Media and Cultural Studies:
Key Works. Blackwell, Malden, MA, pp. 71-101.
Huygens, M., Baden-Fuller, C., Van Den Bosch, F. A. J., and Volberda, H. W. (2001)
Co-evolution of fIrm capabilities and industry competition: Investigating the music
industry; 1877-1977. Organizational Studies, 22(6), 971-1011.
IFPI (2009) Digital music report 2009. Online at http://www;i:fi?i.org/ content I library I
dmr2009.pdf (accessed May 24,2009).
Katz, M. (2004) Capturing Sound: How Technology Has Changed MltSic. University of California
Press, Berkeley.
Kelley; N. (ed.) (2005) R&’B, Rhythm and Business: The Political Economy of Black Music.
Akashic Books, New York.
Kenney; W. H. (1999) Recorded Music in American Life: The Phonograph and Popular Memory,
1890-1945. Oxford University Press, New York.
Kofsky, F. (1998) Black Music, White BltSiness: flllLminating the History and Political Economy of
jazz. Pathfmder Press, New York..
Kusek., D. and Leonhard, G. (2005) The Future of Music: Manifesto for the Digital Music
RevollLtion. Berklee Press, Boston, MA.
Lathrop, T. (2003) The Business of MlLsic Marketing and Promotion, revised and updated edn.
Billboard Books, New York..
Lessig, L. (2005) Free Culture: The Nature and Future of Creativity. Penguin, New York..
Lessig, L. (2008) Remix: Making Art and Commerce Thrive in the Hybrid Economy. The Penguin
Press, New York.
Lee, S. (1995) Re-examining the concept of the “independent” record company: The case
of Wax Trax! Records. Popular MltSic, 14, 13-31.
Lopes, P. D. (1992) Innovation and diversity in the popu1ar music industry; 1969-1990.
American Sociological Review, 57(1), 56-71.
Malm, K. and Wallis, R. (1992) Media Policy and Music Activity. Routledge, London.
Manuel, P. (1993) Cassette Culture: Popular MltSic and Technology in North India. University of
Chicago Press, Chicago.
Marx, K. (1863) Productivity of capital. Productive and unproductive labour. B. Fowkes
(trans.). MECW 34, 121-146. Online at http://www;marxists.org/archive/marx/
works I 1861 I economic I ch38.htm (accessed March 10. 2009).
McCourt, T., and Burkhart, P. (2003) When creators, corporations, and consumers collide:
Napster and the development of on-line music distribution. Media, ClLlture &’ Society,
25,335-50.
McLeod, K. (2001) Owning ClLlture: Authorship, Ownership &’ Intellectual Property Law. Peter
Lang Publishing, New York.
McLeod, K. (2005) Freedom of Expression: Overzealous Copyright Bozos and Other Enemies of
Creativity. Doubleday; New York.
McQuail, D. (2005) McQuail’s Mass Communication Theory, 5th edn. Sage Publications,
London.
Millard, A. (2005) America on Record: A History of Recorded Sound, 2nd edn. Cambridge
University Press, New York..
Morton, D. (2000) Off the Record: The Technology and Culture of Sound Recording in America.
Rutgers University Press, New Brunswick, NJ.
Negus, K. (1992) Producing Pop: Culture and Conflict in the Popular Music Industry. Edward
Arnold, London.
354
355
Andre Sirois and Janet Wasko
Politioal Eoonomy of Reoorded Musio Industry
Negus, K. (1996) Popular Music in Theory: An Introduction. Wesleyan University Press,
Hanover, NH.
Negus, K. (1999) Music Genres and Corporate Cultures. Roudedge, London.
Nielsen SoundScan. (2010) 2009 U.S. music purchases up 2.1% over 2008; Music sales exceed
1.5 billion for second consecutive year. Business Wire,January 6. Online at http://www.
businesswire.com/news/home/20l00l06007077 I en/2009-U.S.-Music-Purchases- 2.12008-Music (accessed October 11, 2010).
Passman, D. S. (1997) All You Need to Know about the Music Business. Simon & Schuster,
New York.
Peterson, R. A. (1976) The production of culture: A prolegomenon. American Behavioral
Scientist, 19(6), 669-84.
Peterson, R. A. and Berger, D.G. (1971) Entrepreneurship in organizations: Evidence from
the popular music industry. Administrative Science Quarterly, 10(1),97-107.
Peterson, R. A. and Berger, D. G. (1975) Cycles in symbol production: The case of popular
music. American Sociological Review, 40(2), 158-73.
Pfanner, E. (2009) Global music sales fell 7% in ’08 as CDs lost flavor. The New York Times,
January 16. Online at http://www.nytimes.com/2009 I 01 I 17 I business I medial
17music.htrnl?_r=1 (accessed May 20,2009).
Roberts, M. (2005) Papa’s got a brand-new bag: Big music’s post-Fordist regime and the
role of independent music labels. In: Kelley, N. (ed.), R&-B, Rhythm and Business: The
Political Economy of Black Music. Akashic Books, New York, pp. 24-44.
Robinson, D.C., Buck, E. B., and Cuthbert, M. (1991) Music at the Margins: Popular Music
and Global Cultural Diversity. Sage, London.
Rudsenske,]. S. and Denk,]. P. (2005) Music Business Made Simple: Start an Independent Record
Label. Schirmer Trade Books, New York.
Sanjek, 0. (1998) Popular music and the synergy of corporate culture. In: Swiss, T, Sloop,
]., and Herman, A. (eds), Mapping the Beat: Popular Music and Contemporary Theory.
Blackwell Publishers, Malden, MA, pp. 171-86.
Sanjek, R. and Sanjek, D. (1991) American Popular Music Business in the 20th Century. Oxford
University Press, New York.
Scott, A.]. (1999) The US recorded music industry: On the relations between organization,
location, and creativity in the cultural economy. Environment and Planning, A 31(11),
1965-84.
Singh, A. (2001) Cutting Through the Digital Fog: MilSic Industry’s Rare Chance to Repositionfor
Greater Profit. Bain & Company, Inc., Boston.
Sisario, B. (2008) Music sales fell in 2008, but climbed on the web. New York Times, December
31. Online at http://www.nytimes.com/2009 I 01 I 011 arts I music I 01indu.htrnl
(accessed October 11, 2010).
Smythe, D. (1960) On the political economy of communication. Journalism Quarterly,
Autumn, 563-72.
Sousa,]. P. (1906) The menace of mechanical music. Appleton’s Magazine 8. Online at http://
explorepahistory.com/odocument.php?docId=418 (Accessed April 12, 2009).
Steffen, 0. ]. (2005) From Edison to Marconi: The First Thirty Years of Recorded Music.
McFarland & Company, Jefferson, NC.
Storey, ]. (1996) Cultural Studies and the Study of Popular Culture: Theories and Methods.
University of Georgia Press, Athens.
Swiss, T, Sloop,]., and Herman, A. (1998) Mapping the Beat: Popular Music and Contemporary
Theory. Blackwell Publishers, Malden, MA.
Taylor, T D. (1997) Global Pop: World Music, World Markets. Roudedge, New York.
Theberge, P. (1997) Any Sound You Can Imagine: Making Mime/Consuming Technology.
Wesleyan University Press, Hanover, NH.
Toynbee,]. (2006) Copyright, the work and phonographic orality in music. Social &- Legal
Studies, 15(1),77-99.
Vaidhyanathan, S. (2001) Copyrights and Copywrongs: The Rise of Intellectual Property and How
it Threatens Creativity. New York University Press, New York.
Weber, M. (1958) The Rational and Social Foundations of Mimc. Martindale, D., Riedel,]., and
Neuwirth, G. (ed. and trans.). Southern University illinois Press, Carbondale.
356
357
A peculiar kind of freedom is invoked when
it can be exemplified in subjection for life.
—Carole Pateman, The Sexual Contract
Chapter 4
Freedom, Unfreedom, and the
Rhetoric of the Recording Contract
Recording Artists: Slaves and Indentured Servants?
In early 2001, at the urging of his Los Angeles “talent” constituency, Democratic State Senator Kevin Murray, a former executive at the William Morris
talent agency, began looking into record industry contracting practices.
Major label recording artists had begun to complain about section 2855(b) of
the California Labor Code, the amendment to the state’s long-standing sevenyear rule discussed in chapter 3. The rock star Courtney Love, who at the time
was challenging her contract with her record company, had complained quite
publicly.1 Love and others contended that the amended rule exposed them to
virtually interminable contracts. For over a century, prior to the addition of
subsection (b) in 1987, section 2855 had limited the enforceability of employment contracts to a certain number of years, increasing to seven in 1931. The
legislature’s addition of subsection (b) at the behest of the RIAA, “carved out”
recording artists from protection under the seven-year rule by adding special
provisions for damages to recording contracts. Since 1987, recording artists
seeking to get out of their contracts at the end of seven years have remained
vulnerable to assessments of financial damages on “undelivered” recordings
(from which, in theory, the company could have profited) beyond the sevenyear mark, effectively extending the terms of the contract and eliminating
the time limit.
In September 2001 Senator Murray convened an informational hearing
before the Senate Select Committee on the Entertainment Industry, of which
he was the chair. The purpose of the hearing was to give recording artists and
their allies the opportunity to air their grievances regarding subsection (b)
and the post-1987 contracting regime. Record company executives and their
lawyers and lobbyists were also invited to explain their need for this special
exemption and to respond to the artists’ arguments for its reconsideration or
repeal.
The hearing was a sensation. It brought music industry stars, bigwigs, and
their dirty laundry before the public in Sacramento. It also publicized the artists’ charges against their employers, the major record companies. The jazz
and R&B singer Patti Austin told the assembled lawmakers, witnesses, and
members of the audience and press that “I was always taught that Lincoln
freed the slaves, and I didn’t realize that he excluded recording artists from
that list.” “The Legislature,” she added, “should join the Union”—a reference
to the North in the US Civil War—“in freeing the recording artist from the
bondage to which this legislation relegates us.”2 Courtney Love pointed to the
political and economic principles at work in the 1987 legislation in her testimony: “It seems to me that 2855(b) is so precious to this system, [because
Vivendi] would have never paid $30, $40 billion dollars for Universal if we
weren’t indentured, we weren’t part of the deal, if our slavery wasn’t part of
the deal.” She added: “In the last 14 years, you [record company] guys have
created a real economy based on 2855.”3 That is, “you guys” have been able
to develop a business model based on your ability to keep us under contract as long as you like, because you’ve taken away our right to depart from
the contract at the end of seven years. The language of “slavery” was not as
far-fetched as it might initially sound. To scholars and policymakers in the
centuries- old liberal tradition, “the limitation on the duration of the contract appears to be the only thing that divides a slave from a servant or wage
laborer.”4 Austin’s and Love’s characterization of the loss of a limit on duration is well within reason, analytically speaking.
144 Regulation
Austin and Love are not talking about being born into slavery or being
captured or conquered into slavery. They are talking about what scholars
call “civil slavery”—“civil” here indicates that it is voluntary and consensual.
(This interpretation is underscored by the artists’ equation of slavery with indentured servitude, the latter being a form of consensual labor bondage that
could be enforced by criminal sanctions.) Love acknowledged the strangeness
of their complaint: they were “not here to complain that we don’t have swimming pools, or, to use sort of an inverted phrase from Bonfire of the Vanities,
‘they get the cake and they give us a little bit of the crumbs.’ I have a swimming pool, all right. I have nice shoes. Nobody is sitting here saying, ‘I’m so
poor. Please help me.’ ”5 However, in theoretical terms, the artists’ leap to this
language of slavery and indenture was not a long one. High-profile recording
artists complaining about involuntary servitude could seem like a patent absurdity, but from another perspective it is actually a cogent, if rudimentary
and self-interested, political critique.
In the 2001 informational hearing at which they uttered these charges,
recording artists and their allies argued that in exempting recording artists
from the protection of the seven-year rule, the Legislature made the artists
exceptionally, unfairly, and excessively vulnerable to their record company
employers’ superior power in the labor market. Austin, Love, other recording artists, artists’ attorneys, union officers, and even lawmakers used this
barbed language to advance two main points: that recording artists had been
unfairly singled out from all California employees for special vulnerability,
and that recording artists’ loss of protection under the seven-year rule deprived them of a crucial dimension of the control of their own labor. Industry insiders from both sides gave extensive testimony over the course of the
hours-long hearing; in the weeks leading up to the hearing, numerous other
interested parties had submitted letters and position papers for consideration
by the committee. This material offered the public a rare glimpse into the
inner workings and politics of the relationship between record companies
and recording artists.
In January 2002, Senator Murray introduced legislation to repeal the 1987
carve out and restore to recording artists the seven-year rule’s guarantee of
the right to change employers or leave employment entirely at the end of
seven years, without penalty. The assignment of Murray’s bill (SB 1246) to the
Judiciary Committee for debate led to a second public discussion of recording industry politics and minutiae. The stakes were much higher at this second debate because actual legislation was now under discussion. Accordingly,
Freedom, Unfreedom, and the Contract 145
the committee’s chair, Martha Escutia (a Democrat from Los Angeles), instructed participants to avoid hyperbole of the kind engaged in by Austin
and Love and others the year before, and to stick closer to empirical details
of the business and their relationships. However, while the recording artists’ side toned down their rhetoric, the companies’ side cranked theirs up
considerably, spurred aggressively by Ray Haynes, a conservative Republican
state senator from wealthy Orange County. The artists’ side shifted emphasis,
from charges of slavery and indenture to more considered arguments about
the perceived degradation of their bargaining power. The record companies
continued their arguments about the need for incentives and efficiency but
shifted from a tentative to a radical contractarian approach, in which voluntariness and consent are the only criteria necessary to legitimate a contractual
relationship. In part by giving up their more radical arguments about slavery
and indenture, but also because of a myopia resulting from their deep investments in the record industry’s contracting system (despite their complaints
about it), and the absence in existing case law of a clear and useful critique
of the carve out, the recording artists and their attorneys were caught short
when faced with these absolute, misleadingly sharp, and ideologically mainstream arguments.
This chapter takes the examination of this kind of contest in a different direction. The empirical substance here is the arguments made by each side in
their struggle over the reconsideration and repeal of the 1987 carve out. And
not all of the arguments either: many of the arguments made in 2001 and
2002 are more or less identical to those of the 1980s (discussed in the previous chapter) and so will only get passing mention (if any) here. This chapter takes its impetus from the statements of Austin and Love and their allies
about civil slavery and indentured servitude, the receptivity of the lawmakers
to these statements, and their discursive trajectory over six months of debate.
What kind of an argument is it to say that one’s work is a form of consensual slavery or servitude? What kind of an argument is it to say that you can
be held to whatever you agree to? From what kinds of broader political conversations do such contentions flow? To what kind of broader political conversations do such contentions link or gesture? What can we learn about the
politics of recording artists’ labor—and labor more generally—by following
these arguments through these public debates?
Critical scholarly analyses of the politics of employment help clarify the
arguments made by both sides in this particular conflict. These analyses also
146 Regulation
invoke civil slavery and servitude, and in a complementary way: whereas the
recording artists use this language to highlight their encounters with what
they believe is excessive employer power, scholars use it in the analysis of
routine relations to show that modern labor is not, as liberal rhetoric has
it, free in any essential way. Robert Steinfeld has studied the emergence and
legal history of the system of “free labor” in the Anglo-American world of
the last several centuries, showing that the categories of “free” and “unfree”
change alongside other changing social and cultural institutions. He points
out that “the line separating free from unfree labor is not natural, but conventional”—that is, it does not derive from inherent characteristics of the work
or the relationship between worker and employer but is a social construction
or story, produced by people as they interact, that can serve all kinds of social
purposes. This particular story, according to Steinfeld, tells us that our work
arrangements are “free” in comparison to those of our forebears before the
twentieth century. But because of the socially constructed nature of the definitions of “freedom” and “coercion,” Steinfeld reasons, “nearly all forms of
labor not performed for sheer pleasure can be characterized [by the observer]
as either voluntary or coerced,” depending on the observer’s definitions, or
the dominant definitions, of these terms.6 After seven years, the recording
artists argued, their labor was no longer voluntary but coerced by the threat
of damages. For the record companies, this was an impossibility: all parties
agreed to the contract, and the terms of the contract did not change in any
way at the seven-year point. However, while the recording artists’ definitions
of “voluntary” and “coercive” differed from those of the record companies,
they did not differ either clearly or completely, and even this lack of clarity
was itself obscure to the artists.
This chapter analyzes testimony and argument from the 2002 California State Senate Judicial Committee hearing against the backdrop of critical
scholarly analyses of the employment relationship. It focuses in later sections
on very revealing gaps in the recording artists’ arguments for their return to
the protection of the seven-year rule. Although their rhetoric of “involuntary
servitude” points to real problems at the heart of liberal society’s defining relation of employment, the artists ultimately were too invested in their existing contractual relationships to enable their critique to hit its true target. The
companies’ most powerful contractarian arguments were that the artists had
signed their troublesome contracts voluntarily and therefore had no basis for
complaint. When the artists finally encountered these arguments, they were
Freedom, Unfreedom, and the Contract 147
so handicapped by the gaps in their arguments that they could not effectively
refute their opponents, even though their stance was perfectly aligned with
powerful and long-standing political and philosophical counterarguments.
Whether or not pressures on people to work and in work are considered
coercive by dominant common sense, such pressures “take similar form,”
according to Steinfeld: “One person is placed in a position to force another
person to choose between labor and other alternatives that are more disagreeable than labor itself.”7 However imperfectly articulated they might be,
the arguments of recording artists and progressive legislators that employment agreements can give rise to coercion—even when entered into voluntarily—challenge commonsense conceptions of employment in the cultural
industries and in general. Is it a legitimate exercise of freedom to give up
one’s freedom this way? An individual may choose to enter a contract, but in
so doing, as John Stuart Mill puts it, “he abdicates his liberty” and “foregoes
any future use of [his liberty] beyond that single act.” The individual entering
into a contract “therefore defeats . . . the very purpose which is the justification of allowing him to dispose of himself.” According to Mill, “the principle
of freedom cannot require that [a person] should be free not to be free. It is
not freedom, to be allowed to alienate [one’s] freedom.”8 By making charges
of “[civil] slavery” and “indentured servitude” regarding contracts they had
signed voluntarily, the recording artists implicitly invoked a Millian critique
of employment, arguing that any relation that subordinates one person to the
will of another is undemocratic and contrary to a strong conception of liberty,
even when the relation is consensual. In making these charges, the recording
artists gestured toward challenging critiques of contract, employment, and
alienation. In contrast to the dominant, classical liberal contractarian logic
that more freedom means freedom to alienate more things (including rights),
the recording artists agreed with Mill, in principle, that people should not be
allowed to alienate certain freedoms, even voluntarily. But the artists were unable, finally, to argue why that should be the case.
The recording artists’ rhetorical failure is not surprising; after all, the market system in which most of us make our livings is based on alienation. What
is surprising is that they got as far as they did in their arguments, and that
their arguments were taken as seriously as they were by legislators. Seen in
this light, this episode is significant in at least two ways: first, it offers an
opportunity to explore further political aspects of the relationships between
creative workers and their entertainment industry employers, especially how
they work out their differences in the world of public policy; and second, it is
148 Regulation
an example of a rare opportunity (ultimately, a missed opportunity) to bring
a formidable critique of both contractarianism and employment tout court
before the public from the standpoint of labor.
Hearings on the Seven-Year Rule
The ground rules of the employer-employee relationship are “nearly always
subject to challenge and may become the object of political and legal struggle
at any time.”9 The seven-year rule is a California-specific example of such
rules. In the mid-1980s, during a period of turbulence in the industry, the
RIAA successfully challenged the seven-year rule. As I argued in chapter 3,
the ability of business enterprises to achieve stability in their labor relations
is a central concern during times of organizational uncertainty. In conditions
where highly valuable employees—such as star recording artists—may be
tempted to change employers and thereby threaten sets of income streams,
contracts of effectively unlimited length are very effective in enhancing at
least the appearance of this stability. In 1985, the RIAA lobbied the California
Legislature to change the seven-year rule’s time limit to ten years; when that
approach failed, they attempted to get the law changed so that a renegotiation
prior to the end of the first seven-year term would trigger a new seven-year
period (“tacking,” in industry jargon, technically known as “novation”); this
effort also failed. Finally, in 1987 a new subsection of the law was proposed,
saying that artists would be liable for damages on undelivered albums enumerated in the contract (albums that may never even have been optioned
or requested by the company) after the expiration of the seven-year period,
thus effect…