A History of the Music Business and Where it’s Headed Now

During the 20th Century music became big business, but the 21st Century may lead us back to an older mode of existence for artists.

In the 1700s and 1800s, music was largely funded by the state, the church, and wealthy private patrons, or was simply played in the home by amateurs. In the mid-1800s however there became some opportunities to “mass market” music. A song could become a “hit” if it was part of a successful operetta (the Merry Widow was famous for its successful merchandising efforts) or if a well-known, touring minstrel or, later, vaudeville performer performed the song repeatedly across the country. (Al Jolson famously insisted on including his name as a co-writer on songs he had nothing to do with writing so that he would receive royalties in exchange for making a song famous.) Publishers were able to sell thousands and thousands of copies sheet music to the musically literate public of “hit songs” to be played at home on their pianos. The constant production of new songs that could capture the public’s attention became a booming model for publishers and songwriters.

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The 20th century expanded this model of mass distribution. As Vernon and Irene Castle made ballroom dancing all the rage in the 1910s (it was seen as unwholesome by many in the US prior to the Castles) there became a larger and larger demand for dance bands, and published arrangements of popular songs for them to play. The “band business” became a huge market between WW1 and WW2. Simultaneously, the technology for recording performances onto a record became better and better, and more and more Americans purchased record players and albums. This was yet another source of opportunity for publishers, artists, writers and record companies to earn revenue.

Antique Radio 300x196 - A History of the Music Business and Where it's Headed NowBut the biggest boom came with radio. In the 1920s radio set producers started broadcast networks. (After all, you can’t sell radios if there’s nothing being broadcast.) At first the programming was free, but radio producers soon realized they had sold nearly everyone a radio and they needed a way to generate a new stream of revenue. There entered the advertising model which has supported radio for generations (with the exception of Public Radio) and now, in the 21st century, also provides the model for streaming services like Spotify.

Radio not only paid artists to perform live (playing a recording on-air was unheard of) but it served as a marketing tool for new songs, new musicals, and for performers’ live appearances. It was the first time that American audiences could simultaneously (more or less) all connect to the same new songs and artists.

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In the 1930s the recording industry dipped with the great depression as Americans began to favor radio (since it was free). But, the new “soundie” technology created a boom in Hollywood and songwriters and performers found a new home in talking pictures. In the late ’30s, as the US started to come out of the depression, the advent of swing music drove young people to buy records again. The jukebox industry also began to boom, which increased the sale of records. This model continued through the mid 1940s.

After the war the dance band business began to fade as soldiers and their sweethearts settled down into domestic life en masse. In the early ’50s the boom in TV set ownership offered a new medium for music. The record industry boomed again with increased prosperity and TV variety shows, with performances by new musical artists (especially those playing Rock ’n’ Roll which young people were crazy for), served as marketing fuel for the record industry’s success. Radio, by eliminating live performance and simply playing recordings (due to a hobbled Musicians’ Union from the collapse of the dance band industry) was able to lower its costs and capture a market share as well. This was especially due to Americans moving to the suburbs and buying more cars which had built-in radios.

The nature of Rock ’n’ Roll music also helped to change the industry. Previously, songs were written by composers and performed by performers. But Rock ’n’ Roll more and more often combined the two into one. Since these artists were under contract to the record companies this gave the record companies increased power as compared to publishers. Additionally, 30 years of radio had created a largely musically illiterate public. The death of the amateur musician meant fewer sales of sheet music feeding the record industry’s rise and publishing’s decline.

bloomingdales-record-shop1904
Bloomingdales’ record shop 1904

With the record companies new-found power to shape the industry and make or break artists, it became the corporate giant that we think of that reached its peak in the 1980s. The great disadvantage of this model was that a lot of middle men got to decide what the public would hear. Music was often sold more on image than artistic quality (and the largely musically illiterate public was none the wiser). However the great advantage to this model was that record companies could afford to develop artists. They could afford to put a 40-piece orchestra behind an unknown and could risk absorbing the loss if the artist didn’t become a star. Essentially, some of the terrible pop music was paying for the development of some of the hipper artists.

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The 1990s marked the beginning of the end for the big record companies. First came the CDR which allowed people to copy CDs. Records were very difficult to copy. Tapes were easier to copy but copies were reduced in quality (and tapes could be a pain to listen to and they broke easily). But CD duplication offered people a way to share music in full quality without paying for it. Soon on the heels of the burned CD was the MP3, followed quickly by sharing sites like Napster which allowed people to share recordings quickly and easily without spending a dime.

Legal action worked to shut sharing sites down, but not before the MP3 became the standard way of listening to music. Apple, seeing this trend, launched iTunes in 2001, a way of legally purchasing and downloading MP3s. Today many computers don’t even have CD drives anymore. The CD has seen its day and has become increasingly an artifact used only by the over-45 set.

People had gotten a taste of free music though, and as internet connections became faster and faster, streaming services began to pop up and compete with sites that sold MP3s. That brings us up to present day. iTunes is folding, Spotify is, for the first time, in the black.

Throughout the 20th century, large companies essentially took care of artists. Though these companies still exist, they no longer have the budgets (or the desire) to do much other than music that will appeal to the lowest common denominator. So where does the current state of the industry leave artists?

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Though technology has now afforded us the means to produce our own music more affordably without the backing of a label, there is no way to really earn much money from sales of a record (and streams pay abysmally) because nobody’s buying. If an artist makes electronic music, their costs are pretty low: a protools subscription, sample packages, and the time of one person and perhaps they can turn a little profit. For small bands of four to six members, it becomes much more difficult. And for artists who produce large ensemble music (such as myself) the task becomes almost insurmountable.

After all, a song that takes four musicians to make doesn’t sell/stream for four times more than a song that takes one producer with a computer to make (thanks iTunes) and a song that takes 16 musicians to make doesn’t cost four times as much as the song recorded by a quartet. (In fact the cost of a single song purchase in 1901 on a Victor Black Label record was $1, the same as the cost of a song today ($1 in 1901 dollars is $30.13 in 2019 dollars).

Since the value of a song has gone down by thirty times, the amount of money that can be spent on producing a track decreases accordingly. While technology can help make up for this a little, the ultimate result is a loss of variety and quality in music. Artists are less willing to take musical risks because of razor-thin profit margins. Songs must use fewer musicians. Music is more often produced by musicians with less skill and ability.

What may save the music industry from a spiral into an oblivion of unlistenable garbage is a variation on a model that served us well prior to the mid 1800s: a patronage model. However, rather than relying on a few wealthy patrons, the church, or the state, the new patronage model may be a more democratic one: crowdfunding.

Crowdfunding albums allows musical artists to present the public with what they’d like to create, and lets folks who value that artist’s work collectively support the project. This allows the record buying public to enjoy more interesting music, music made with larger ensembles, where artists take more risks, and in more niche genres: music that could not be produced if the artist needed to break even on sales/streams.

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The one piece of this puzzle that is left out is pay for the artist. Since most crowdfunding campaigns do not include the artist paying themself, the question becomes “how does the artist eat and pay rent?” I believe that the answer to that is in people becoming more accepting of, and participatory in, the crowdfunding model.

For example, I’m currently running a crowdfunding campaign for a big band Christmas album with my 1940s-style big band. The record will feature 26 musicians including my band, an added string section, and our vocalists. An album like this lacks commercial viability because it has a niche market, further compounded by the overall increase in streaming and decrease in sales—it would take roughly 3–4 million streams on Spotify to cover production costs.

The response an artist receives when doing a campaign like this is mixed. Some folks are really excited and back the project right away. Others say they’ll check it out and do, others say they’ll check it out and, sadly, don’t. Others completely ignore you, a few will mark you as spam. (Why someone would mark you as spam who followed you on social media in the first place to find out about your musical projects is, well, batty—but people do it.)

The problem is that a lot of people see crowdfunding as charity or, worse, as begging for money. People have asked me “What happened to investing in something instead of just asking for money?” (The answer to that question is of course “An investment? Great, what percentage of the losses would you like to take on?”) While a lot of crowdfunding is charity (crowdfunding campaigns are basically the only form of medical insurance for a lot of Americans) the perception of what what it means to crowdfund an artistic project needs to change.

I love the big backers on my crowdfunding projects—people like that are currently keeping music alive in the world because they can until everyone else gets hip to the new paradigm. But it’s the small backers that can ultimately bring that new paradigm into full effect.

Between all my social media channels and my email list I have around 20,000–25,000 friends/followers/subscribers. If one-twentieth of those fans were willing to say “yeah this music is worth $1 a song to me, sign me up as a supporter and send it to me when it is done” then I’d have no problem producing a record and wouldn’t have to sit around fretting about my worth as a person to my fellow human beings on the planet. (If you’ve never done an artistic crowdfunding project, I assure you it is the most humbling, soul crushing thing you can do.) Eventually if more people were hip to the patronage model, artists could even afford to pay themselves a little something for their time and effort, and nobody would think that was unreasonable.

So the question becomes, how do we change the norms? How do we get fans to want to become backers because they understand that when they do that, they become part of the creation of the art. That was, after all, enough motivation for the Medici family to commission countless works of art.

You know why the hipster burnt himself on the stove? Cause he touched it before it was cool.

People used to brag about having bought a new record before everyone else, I don’t see why folks couldn’t come around to bragging about helping fund a great record—after all, listening to something and knowing it’s good before other people do is hip, but being so in tune that you buy the album before the artist even made it—that’s a whole new level “touched it before it was cool.”

How we change that perception is a question I don’t have the answer to. Hopefully someone will answer it soon though; if not we may be doomed to a complete erosion of public taste and find music sucked eternally into the black hole of mediocrity.

I welcome your comments on how we change that perception as an industry! And, if you’re already one of the converted, then please do lend us a hand with our current album Kickstarter at www.kickstarter.com/projects/glenncrytzer/underneath-the-mistletoe.

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