In light of the recent closings of indie favorites Aron Records and the Rhino record shop in Los Angeles, and the Chapter 11 filing of mall giant Musicland, many are sounding the death knell for the conventional retail record business.
No doubt, this demise was a long time coming. In fact, I would peg the beginning of the downward trend with the 1979 release of The Knack’s debut album containing the hit “My Sharona,” and essentially nothing else but filler material. At a time when record albums were priced under $8.00, this particular product earned the undying enmity of the public because it was the first one issued at $9.00, exacerbated by the lack of anything but the single at the new high price.
This little act of greed by Capitol Records, along with the limited talents of The Knack, pretty much finished the career of that group, but also launched the home-taping revolution, that was to grow into the downloading revolution 20 years later.
Ironically, the industry never properly capitalized on the best thing they ever had, which came out only three years after the “My Sharona” debacle, and that was the audio CD. At last, recorded music really was better than live music (at least regarding the pure sonic experience), since you could have beautiful sound quality with none of the live annoyances. Indeed, this was especially true with classical music, long the gold criterion of audio perfection, as the incessant coughing, so typical of a concert hall experience, along with the scratchiness of vinyl and the hiss of cassettes, were gone forever.
While there were some logical constraints in undermining live music performance, not the least of which was that this was the major source of revenue for non-writer artists, the industry did precious little marketing based on the audio quality, except for insider events. Moreover, they never talked about the more robust nature of the CD medium. That was left to one retailer—The Wherehouse—which was the first to promote the sale of used audio CD’s. A great idea, except it meant that someone other than the record company would be taken care of for a change, so they were temporarily drummed out of the business.
So how DID the majors market audio CD’s? They overpriced the product, to be more expensive than vinyl discs or cassettes, even though the manufacturing cost was far less. Yes, CD’s could have been tagged moderately higher based on perceived value, but not 40-50% higher. Another misstep was the absurdly wasteful packaging, utilizing the long box, that was immediately discarded upon purchase. Despite widespread complaints from the get-go, it took a couple of years for this to finally give way to the shrink-wrapped Jewel Box, even though that packaging mode had always been used in Europe.
And why did the industry first favor the long box? Well, it fit into existing bins that were being used for record albums, and besides, how could they pare down those juicy vendor relationships with printers—themselves caught up in the computer revolution? Unfortunately, the long box fiasco was simply another dumb, short-term logic business decision that only ticked off the young record buyers who could see the obvious environmental disaster of the useless long box, being thrown away by the millions.
The final wake-up call was to come in the late 1990’s. Clearly, a fortune could be made by music copyright holders, if they could literally eliminate the middleman (several middlemen, in fact) and provide the product in mp3 format, direct to the user. This should have been done early in the game, before Napster, and before the binary newsgroups got too big.
But, no. I was involved in meetings pitching the creation of company-owned download sites, and the proposals were all turned down. Care to guess why? The execs said that if they were to do that, then people would steal their copyrights. When I told them that this was already going on, they were in a sort of denial that could only be called schizophrenic. A few years later, they would try to turn back the tide by suing struggling single mothers, whose kids had downloaded a few songs. That sure worked…
Thus, the current $18 audio CD, in a world of $14 movie DVD’s, $15/month satellite radio, $18/month Netflix and unlimited movie rental deals, against the backdrop of very minor presence of I-Tunes, scores of “illegal” download sites, and, yes, artists themselves eliminating the biggest middleman of all—the record company—and selling their wares direct.
How big did the writing on the wall have to be for these guys to notice it?