How the Music Industry Works

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"The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There's also a negative side." - Hunter S. Thompson

Radio Payola

We hear the same songs on the radio over and over again because major record companies are paying radio stations thousands of dollars to play their music. We never hear independent music on our favorite stations for this reason. They don't have the money backing from a record company to pay to be on commercial radio.

Monopoly

EMMIS, Radio One and Clear Channel own most of the radio stations in the US. The past two years, Clear Channel has spent nearly $30 billion on buying radio stations, concert venues and advertising companies. This is leading up to the company's "monopolistic multimedia empire." This idea has decreased competition, reduced consumer choice, and driven up ticket prices for concerts.

Retail Co-ops

Major record labels spend so much money on these co-ops. In exchange for the $3,000 a chain store would bring in around 1,300 units and give them good placement in the stores, put them on sale and feature them in their listening stations in those 100 stores for one month. For example if a label wants to put one of it's new CD's on sale in a 'un-named' chain store they would have to pay about $3,000 to have it's CD in 100 of its' stores. This is shown in special displays at the entrance, window or at a prime location in a large record chain store.

Retail Returns

Being on the outside, we may think this is a simple idea. However, it is the opposite and is complicated. Different music stores don't just buy CD's and then sell them in their store. Instead they take CD's, sell whatever they can and then return the rest but only pay for the amount they were able to sell. Usually there is not a specific time frame meaning that a company can return CD's to a record label- it can be a over a year later and the CD cases do not have to be in good condition. This causes a problem because the store may order too many CD's on purpose thinking they will sell a lot, but since they know they can always return them, it doesn't actually matter if they don't. Stores can sell back more than 80% of the CD's they originally bought. This process makes the record companies lose money with all the returns made. Price Grouping

Major record labels and retail chains stores have become too greedy by charging $18-19 for a CD that usually doesn't have more than 3 good songs on it. However, it is not always the record label who is over charging. Again, chain stores do not care how high they make the price for a CD and how badly the CD will sell because of the high price since in the end, all the CD's the store took in are refundable so the store loses no money.

[Source: THE REAL DEAL (the truth about the music industry) by Jeriko One]

#MusicIndustry #Payola #Monopoly #Retail