How moving to a patronage model can help you escape music industry exploitation


The History of Record Labels

Have you ever wondered why record labels are called record labels? The answer is a simple one that gives you some insight into how old these corporations truly are: It’s because they’re named after the ‘label’ that would go in the center of a vinyl record.

We know what record labels look like today, especially in the form of The Big Three: Sony Music Entertainment, Universal Music Group, and Warner Music Group. But what were they like back when the vinyl record was still at the height of its power? Let’s look at one example that went by the name of A&M Records.

In the early 1960s, Herb Alpert and Jerry Moss founded a small record label called ‘A&M’ out of Moss’s garage. Signing a series of popular artists like Herb Alpert’s own band the Tijuana Brass, the Sandpipers, Burt Bacharach, Captain & Tennille, Liza Minnelli, and more, they quickly gained steam and by 1966 were the fourth largest record label in the United States. In that year alone they grossed $30 million dollars in sales which, adjusting for inflation, would be around a quarter of a billion dollars today. In an interview a few years after the labels creation, the co-founders insisted that they wanted to stay a ‘boutique label’ and pointed out that they had only released 7 albums that year and had a crew smaller than 40 people.

As A&M grew, they continued signing successful artists. They went international and signed artists from the U.K. like Cat Stevens, and in the 1980s were more successful than ever with stars like Janet Jackson, Oingo Boingo, and The Police. In an interview, Sting said that the reason he chose A&M is because they felt like “a family”.

Smash cut to January 1999, and A&M’s entire 170-person staff (much larger than the 40 people they employed at the height of their success) showed up to work only to be told that they were all let go, effective immediately. The LA Times reported on the day, saying that “artists and executives hugged in the parking lot as weeping employees carried boxes of personal belongings to their cars. Above them, the A&M sign was draped with a black band and the flag flew at half staff, to commemorate, fired workers said, the death of the historic Hollywood record label.”

Just like that, A&M Records was no more. Which begs the question: What in the world happened between the happy days of the the label?

Well, we can look to ‘The Big Three’ that still exist today to find out.

Sony, Universal, and Warner are all merely the newest forms of labels that have existed since the 1920s, 1930s, and 1950s respectively. Sony started existence as the American Record Corporation, morphed into Columbia / CBS Records in the 1930s, and was taken over by Sony in the late 80s who then also acquired BMG, one of it’s largest competitors. Universal began life as Decca Records, which turned into MCA Records in the 1970s, and then acquired two of the largest labels, EMI and PolyGram, the latter of which had before acquired and killed A&M. Warner slowly acquired more and more smaller labels over time (and on occasion was itself bought before being restored to its original name), turning into the behemoth it is today.

If this all sounds complicated, it’s because it absolutely is. I’m reminded of a scene in 30 Rock where Alec Baldwin’s character Jack Donaghy, Vice President of GE, explains the company org chart and reveals that NBC is not actually owned by GE directly but instead, through a series of mergers and acquisitions, is owned ‘in full’ by a subsidiary of a subsidiary called ‘The Sheinheardt Wig Company’.

This punchline is deeply rooted in reality, and I find the messy history of record labels insightful. These are not cleanly formed organizations, instead the result of tangled dynamic after tangled dynamic. If we were to rethink the record label concept today with a blank slate approach, it would certainly look nothing like what it currently does.

When the one-time President of A&M was interviewed after the label’s closure, he said that “the record business is changing fundamentally” and cautioned musicians to not “think that there are calm seas on the other side of this threshold.” He continued by saying, “If the quake that devoured A&M is a 6.0 on the Richter scale, there is a 7.0 coming in this industry. It’s a Wall Street world now. Get ready.”

It seems like the music industry has always been quick to blame a ‘changing world’ for the failings of the industry, but looking at the way that record labels cannibalized each other paints a different picture altogether. It’s simple economics: When labels merge, the label gets bigger. When the label gets bigger, the payroll gets bigger. When the payroll gets bigger, the percentages they need from contracts gets bigger. When the percentages they need from contracts gets bigger, the artist is squeezed out.

It’s easy to see how removing competition and growing labels into behemoths has led the music industry into the unfortunate position its in today, and the lack of choice means that artists only have a few options, none of whom are incentivized to give a good deal.

During an interview in 1967 at the height of its success, A&M co-founder Jerry Moss was asked why he started the label. He said this: “What the label is now is a labor of love that money makes possible. That’s the nicest thing about money; you can afford labors of love.”

Unfortunately, record labels have gone from being “labors of love” to cogs within a gigantic industry. The love is gone, but the labor is more real than ever.

So why do they still have so much power?

PART THREE // The Safety Net >>>