Running Head: MUSIC INDUSTRY CONGLOMERATION
The Conglomeration of the Music Industry
Nicole Plumridge
American University of Beirut
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Running Head: MUSIC INDUSTRY CONGLOMERATION
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Abstract
This paper discusses the conglomeration of the music industry and the effects
this has on the consumers, the artists and big label companies. There are three major
music labels in the industry which are Universal, Sony, and Warner Music. The
conglomeration of subsidiaries into these major labels has many negative effects. For
instance, there may be a decrease in competitiveness between the labels. Also labels
will focus more on the quantity of music being produced instead of the quality in
order to maximise profit. Since these major labels only produce music that they find
sells well, they force specific trends on the public by only supplying songs that fit in
with their recipe for success, whilst ignoring diverse styles of music. Nevertheless, the
music industry is facing some major changes since more consumers are going online
to acquire songs rather than buying CD’s.
Running Head: MUSIC INDUSTRY CONGLOMERATION
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Effects of Conglomeration
The effects of conglomeration in the music industry are omnipresent. As a
consumer, I have bought many CD’s before without realizing the domination of the
three major record labels. This accumulation of power in three major labels can have
serious impacts on the consumers and the artists. For instance, with the decrease of
competition, these labels can increase CD prices. Also most music these days sounds
very similar. This is because the major labels merely want to make a profit; therefore,
are less willing to take risks with their material. Furthermore, since the industry is
producing similar songs, it is promoting certain values, attitudes, lifestyles through the
lyrics to the public, while ignoring other perspectives. Fortunately, with the rise of
digital methods of acquiring music, this is changing. Not only do consumers have
more control over the type of music they want to listen to, but also music artists have
more control over where their money goes.
Below are ten CD’s, six of which I own and four of which belong to family
members. The chart lists ten artists, their albums, and which record label they belong
to.
Artist
Eamon
Pink
Flo Rida
3 Doors Down
Beyonce
Dido
DeeDee
Bridgewater
Farid
U2
Sarah Vaughan
Album
Now That’s What I
Call Music: 15
All Woman
Now That’s What I
Call Music: 72
Now That’s What I
Call Music: 14
Movie 2001
Life for Rent
J’ai Deax Amours
Record Label
Capitol Records
Parent Company
Universal
Telstar Records
Virgin Records
Sony
Universal
Capitol Records
Universal
Columbia Records
BMG
DDB
Sony
Sony
Universal
Farid
Universal Music
Arabia
Flood
Capitol Records
Universal
Achtung Baby
Totally Jazz
Island Records
Universal
Running Head: MUSIC INDUSTRY CONGLOMERATION
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The average price of a CD is $15.99 according to Rolling Stone (Cohen, 2004). Since
I bought six of these CD’s, I spent a total of $95.94. The breakdown of the money
spent is as follows:
Money Spent on Music Unions: $1.02
Money Spent on Packaging and Manufacturing: $4.80
Money Spent on Publishing Royalties: $4.92
Money Spent on Retail Profit: $4.80
Money Spent on Distribution: $5.40
Money Spent on Artists Royalties: $9.60
Money Spent on Label Profit: $10.20
Money Spent on Marketing Promotion: $14.40
Money Spent on Label Overhead: $17.46
Money Spent on Retail Overhead: $23.34
As I did not buy the last four of the CD’s, the industry lost $63.96.
The lack of competition that occurs when three major companies take over the
music industry can have many negative consequences. I will demonstrate this issue
using Wal-Mart as an example. In 2004 Wal-Mart was the biggest record’s store in
the United States. On the positive side, Wal-Mart had very cheap prices for CD’s;
therefore, consumers felt they were getting good deals. However, on the negative side,
when consumers go to Wal-Mart instead of smaller record stores, these smaller stores
are being put out of business. This decreases the competition in the music industry. As
a result, whenever Wal-Mart decides to increase its prices, there are no alternatives
that consumers can turn to.
Furthermore, this has negative impacts for the music companies doing
business with Wal-Mart. None of them enjoy doing business with Wal-Mart since
Wal-Mart holds all the power; therefore, everything is on their terms. If the music
companies do not conform, they don’t get shelf space. Since so many people go to
Wal-Mart, industry insiders claim that, “What it chooses to stock can basically
Running Head: MUSIC INDUSTRY CONGLOMERATION
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determine what becomes a hit.” (Cohen, 2004). Therefore, it is a crucial portal for
reaching consumers.
In addition, Wal-Mart does not tend to care for individual artists. It only sells
mainstream music. This is because its main goal is solely to make a profit. This is also
true for major record companies. In the past, the record companies cared about the
individual artists. It was important to be different and ground-breaking. The artists
and companies worked together to ensure quality music was produced. This was
before the amount of profit to be made in this industry was discovered. Now the
artists are not as important as the money they can bring in. Music industries prefer
quantity over quality. In order to maximize profits, companies take fewer and fewer
risks with the type of music they produce. This leads to the homogenization of music
whereby all the music produced by these major labels sounds very similar. They have
the same beats, similar lyrics, and similar video clips to accompany the songs. This
profit making machine that the music industry has turned into is underscored in the
article written by Nelson (2012) when he says, “record companies leave no financial
stone unturned, and will do questionable things to maintain the bottom line first, and
everything else second.”
Furthermore, with this homogenization of music, we are finding ourselves
increasingly bombarded with recurring themes and trends that the major music
companies deem popular. As Nelson (2012) puts it, “Historically, record labels have
been known to force annoying trends and musical perspectives onto the public.” The
dominating themes out of the selection of CD’s above are sex, break-ups, hardships
and family tensions. Although we may feel we can relate to these issues, they are
more representative of Western culture and values. They also all follow the same
recipe. These lyrics can have an affect on people’s lifestyles, attitudes and beliefs. If
Running Head: MUSIC INDUSTRY CONGLOMERATION
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we are constantly presented with the same lyrics and songs, with just a bit of rephrasing, we may internalize such messages. However, the messages may promote the
wrong things, such as drugs and teenage sex. Not only are they promoted, but they
are also glamorized. For instance, many of Lady Gaga’s songs feature her half naked
and have lyrics about drugs, sex, partying and drinking. Therefore, impressionable
teenagers may view these activities as cool and take her as their role model, which can
only have negative consequences!
Despite all the gloom and doom over the music industry, it is changing. There
are now digital techniques of acquiring music. This offers a way to be a music fan
without supporting the big labels. I-Tunes has now surpassed Wal-Mart as being the
dominant leader in music sales. This caters to a wider, more diverse audience which
makes it difficult for big companies to compete. It is hard for the conglomerates to
compete with online downloading and streaming since most people do this for free
and are therefore not used to paying for music anymore. This gives consumers more
control over the music industry. It is also advantageous for the artists. They have more
control over what happens to their music and where there money goes. There are no
complicated “hidden payments” that spring up when they deal with the major labels.
(Busch, 2012). They have more rights regarding their work.
In conclusion, the conglomeration of the music industry has many negative
impacts such as less competition, homogenization of music, and promotion of certain
lifestyles and values which may prove harmful. Fortunately this is changing. Since
people are able to download songs online, they have more freedom to choose what to
listen to. This is also beneficial for the artists who are able to take more control in
deciding what happens to their songs. This is not good news for the major labels;
however, who are going to end up losing revenue due to the digital shift.
Running Head: MUSIC INDUSTRY CONGLOMERATION
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References
Busch, Richard. (27/03/2012). “Major Record Labels as Dinosaurs?” Forbes.
Retrieved Oct. 19 2012 from
http://www.forbes.com/sites/richardbusch/2012/03/27/major-record-labels-asdinosaurs/
Cohen, Warren. (12/10/2004). “Wal-Mart Wants $10 CDs.” Rolling Stone. Retrieved
Oct. 19 2012 from
http://moodle.aub.edu.lb/pluginfile.php/33023/mod_label/intro/WalMart_want
s_10_CDs.pdf
Nelson, Daryl. (15/06/2012). “Big Four Records Companies May Become the Big
Three.” Consumer Affairs. Retrieved Oct. 19 2012 from
http://www.consumeraffairs.com/news04/2012/06/big-four-recordscompanies-may-become-the-big-three.html