History of Music Labels

Record labels have played a vast role in the music industry since the early 1900s. Like all behemoth companies, their power waxed to a daunting pinnacle...but they are now faced with the possibility of certain death as bands have started flexing their independent muscles and appealing to fan support to survive and thrive without their label contracts.

This is a documentation of the growth and expansion of music labels, as well as their involvement in DRM media and their decline due to the advent of online music piracy.

The Role of Music Labels Defined
Music labels are essentially promo companies that enter into contracts with up-and-coming artists. They agree to produce and market the artist's music in exchange for royalties on the selling prices. Already-established and influential artists are sometimes able to negotiate contracts to their best advantage....but often, struggling but talented bands sign on to a label just to survive, end up becoming immensely popular, and eventually get screwed over by their record labels because of the restrictive terms of their original contracts. Often the relationship between labels and artists is disagreeable and combative. Record labels edit songs, change album artwork, and do whatever they feel will boost album sales - regardless of what the artist originally intended for his/her work. They also tend to charge vast amounts of money for their services, leaving even successful artists with not much money, because until very recently they believed that it was impossible for artists to survive in the harsh and jaded music world without them.

But let's back up a little.....


History
Music labels (surprisingly) found their origin in the inventions of Thomas Edison. In 1877 he created a recording device for the telephone (invented one year previously by Alexander Graham Bell), which basically functioned as an answering machine. Edison then set up the American Gramophone Company in the 1880s, which first sold dictating machines and then phonographs, which played music. Their popularity was unprecedented, and by the 1890s every major U.S. city was home to its own phonograph company.



Edison's original products were cylinders, which had audio recordings engraved on the outside metal. But in 1900 competitors began selling disc-shaped records (the beginnings of vinyl), which were 1) cheaper, 2) easier to store in bulk, and 3) a more efficient and less problem-ridden method of playing music. Edison's sales began to drop as the two companies selling discs (Victor and Colombia) steadily gained popularity.

In 1913 Edison succumbed and produced the Edison Diamond Disc Player. But by this time, most of the decades-old patents copyrighting record machines had expired, and dozens of smaller independent companies producing the same product sprang into existence. Throughout a swift couple years of founding, buying, and acquiring in the 1920s, these first record labels mostly focused on producing jazz and blues on discs. Edison was forced out of business shortly after Black Friday in October of 1929, mostly due to his refusal to produce jazz records because of his personal distaste for it....despite that fact that jazz was by far the most popular music of the time period.



Over the next few decades, business continued as usual with independent labels springing up/major labels buying out smaller ones/technology slowly but surely advancing. Two major labels (Colombia and RCA) first introduced vinyl records in 1948. In the 1950s, there were five major record labels: Colombia, RCA Victor, Decca, Capitol, and Mercury. Their stock plummeted during that decade as the independent labels began producing rock and roll/ R&B records while the "old fogies" stuck with jazz. But eventually they caught on and the labels rode the waves of musical evolution for the next four decades.

The cassette tape was introduced in 1963 and the CD in 1981. Cassettes were the most popular music configuration in the 1980s, until CDs finally ousted them from glory in 1992.






DRM
The idea of "Digital Rights Management"-controlled media became popular with labels by the late 1990s. The concept was, in theory, going to be used to limit consumption of audio and visual media solely to paying customers and reduce the amount of online piracy. Illegal downloading, the labels argued, would drop profits, limit creative input, and decrease overall quality of the media being produced - which would lead to a decline in the industry as a whole. In 1998 President Bill Clinton signed the Digital Millennium Copyright Act, which criminalized the production and use of any technology which could circumvent the securities surrounding DRM-protected media, and also raised criminal penalties for Internet copyright infringement. Companies like Napster, Kazaa, and MP3.com were essentially shut down as a result, and pay-to-listen sites like Pressplay and Rhapsody were set up. In 2003 the CEO of Apple (Steve Jobs) created the iTunes music store, which offered legal music downloads for 99 cents a song.






Now
Today, the four major music labels are: Warner Music Group, EMI, Sony BMG, and Universal. Despite recent declines, they still hold a considerable amount of power and will not hesitate to sue millions of Americans for illegally downloading their copyrighted music. In 2007, Jammie Thomas was the first to go to court out of over 26,000 people sued by music labels for copyright infringement. She was found guilty and ordered to pay $220,000 to six labels for 25 songs she was found guilty of downloading illegally.


However, several bands have finally tired of being kicked around by their boorish labels and have started to stand up for themselves....led by three of the most famous artists in recent history: Radiohead, Madonna, and Nine Inch Nails.


It remains to be seen how well these artists will function without any ties to a label. After all their label-free hype, Radiohead ended up negotiating a short-term contract with XL Recordings to distribute physical copies of their newest album In Rainbows. Nine Inch Nails dropped Interscope, but has experience numerous problems and glitches with their self-distributed album Ghosts I. Madonna, of course, has yet to release any new material since she left Warner Music, but has signed with a concert promoter (Live Nation), which will allow her to keep 90% of her concert revenues.



Some say it's too early to tell, but most people agree....the death bell for traditional music labels is tolling. It will take a couple years....but more and more artists are jumping ship to prove that they can make it on their own. Labels won't die off completely, but their role is going to be dramatically revamped within the next decade.

Probably for the good of everyone.