SIC 3652 Phonograph Records and Prerecorded Audio Tapes and Disks
SIC 3652
This category includes establishments primarily engaged in manufacturing phonograph records and prerecorded audio tapes and disks. Establishments primarily engaged in the design, development, and production of prepackaged computer software are classified in Computer Programming, Data Processing, and Other Computer Related Services; and those reproducing prerecorded video tape cassettes and disks are classified in the Motion Picture industries.
334612
Prerecorded Compact Disc (Except Software), Tape and Record Reproducing
512220
Integrated Record Production/Distribution
After a rocky start in the first decades of the twentieth century, the business of recording and selling music has grown into an international industry worth billions of dollars. Analysts from the International Federation of the Phonographic Industry (IFPF) estimated that international record sales, a category that includes audiotapes and disks, grossed $33.6 billion in 2004.
Though a handful of major companies dominate the industry, the nature of the music business has always guaranteed a place for the small record company attuned to new forms of popular music and specialized interests. The rise of online file-sharing networks that allowed consumers to obtain popular music for free, along with writable CD drives that allowed music to be recorded from online and prerecorded sources, was eating away at the industry's financial health, although by the mid-2000s legal online music purchasing was on the increase, with sales doubling from 2004 to 2005 alone.
The business of producing recorded music is like digging for gold—a record company has to pan many streams before it hits the jackpot. The principal work of each recording company consists of locating promising musical acts, producing them in the most commercial way, promoting them to fit into a rapidly changing market, producing the physical recorded product, and providing efficient distribution. Record companies lose money on recordings that do not sell as well as anticipated, but those that become "hits" provide such immense profits that they make up for the failures.
Although the Recording Industry Association of America (RIAA) claims about 220 members, five of those corporations account for more than 90 percent of the U.S. market and 75 percent of the world market. In the early 2000s, the leading five recording companies were Bertelsmann Music Group (BMG), EMI, Sony BMG, Universal Music Group (UMG), and Warner Music Group. Together, these firms sold about $20 billion worth of recorded music.
Recording companies are often referred to as "labels," though that term became less accurate when large companies began marketing music under several different labels or brands. Originally, the label was synonymous with the company, for each recording company had one label that identified its records. During the years, however, big companies have bought little companies, and single firms have acquired several smaller companies and their labels. When CBS bought the American Record Corporation in 1938, for example, it acquired both the Brunswick and Vocalion labels. After the very large corporate mergers and buyouts of the late 1980s and early 1990s, each one of the five companies that dominated the market owned many labels. For example, Poly Gram had twenty-seven and Sony had twenty-five. The industry's dominant companies are known as the major labels or simply "the majors." Many of the individual labels owned by a large corporation retain their own staff, which enables the large companies to maintain better and more personal relations with the artists, who record on only one label. Independent record companies are usually still identified with a single label and are referred to as "the independents" or "the indies."
Single labels often produce only one kind of music. For example, Deutsche Grammophon is a classical music label, Mercury carries country-western music, and Motown is a rhythm and blues (R&B) label; all are owned by UMG. Occasionally, a major label will create, rather than buy, a new label to produce one specific genre, as when Warner launched Warner Western in 1992. On the other hand, not all labels are thus limited. Koch International, an independent label, produces classical, country, pop, and jazz.
The first job of any recording company is to sign up musicians. This job is handled by the Artists and Repertoire (A&R) department, which scouts for and signs contracts with new talents, finds them songs if they do not write their own, and finds the right producer to oversee their records. In the first few decades of the industry, the A&R department hired singers, found new songs for these singers to perform, and produced the record. These functions made the A&R department one of the largest and most powerful in any recording company.
Rock and roll music changed much of the music industry and affected A&R departments more than any other type of music. Rock musicians often wrote their own songs and found their own producers. The role of the A&R department subsequently became much more limited; it relied heavily on the independent producer for the sound of the final product.
The producer of a record, as the name implies, oversees the production of the master recording. The producer serves as the artistic director and business manager for the recording. The record company, through the A&R department, contracts with the artist and producer and provides the advance money for both. The producer then handles the main business aspects of recording the record. These tasks include budgeting for the project, arranging the copyright licenses when necessary, booking the recording studio, and hiring any extra musicians and equipment as needed. While recording companies frequently own studios, independent studios are also used for a variety of reasons, including the local musical styles of an area. Most records are still made in one of the three major musical cities—Los Angeles, New York, and Nashville—but the studios of smaller cities with unique musical roots are often hired for their particular sounds.
The producer also oversees the rehearsing, recording, and mixing of the musical tracks. Depending on the musicians involved, the producer sometimes has an enormous artistic role in the recording. The producer may hire out or write an arrangement, choosing how the accompaniment will sound. Working with the musicians in rehearsal, the producer frequently contributes to the musical interpretation. No matter the size of the group, each instrument and voice is recorded separately on its own track. The producer oversees the mixdown of the tracks, combining the individual instruments into the final ensemble sound. The final balance of instruments and voices, as well as the use of different electronic effects such as tone-quality filters, reverberation, delay, and echo, is determined by the producer. Musicians who want complete control over their own artistic productions will sometimes produce their own work, but many recordings are still governed by producers who are trained in sound engineering.
After the master recording is made and delivered to the record company, the production and promotion departments take over. The production department makes the physical items that the consumers will buy, both the recording and, just as important, the packaging. Both the producer and the promotion department may have roles in the artwork for the packaging. A given music video (music videos are a major form of promotion on music television networks) may have the same producer as the recording.
Because the ultimate goal of record companies is to sell a record, the marketing department is frequently the largest and most important. In this intensely competitive industry, promotion and marketing play a large part in the final success of any recording. Marketing departments use two primary avenues of publicity: radio promotion and media advertising.
Airplay is the most effective form of promotion for any popular recording, whether it be on radio or television, and having a new record programmed onto the playlist is the goal of all promoters. While there are several thousand music-format radio stations across the United States, only several hundred are important. Record promoters may send promotional copies to all stations, but they concentrate their efforts on the important few—the stations that determine the poll lists in the trade publications, such as Billboard's Top Ten. Most radio stations, however, usually play less than forty songs in rotation in a week. Because the...
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