March 19, 2008

Top 20 Record Company Screw-Ups

I found this list on via NPR, here are the ones that stood out to me, to see all 20 check out the link:

Something’s Happening, But You Don’t Know What It Is
#7 Music publisher gives away Bob Dylan
In the early 1960s Leeds/Duchess was a legendary music-publishing company but far from the hippest: It knew Tin Pan Alley but couldn’t find a Greenwich Village coffeehouse with a compass. Yet when Columbia signed Bob Dylan in 1961, they steered him to Leeds, where he happily signed a publishing deal with a $1,000 advance. The following year, Dylan’s new manager, Albert Grossman, got out of the deal with the disinterested publisher simply by repaying the $1,000. Dylan’s new publisher, the savvier M. Witmark & Sons, received 237 songs—many of them future standards worth tens of millions of dollars—in just the first three years.
Unintended consequence The receptionists at Leeds/Duchess never have to field calls asking what “All Along the Watchtower” is really about.

Detroit At a Discount
#3 Motown sells for a pittance
In 1988 Berry Gordy Jr., reportedly losing millions of dollars on the label he had founded decades earlier, sold Motown and its incomparable back catalogue to MCA and investment company Boston Ventures for $60 million. How bad was that price? The next year, Herb Alpert and Jerry Moss sold their A&M Records to PolyGram for roughly $500 million. In 1990, David Geffen got about $700 million for Geffen Records and in ’92, Richard Branson unloaded Virgin Records to EMI for $960 million. And five years after buying Motown, Boston Ventures cashed out, selling the label to PolyGram for $325 million—a return of more than 500 percent.
Unintended consequence The Motown Atlantic airline, and Berry’s career as a trans-global balloonist, have yet to materialize.

Tomorrow Never Knows
#2 Decca Records A&R exec tells Fab Four, “No, thanks”
Dick Rowe was not the only record-label executive who passed on the Beatles in the early ’60s, but he was the only one who brushed off their manager, Brian Epstein, with the astute prediction that: “Groups with guitars are on their way out.” Epstein begged Rowe to reconsider, so Rowe hopped a train to Liverpool to check out the band live. When he arrived at the Cavern, he found a mob of kids trying to force their way into the club in the pouring rain. Annoyed, he smoked a cigarette, went home and signed Brian Poole and the Tremeloes instead.
Unintended consequence The Monkees

#1 Major labels squash Napster
Shawn Fanning’s file-sharing service attracted tens of millions of users, but instead of trying to find a way to capitalize on it, the Recording Industry Association of America rejected Napster’s billion-dollar settlement offer and sued it out of existence in 2001. Napster’s users didn’t just disappear. They scattered to hundreds of alternative systems—and new technology has stayed three steps ahead of the music business ever since. The labels’ campaign to stop their music from being acquired for free across the Internet has been like trying to cork a hurricane—upward of a billion files are swapped every month on peer-to-peer networks. Since Napster closed, “there’s been no decline in the rate of online piracy,” says Eric Garland of media analysts BigChampagne, who logged users of son-of-Napster peer-to-peer networks more than doubling between 2002 and 2007. And that figure doubles again if you count BitTorrent.
Unintended consequence Your grandmother deciding to trade up from that dial-up connection


bob_vinyl said...

I think it's interesting that something finally knocked off Decca turning down the Beatles. I agree though. The majors are going to have to figure out their place in music, but now they're at a disadvantage because they didn't jump on the Napster thing and find a way to make money on it. Now they want us to spend almost $1 a track on iTunes, etc, but they're ripping everyone off with that. Their costs go way down and yet the cost to us doesn't (even though we don't get any tangible product. I do think it's funny that it looks like vinyl will outlive CDs, because there will always be that niche market for collectors.

Mike said...

my favorite mag. Blender is a great read.

David Amulet said...

Hmmm. The Napster thing is annoying, but understandable and certainly not as big as the Beatles rejection!

bob_vinyl said...

David, I disagree. The Beatles rejection was one label and one band. In the long run, it only mattered to Decca, but they made their money on the Stones. The Napster thing was a huge across the board refusal to see a future they created when they digitized music in the first place. They loved CDs when it let them hike up the prices, but then they had second thoughts when they realized that the used market was huge since they were harder to screw up than vinyl. Then they had more second thoughts when it became cheap to copy CDs. Once storage and bandwidth permitted, file sharing was the next way to get our money's worth from an industry that fixed prices, engaged in payola and release more albums with one good song than with ten or twelve. For years, they've been happy to rip us off, but when we rip them off, they cry foul and sue the pants off of people.

Perplexio said...

I read the whole article a few days ago. It was quite intriguing. And honestly I thought the suing their customers was the biggest mistake the music industry ever made. But it is tied to shutting down Napster.

Rather than be creative and figure out how to use the Internet to their advantage they shut down what could have been their most valuable asset for changing how they do business and ended up suing their customers.

When it comes to the Internet, the music industry has made mistake after mistake after mistake.

The thing is, I believe a lot of the musicians "get it", it's the suits at the labels. They want to hold on to the old ways because they KNOW with the Internet they will eventually become redundant and thus expendable. So rather than learning how to make the Internet work for them and maybe adapt and learn some new job skills they're fighting tooth and nail to maintain the status quo.

Bond said...

The Dead allowed music sharing for years and still did pretty damn fine financially...The labels were wearing blinders when they went after Napster....

And my vinyl collection appears to be more and more valuable every day

Malcolm said...

I read this a couple of weeks ago. Blender has some pretty good lists. The recording industry's mishandling of the Napster situation deserves to be at #1.

I am surprised that Sam Phillips selling Elvis Presley's contract to RCA Victor for $25,000 didn't make the list of record company screw-ups.

RAHM said...

the Napster case is like a boomerang or the cure is worst than illness, for labels of course...
now I remember Lars Ulrich from Metallica entering to a room where a guy (one of the Wayans brothers) was sharing music, in a sketch in a MTV movie awards some years ago...

David Amulet said...

I see your point, Bob--and you argue it well. I've never had a problem, however, with any copyright holder trying to protect his or her rights. I realize the cultural-trend ship of stealing music has already sailed, and I suppose the record companies did miss an opportunity to get in while the getting was good.

I guess I still have a negative reaction to anything that seems to put a halo on Napster. (I'm not implying you did--I'm just pointing out that I recognize I have a knee-jerk reaction to it!)

bob_vinyl said...

I think I would be more sympathetic if file sharing really stole from the artists (which it may in the case of small indie labels in the sense that the money goes back into putting out music for the next band), but the ones who are suing people over it now have done nothing to contribute to the music. Sure, they have some legal rights, but that's only so they can manipulate it to their advantage and screw us. I'd feel differently about the majors if they actually cared about music and tried to not rip us off.

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