The State Of The Music Business

During the late 80s and early 90s the industry underwent a transformation and restructured, catalyzed by three distinct factors. Record companies no longer viewed themselves as conduits for music, but as functions of the manipulations of Wall Street. Companies were acquired, conglomerated, bought and sold; public stock offerings ensued, shareholders met. At this very same time, new Nielsen monitoring systems -- BDS (Broadcast Data Systems) and SoundScan were employed to document record sales and radio airplay. Prior to 1991, the Billboard charts were done by manual research; radio stations and record stores across the country were polled to determine what was on their playlists and what the big sellers were. Thus, giving Oklahoma City, for example, an equivalent voice to Chicago's in terms of potential impact on the music scene. BDS keeps track of gross impressions through an encoded system that counts the number of plays or "spins" that a song receives. That number is, thereafter, multiplied by the number of potential listeners. SoundScan was put in place at retail centers to track sales by monitoring scanned barcodes of units crossing the counter. A formula was devised whereby the charts were based 20% on the SoundScan number and 80% on BDS results. The system had changed from one that measured popularity to one that was driven by population.

Record companies soon discovered that because of BDS, they only needed to concentrate on about 12 radio stations; there was no longer a business rationale for working secondary markets that were soon forgotten -- despite the fact that these were the very places where rock and roll was born and thrived. Why pay attention to Louisville -- worth a comparatively few potential listeners -- when the same one spin in New York, Los Angeles or Atlanta, etc., was worth so many more potential listeners? All of a sudden there were #1 records that few of us had ever heard of. At the time we asked ourselves, "Am I out of touch?" We didn't realize that this was the start of change that would grow to kill, if not the whole of the music business, then most certainly, the record companies.

Reagan's much-vaunted trickle-down theory said that wealth tricked down to the masses from the elite at the top. Now we've found out that this is patently untrue -- the current economic collapse reflects this self-serving folly. The same holds for music. It doesn't trickle down; it percolates up from the artists, from word of mouth, from the streets and rises up to the general populace. Constrained by the workings of SoundScan/BDS, music now came from the top and was rammed down people's throats.

Read the entire article by John Mellencamp here...click on hyper-text...