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Share and Share Alike by Bob Lefsetz One day Gorbachev woke up and realized it just wasn't going to work anymore. Iron-fisted Communism. The economy was too bad. The public knew too much. So he decided to loosen things up. Perestroika was initiated. According to the Communist Party Plenum of January 1987, perestroika can be defined thusly: "Perestroika is the decisive defeat of the processes of stagnation, the destruction of the braking mechanism, the creation of a reliable and effective mechanism for increasing the pace of the social-economic development of society. The main idea of our strategy is to unite the achievements of the scientific-technical revolution with a planned economy and to bring into action the entire potential of socialism." Communism had started out as a revolution. A PEOPLE'S revolution. Against the totalitarian rule of the czars. Little did anybody know that the abuses of the Communist leaders would be just as bad, and in some cases worse. Used to be renegades ruled the record business. Distribution was inefficient, and artists were ripped off. However, seeing the large number of dollars generated in this business, conglomerates purchased the independent labels, established branch distribution, instituted accounting and payment rules, and fine-tuned a chaotic business into a streamlined operation. The heyday of this era was the '70s. Music ruled the world. It drove the culture. Profits were enormous. Everybody made money: the conglomerates, the executives, and the artists. But then the recession of 1980 hit. Creative executives ceded power to accountants. Billboards on the Sunset Strip disappeared. Lavish parties and T-shirts, too. After all, this was a BUSINESS, and the bottom line was the most important. Didn't matter how many records you sold; if you had three acts on the verge of going platinum, the question was, were you making money NOW? With this new focus on profits, record labels started to spend a FORTUNE to ENSURE profits. Thus the advent of independent promotion. Oh, payola - and that's what it is, have no doubt - had been around since the '50s. But not with this many zeroes on the checks. The best way to sell records was to get radio airplay, and the way you got radio airplay was to PAY for it. Like baseball team owners, the labels decried this escalating expense, but they couldn't hold themselves back from paying the big bucks. They saw it as a necessary insurance policy, or security blanket. Without the radio fix, their records wouldn't sell and they'd be out of a job. In the '80s three independent record labels survived. A&M, Island, and Virgin. They were all using major branch distribution, for you cannot sell what isn't inventoried. Or, to tell you the truth, an indie can't get PAID! They need the leverage of the giant corporation. Which always has hit product that retailers need and can sustain a chain bankruptcy without going out of business itself. These three indie labels were artist havens. They had the best and the brightest. Not the one-hit wonders, but the visionaries, who set the standards. Seeing these hit acts, and wanting new product and catalog to increase their market share and leverage, the conglomerates made the indies offers they couldn't refuse. And overnight, there were no major independent labels anymore. However, when this occurred, 10 years ago, a curious side effect was noticed. A PLETHORA of independent labels arose. Conglomerate employees laughed. Didn't these kids know that a one-hit record would put them out of business? Squeezed between pressing-plant bills and retailers who'd never pay? But these indies soldiered on. It wasn't about the money; it was about the MUSIC! These newfangled indies didn't sell top 40 dreck. Rather they focused on punk. What we now call electronica. They sold their records in alternative outlets, stores run by people like them, who WOULD pay them. And oftentimes, the record sales were just a PART of the enterprise. For there was a new business philosophy. An act owned EVERYTHING! Live business drove record sales, which drove the live business, which drove merchandise sales. And at the end of the day, these new acts might not be rich, but they were SURVIVING! Still, you couldn't make the big money unless you had major distribution. Then came the Internet. |
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