Death Is Not So Bad!

On the Future of the Music and Media Industry

Tim Renner

• Publisher: Fuego
• Year: 2013
• ISBN:
  9783862871094
• Topic: Media & Performing Arts
• Subtopic: Music

When Tim Renner applied to the German record company Polydor in 1986, he intended to write an exposé about the music industry. However, things went differently and he turned this exposé into a career. For eighteen years his biography has been intermeshed with the development of the music industry, he led bands like Element of Crime, Rammstein, Tocotronic and Philip Boa to sucess. He raised up higher and higher on the ladder, finally reaching the top of Universal Music Germany. He witnessed how musical development has been hampered by the pressure of the markets, how pop and commerce diffused, and importantly, he witnessed the rapid dissolution of old comercial structures through the forces of digitalzation and globalization. But the ponderous giant labels kept their eyes shut in front of these developments and Renner finally quit. After his leave from Universal in 2004 he described his point of view on what he found were wrong tracks and challenges of contemporary pop music."Death is not bad!" is a profound analysis of culture and music in times of digitalization, based on the vison that creativity, consumption and capital could find a way of coexistence.Ten years after the German edition of this book was published some passages read like a history book about a long forgotten time. Some passages pointing to developments which are fully manifested today and look to evolve further in the future. The book shows the changes of a whole industry and the first steps of a society on it's way into the digitalized future.

PART ONE:

THE OLD TESTAMENT

PARADISE

PARADISE – SAVED BY HERBERT VON KARAJAN AND JAN TIMMER

1 August 1986, my first day at Polydor as a junior artist and repertoire manager, began with an announcement from my boss that it was his last day. What a volatile industry, I thought to myself as I wished him the best for the future. I assumed, not without justification, that this would enable me to conduct my research a bit less closely observed. I was still, at this point, planning to reveal the dirty secrets of the music business by operating as an undercover investigator. Had I been sufficiently observant, I would soon have realized that the material had fallen into my lap for a far bigger story: the story of the beginning of the end of the music industry as we know it – I was there!

A corpulent, semi-bald man, who reminded me strongly of South African President Piet Botha, stood on the stage of the Golf & Sport Hotel in the Baltic coastal resort of Timmendorf. I and almost everyone else present felt awful. The day was still young and the previous evening had been given over to an incredible drinking contest (schnapps and beer) between the product managers (of whom I was one) and the sales reps, who had won decisively on points. I swore to myself that I would turn up at future sales conferences better prepared for this kind of thing. Now all I could see were circles. They all had a hole in the middle of them and were being projected onto the screen in front of us. The large gentlemen who had introduced himself as Jan Timmer, world boss of PolyGram, was busy giving these things names. One was a data CD and could make jolly pictures appear on computer screens – the future CD-ROM. Another was a CD that could record data, which later became known as the CD-R.

It wasn’t just my hangover that made the talk seem absurdly abstract. In the whole of Polydor there was just one computer, and before being allowed to use it you had to prove you were qualified. My vacation job as a data inputter with Albingia Insurance was not good enough. Recordable – no, that didn’t sound too good when I thought about our rights situation. But cassettes were also recordable and they hadn’t destroyed the industry. I smiled at the memory of the “Home taping is killing music” campaign run by the music industry. Ever since ailing vinyl had started being replaced by the CD, no one ever mentioned it any more. The CD had been pushed through by Timmer in the face of opposition from the rest of the music industry. Why couldn’t he be happy with that?

We were all suffering with headaches and another change of format was the last thing we wanted. Things were finally going well again for the industry, although it still hadn’t fully recovered from the scare of 1979, when the market collapsed dramatically for the first time. Only the previous year, the corks had been popping in spectacular fashion at PolyGram. Saturday Night Fever and other records from the end of the disco era had delivered fantastic profits in 1978. This had had to be celebrated. Former American Secretary of State Henry Kissinger was invited to the annual conference in Florida as guest speaker, flamingos that had been flown in by company jet teetered through an artificial lake created specially for the occasion, and the company gorged on caviar. A year later the hits that could have made up for the weakness of vinyl sales failed to materialize and bankruptcy loomed. Unfortunately I was not there, but I know about the party from the vivid picture painted of it by the grim-faced head of Human Resources at a staff seminar in Noordweik, The Netherlands.

Back then, in 1990, we simply reflected on the case study and shook our heads. What idiots, we thought and said. Anyone who has attended a basic marketing seminar could tell you that products have a life cycle. First comes the introductory phase, followed by the growth phase, the maturity phase, the saturation phase, and finally the decline phase. This can even be represented by means of mathematical formulae; it is predictable. The end of vinyl came as no surprise, therefore. The naiveté of our predecessors, on the other hand, did. I didn’t understand Jan Timmer and his lecture. What else but this had his message been? And yet the same thing happened to the next generation of sound carriers, the noble CD, which at the time was bringing us undreamed-of returns of over 20 percent. He was not yet able to show us a prototype of the CD-R, but he did explain what the logical and technical next steps would be on which the patent holder, Philips, our Dutch parent company, would soon embark. The day was coming and with it the beginning of the end for the CD and the music business as we knew it.

In 1990, Jan Timmer began a six-year stint as head of the entire Philips group. And although he introduced a drastic restructuring program (named “Centurio”) at the badly hit electronics giant, cutting more than 50,000 jobs in the hardware division (and earning himself the nickname “Butcher of Eindhoven” in the process), the company held on to its software interests for as long as he was in charge. His aim was to reinvent Philips as a media group with significant vertical integration. Above a certain size of company, territory and number of products to be marketed, it makes less and less sense to attempt to maximize profit by cutting costs. This occurs more through the absorption of costs within the group. If a company controls numerous different phases of the value chain, many costs get reabsorbed into different areas as revenue. At the heart of Timmer’s strategy was the music division PolyGram. He knew the business well and saw content such as music as being where the biggest opportunities for development lay. His goal was to link content with hardware interests and to let one drive the other. The introduction of the CD was a perfect example of this strategy.

The story of the CD began in 1969, when Dutch physicist Klaas Compaan came up with the idea of a disc that could be read by laser. A year later he was working on the prototype with his colleague Piet Kramer. Not long after that, capital started to take an interest. Philips’ technical director at the time, Lou Ottens, took the view that compact dimensions were vital for the successful marketing of the new development and was therefore responsible for naming the invention. In 1979, Philips unveiled a prototype of the compact disc player and formed a strategic partnership with Sony. The collaboration would prove a brilliant success on two fronts: first, from a technological point of view, as Sony’s expertise with digital conversion technology complemented Philips’ development of the CD perfectly; and second, Sony already had a stake in CBS, parent of Columbia Records (now Sony Music).

While all the record companies originally rejected the new format, Sony was at least able to help overcome the objections of one of the major players. By this time Philips had poured $60 million into the development of the CD and reminded its subsidiary PolyGram of this in no uncertain terms (in other words: “Now hand over the back catalog”). On 17 August 1982 Philips and PolyGram presented the public with the first CD player and CD, a recording of Chopin waltzes by pianist Claudio Arrau. This was closely followed by the first pop album: The Visitors by ABBA. The development of the CD and accom panying CD player is a good example of how important comfort and emotionality are for the consumer and therefore the success of a market launch. The introduction of the CD succeeded with such speed and success precisely because the underlying technical complexity of the system was belied by its outward user-friendliness. In the first year, PolyGram produced 376,000 CDs – and then demand exploded. To date, 950 million CD players and billions of pre-recorded CDs have been sold.

It was through the CD that the phenomenon of digitalization first reached the mass market – not as a terrifying data monster, but as an audible, perceptible leap in quality for the user. The CD was less sensitive than vinyl; the tracks could simply be keyed in

– there was nothing users could actually do wrong. The CD may have been a technical innovation, a “cold” development, the simple conversion of music into countless zeros and ones, but it was sold emotionally, “warmly.” Here the nature of its content – music – played a decisive role. So too did the artists. Herbert von Karajan set the standard in two different ways. The conductor of the Berlin Philharmonic Orchestra was given a CD demonstration as early as spring 1981. He adored the format and was prepared to talk about his new love to anyone who would listen. “A technological achievement comparable with the transition from gas lamp to electric light,” enthused von Karajan. At the same time, Philips and Sony were in discussion over the size of the CD. Originally, Philips had set the diameter of the disc at 115 millimeters, which yielded a playing time of 66 minutes. But at Sony’s instigation this was increased to 120 millimeters and a maximum playing time of 78 minutes. The reason was that Sony president, Norio Ahga, a former opera singer and fan of classical music, wanted von Karajan’s recording of Beethoven’s Ninth, his favorite symphony, to fit onto a single CD, and the recording lasted 72 minutes.

There were dramatic repercussions. At presentations, Sony staff used to casually pull their demo CDs out of their shirt pockets as a way of highlighting the practical dimensions of the new discs. This larger CD would no longer fit into normal-sized pockets. Sony staff were therefore supplied with shirts with larger breast pockets. And this size was eventually adopted as the new standard for men’s shirts in Japan. The only problem was that the record companies were refusing to accept the CD as a new music medium and grasp it as a new opportunity – despite the fact that the water was already up to their necks as vinyl sales collapsed.

PolyGram boss Jan Timmer responded by taking charge of the issue and announcing a 500-day program during which he built CD factories in all the company’s sales territories, thereby driving the market forward. At the same time, Philips boss Cor van der Klugt and Sony president Akio Morita developed a crafty negotiation technique. A meeting had been organized in America in order to agree a way forward with the heads of the big record firms, who considered the 3 cents per CD license fee too high and were planning a boycott. Once all the managers had sat down, Klugt explained: “PolyGram has brought two lawyers with it. All those who wish to go ahead with a CD boycott will receive a legal summons and will be arrested as soon as they leave the room as it is illegal to declare a collective boycott in America.” The gambit worked: the music bosses were caught off guard and the boycott never happened.

Soon after, Philips stopped charging the record firms the CD patent license fee and started collecting the 3 cents per disc from the pressing plants instead. Most of the pressing plants were owned by the record companies and the fee was simply absorbed as part of their production costs. The price of a CD, meanwhile, was approximately double that of an LP. At this point the music managers’ skepticism began to give way. As the CD rapidly went from being a toy for classical music snobs to being a toy for rock snobs, becoming part of the everyday lives of millions of music lovers, the music industry began to become enthusiastic about the idea of distributing its previously closely guarded masters to the public in digital form.

PARADISE – CREATED BY EMILE BERLINER AND FRED GAISBERG

I arrived at PolyGram just in time for the 100th anniversary of the record player: Emile Berliner and his invention were celebrated in 1987. We were given a first-day cover bearing a set of Deutsche Bundespost anniversary stamps and a commemorative book. From the latter we learned that Emil had left school at the age of 14 and fled to America five years later in order to avoid Prussian military service. A physics and meteorological textbook by Freiburg professor Johannes Müller had inspired Emile (he added an “e” to his name in order to appear more American) to take an active interest in acoustic phenomena. And his enthusiasm was fired further by his neighbors’ daughter, Cora Adler. The acoustic experiments conducted by Berliner, who actually earned his living as a bookkeeper, involved drawing wires through Cora’s family’s rooms. The patient Adlers did not try to stop him and even in the end allowed him to marry their daughter.

This hormone-driven research resulted in the invention of the telephone microphone. Emile sold the patent to Alexander Graham Bell, allowing him to mass-produce the telephone. He built a factory for his brothers Joseph and Jacob back home in Hanover in Germany. Through telecommunications the Berliners built up DM20,000 of start-up capital with which to found the Gramophone Company in 1892. Meanwhile, Thomas Alva Edison had invented the phonograph as a means of recording the human voice. A few hundred machines toured America’s fairgrounds from 1877 onwards, causing amazement wherever they went. Edison himself had lost interest long before and had turned his attention to the invention of the light bulb. Emile Berliner, on the other hand, focused not on the world of the office and the recording of sound for dictation purposes, but on home use. Instead of cylinders, his gramophone, which he patented in 1887, used easily interchangeable discs and was much cheaper to produce.

The first hit was the Lord’s Prayer recited by street trader John O’Terrel. This success may have been carefully calculated, but the technology was not quite fully developed. Berliner’s calculation that listeners would recite the prayer aloud while listening to the recording, thereby covering up some of the blemishes, was thus extremely shrewd because they did. The “software” was simply a way of helping to sell the gramophones. The quality of the first records was thus rather poor and the image of the “hardware” suffered as a result.

In Germany, the gramophone soon acquired the nickname Spießers Wunderhorn (the enchanted horn of the bourgeoisie). It took Fred Gaisberg, the Gramophone Company’s first artistic director and the forerunner of subsequent artist and repertoire managers, to turn things around. Gaisberg came to the company as a 21-year-old from Columbia Phonograph. Columbia had been founded by a former court and Congress stenographer. This said a great deal about which aspects of the new recording technology it was interested in. Gaisberg tried his hand as a pianist on some initial, rather joyless music recordings, but these met with little enthusiasm at Columbia Phonograph. Fascinated by the new possibilities of the gramophone, he decided to learn about sound technology from Emile Berliner.

The young musician soon won Berliner’s trust, and in 1898 was sent to London to set up the Gramophone Company Ltd and build the first sound studio. There was a good reason for the spatial separation. Berliner knew that he would not succeed in Europe in the long term with exclusively American repertoire. Gaisberg even convinced him that they needed recordings of authentic artists from all the different countries in which they wanted to market the invention. Music produced by a simple shellac disc was an abstract enough phenomenon; the performers and their songs needed at least to be familiar to consumers.

From London, Gaisberg traveled across Europe and through Russia to India, and all the way to the Far East. He recorded Heurigenlieder in Vienna, fandangos in Madrid, chansons in Paris, tablas in Hyderabad, pipa music in Shanghai and opera arias in Berlin and Leipzig. Forever on the lookout for talent and repertoire, he also, inevitably, turned up at the legendary La Scala in Milan. In 1902 a young, little-known tenor by the name of Caruso was performing there in a production of the opera Germania. Fred Gaisberg was enchanted. Even he had never come across such a voice before. After the performance he went behind stage and enthusiastically offered the young man the opportunity to make several records. But Enrico Caruso was a self-assured artist, and although only at the start of his career he had a very good sense of his own worth. He demanded £100 for ten short arias. This was an exorbitant sum for the time and for a format that was still in the process of being launched. Gaisberg tried to get approval from the parent company, but was rebuffed in no uncertain terms. How many more machines would be sold if this Caruso and not some Italian cowherd or fisherman could be got to sing into the recording horn …

Fred Gaisberg was too proud and too sure of his cause to enter into such a discussion. He immediately decided to pay Caruso out of his own pocket. The tenor recorded everything for him in just two hours. The biggest sensation, and not only in Italy, was caused by the aria E lucevan le stelle from Puccini’s Tosca. The director of the Metropolitan Opera in New York heard a recording and engaged Caruso forthwith. Thus began the first world career in music while the gramophone record underwent a quantum leap. It was suddenly discovered and respected by the newspapers and by cultivated circles as a cultural tool and therefore began to lead a separate life from the machine on which it was played. This was the result of the unwavering belief of a single individual and his faith in quality and a regional approach. Joseph and Jacob Berliner, who pressed the discs for their brother in a cowshed next to their telephone factory, did not know what had hit them. After Caruso the market boomed. A new pressing plant had to be built to meet the demand for the recordings supplied from Britain by Fred Gaisberg. By 1907, 36,000 discs a day were being pressed. And the American market also eventually got going – all the more vigorously for the delay.

By the early 1920s the new record industry had become the biggest sector of the American entertainment business. In 1921, disc sales totaled some $106 million. (By comparison, the motion picture industry, seemingly so powerful, turned over just $93 million during the same year.) However, the euphoria was shortlived. In its frenzy of expansion, the industry had failed to notice the development in America of a new technology that allowed consumers to listen to music for free. This confounded invention was called radio. Like the Internet after it, i...

Table of contents

• About this book
• Introduction
• - PART ONE -
• PARADISE
• THE FALL
• THE EXPULSION FROM PARADISE
• - PART TWO -
• CONTENT – CAPITAL – RESPONSIBILITY
• RESURRECTION
• Acknowledgments
• About the author
• About Fuego
• Imprint