Could consolidation in the music industry radically reverse?

In the news today was yet another rumor of a possible merger between EMI and Label(x). Were such a merger to occur, the number of “major” labels would reduce to three. Back of the envelope calculation would place the market share of these three (still four) labels at like 70% (give or take). In the daily news, its assume that such consolidation is a new phenomenon, timed to match the consolidation of radio and the oppression of corporate overlords. In truth, we have seen this kind of consolidation before… and it did not last forever.

I believe in the early 50’s as much as 80% of sales was represented by only four labels. This level of consolidation collapsed quickly from the late fifties to mid-sixties, when up to 50 labels earned a simliar total market share. Many point to the birth of Rock and Roll as the vehicle for the deconstruction of a tight music indsutry. At the same time however, radio was recovering from a major shot to the revenue jaw from the birth of television. Radio had actually started ot differentiate its playlists, birthing a diverse airwaves of new genres and styles. Americans were suddenly being passively exposed to a wider selection of music than previously available… and the sales charts reflected this expansion in interest.

Given this past outcome, I cannnot overlook the growth of music search and experience online, over the phone and even over the airwaves. As more music is made available and accessible, the consequences could be quite drastic for a suite of dominant firms who have chosen to tighen their rosters in the face of an increasingly diverse musical palette in the United States. We tend to overlook how consolidation can also make firms weak and unstable as the same market contingencies that drove consolidation no longer drive success in the marketplace.

Perhaps we should start to think about the past more often.


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