rowdfunding as an alternative to the traditional financing within the music industry

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Università degli Studi di Modena e Reggio Emilia D

IPARTIMENTO DI STUDI LINGUISTICI E CULTURALI

C ORSO DI L AUREA M AGISTRALE IN

L ANGUAGES FOR COMMUNICATION IN INTERNATIONAL ENTERPRISES AND ORGANIZATIONS

C rowdfunding as an alternative to the traditional financing within the music industry

Il crowdfunding come alternativa al finanziamento tradizionale nel settore musicale

Prova finale di:

Giacomo Rippa

Relatore:

Fabrizio Patriarca

Correlatore

Giovanni Bonifati

Anno Accademico 2018 - 2019

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Abstract

Questo documento si prefigge di analizzare nel primo capitolo l’evoluzione del settore musicale nell’ultimo secolo, dalla sua nascita, allo sviluppo sotto forma di mercato di intrattenimento di massa, fino alla crisi che lo ha colpito sul finire del ventesimo secolo in combinazione con l’ingresso dell’internet tra i potenziali canali di diffusione musicale; il tutto attraverso l’analisi di numerosi testi riguardanti la storia dell’industria musicale. Nel secondo capitolo verrà trattato il processo noto come

“crowdfunding”, pratica di finanziamento dal basso che sta ottenendo un crescente interesse per le sue peculiarità e potenzialità, analizzata grazie a numerosi testi sull’argomento. I due argomenti precedenti saranno proseguiti nel terzo capitolo, dove dopo un’introduzione sull’impatto diretto dell’internet sul settore musicale verrà affrontata la possibilità per gruppi musicali di raccogliere fondi tramite le suddette piattaforme di crowdfunding e verranno portate ad esempio alcune campagne di finanziamento e variazioni delle stesse per dimostrare l’estrema flessibilità riscontrabile nel modello.

Infine, nel quarto capitolo si analizzerà nel dettaglio la ragione della necessità di un nuovo modello di finanziamento nell’ambito musicale, presentando in maniera più approfondita la struttura delle campagne introdotte nel terzo capitolo.

This document aims in the first chapter to depict the evolution of the music sector in the last century, since its inception, through its development as mass entertainment market, up to the crisis it got hit by at the end of the twentieth century in combination with the entry of the internet among the different potential channels of music distribution; this has been possible through the analysis of a number of documents dealing with the history of the music industry. The second chapter will deal with the process known as “crowdfunding”, financial crowdsourcing gaining growing interest due to its peculiarities and inner potential, analysed with the help of a series of books dealing with the topic.

The two previous topics will be both present in the third chapter, in which – after briefly discussing the influence of the internet on the music industry – the possibility of employing crowdfunding as a means of collecting money for music groups will be analysed; some crowdfunding campaigns and their variation will be presented as example of the extreme flexibility this model can offer. Finally, in the fourth chapter the reason for the need of a new financing model within the musical industry will be analyzed in detail, presenting a more in depth analysis of the structure of the campaigns having been introduced in the third chapter.

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Das Ziel dieses Dokument ist im ersten Kapitel die Entwicklung der Musiksbetrieb in dem letzten Jahrhundert zu analysieren, seit ihr Geburt, durch ihr Entwicklung als Massunterhaltungmarkt, bis der Krise, die sie am ende des zwanzigsten Jahrhunderts im Kombination mit der Eintritt des Internets als potentielles Kanale der Musikvertriebs traf; das Ganze durch die Analyse verschiedene Texte über die Geschichte der Musikindustrie. In dem zweiten Kapitel wurde den Prozess als “Crowdfunding”

genannt behandelt, eine Praxis von Finanzierung durch viele kleine Investoren das steigenden Interesse bekommt, dank seine Eigenartigkeiten und Leistungsfähigkeiten, die dank verschiedene Texte über dieses Themas analysiert war. Die zwei vorgenannte Themen wurden in dem dritten Kapitel weitergezogen, wo nach eine Introduktion über die Einfluss des Internets auf der Musiksbetrieb wurde die Möglichkeit des Benutzung des Crowdfunding behandelt, Möglichkeit für Musikgruppen Geld aufzusammeln. Einige Crowdfundingkampagne und Abänderung davon wurden als Beispiel von die Flexibilität dieses Modelles vorgeführt. Schließlich, in dem vierten Kapitel werden die Gründe für die Notwendigkeit eines neues Modell von Finanzierung in der Musiksbetrieb ausführlich analysiert, mit der Vorführung eine eingehender Analyse der Struktur den Kampagnen des dritten Kapitels.

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Introduction

This dissertation presents an overview of the birth and evolution of the music industry as a whole since its inception up to its actual status, focusing mostly on the crisis impacting it during the last decades of the twentieth century and the influence of the World Wide Web on the way said industry used to operate and interact within itself and with its stakeholders (namely the public and the artists).

It is in fact undeniable that the way people availed themselves of music has consistently changed during the decades, with a perceivable accelleration of such a tendency in the last years with the emergence and expansion of new mediums granting their users the ability of enjoying music with greater ease and freedom. At the same time, in the last years the internet has propelled new ways of financing one’s own entrepreneurial endeavours exploiting positively the intense interconnection the web allows, permitting thus the concept of crowdfunding to be first devised and then promoted through the gradual birth of online platforms taking care of allowing creative minds to obtain both the recognition and the money they need to reach a certain objective. Under the ongoing change within the entertainment industry as a whole partially due to the web-induced disruption having altered the equilibrium said industry maintained, it makes thus perfect sense that such a means of raising capital could be successfully employed by artists as well, in a redefinition of the classical relation between creator and financer allowing more financial freedom and a closer relationship with the fanbase, leading to some questions about such a model:

- Can crowdfunding be a feasible means to raise capital for artistic projects such as music, alone or helped by other means?

- Can crowdfunding be recognized as a feasible means in the mainstream, or does it risk being relegated to less known artists and creators due to its difference from the standard practice of raising funds and purchasing products or services?

- Can crowdfunding maintain its efficiency without being stifled by stringent legislation?

The attempt to answer these questions bases itself on a number of publications dealing with the two aforementioned main topics, namely the evolution and crisis of the music industry and the crowdfunding model and its subcategories and functioning, each deserving a specific chapter to better provide a comprehensive overview of the process having undergone in the last century. The first chapter will deal then with the evolution of the music industry from three crucial perspectives, namely the technological innovations it has based its continuous development on, the copyright protection it enjoyed to take care of the subjects violating the intellectual property rights art is subject to, and the market said industry could count on. The second chapter, instead, opens with a general introduction

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on the crowdfunding model, later declined into its various subcategories and crucial aspects which at the same time provide an interesting overview of the potential evolution of the model. The third chapter examines first of all the influence the world wide web has exerted on the music industry, both positively and negatively, and then delves deeper in the opportunities said innovation has offered to the industry for as far as distribution and financing are concerned, with a focus on crowdfunding campaigns having been carried out employing different crowdfunding platforms, strategies and peculiar features, trying to convey an overall depiction of the current state of application of said model. Finally, the fourth chapter delves more in depth in the reasons having gradually lead to the need for a new way of financing art in general – and music in particular – due to the inertia of the industry, then dissecting some campaigns having been presented in the third chapter to better highlight their structure, functioning and growth and development potential to highlight the extreme flexibility and undercover potential this financing model can project onto said industry.

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1. Birth and development of the modern music industry

Throughout the entirety of human history, music has always been a crucial part of human culture – sometimes defined as part of humanity’s “cultural capital” - interlocked with the other fine arts, as well as a marker of identity acquired through the acts of public consumption and affiliation¹. Music has been present at the same time as a form of art, of entertainment and of ritual communication, evolving through various stages from its primal state of rudimentary experimentation by different communities around the world up to being studied, maintained and expanded by educational or commercial enterprises², never failing to be constantly kept up to the pace of the most recent researchs and developments in theory, instrumentation and application. A key example is the mutation in its consumption over time, shifting from an activity requiring the full attention and physical presence in front of the musicians of the beneficiary, to a “time-saving” activity, easily manageable while performing other tasks; the change witnessed a metaphorical relocation of music towards the end- user, while before being the opposite way round³. This evolutionary process hasn’t been perfectly uniform around the world, as the different levels of development and industrialization of the many cultures being present today have showed how different paces are still present, and while the vast majority of the global population lives a reality in which music is already crystallized as a public good having evolved into a product which can be bought and sold (thus “commodified”⁴) or undertaking this path, this cannot be said for other more reclusive populations in which it still maintains its original connotations of pure social culture, both preserving and evolving the background of such group.

The process of commodification of music can be traced back to three main factors, in detail:

- Technological innovations;

- Protection of intellectual property;

- Market⁵.

Their importance in developing music from cultural ritual and pure entertainment to being the worldwide commodity part of an industry reputed worth $19.1 billions⁶ that it is today, is crucial to the point that a detailed analysis of each of the three factors is required, to provide an exhaustive

1 Aram Sinnreich, 2013

2 Waldo Selden Pratt, 1907

3 Francesco Silva, Giovanni Ramello, 1999

4 https://dictionary.cambridge.org/dictionary/english/commodification

5 Francesco Silva, Giovanni Ramello, Ibidem

6 IFPI, 2019

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framework depicting their ever-enduring influence and showing how the aforementioned factors haven’t simply happened to coexist and work together, but have been in a still ongoing process of continuous interrelation, often overlapping up to the point of making it difficult to understand which one was subject to change.

A small elucidation is more than due, to avoid misunderstandings: the correct term to be employed to talk about music sound recordings should be “phonography” and not “discography”, due to the fact of the former term being wider, thus encompassing not only disc-formats as the latter, but also other different or non-physical mediums such as streaming.

1.1 - Technological innovations

The vast amount of different means through which people can today enjoy music - tangible proof of the process of commodification it has gradually witnessed - is the result of decades of technological development and innovations, which find their point of departure in the invention of the phonograph by Thomas Alva Edison; such a medium was later perfected by subsequent innovators, evolving then its concept into the form of vinyl discs, audiocassettes, CDs and now digital audio files. Nonetheless, to better understand how this process took place, it is better to start from the very beginning.

Thomas Alva Edison (1847-1931) has been one of the most prolific inventors of human history, dealing with the most disparate fields of technique of the time and contributing actively to each of them. Between 1869 until 1910 he applied for 1328 patents⁷, up to the point of deserving the nickname

“The Wizard of Menlo Park”, from the area in which Edison’s laboratory was located. Among his most trusted coworkers stood John Kruesi (May 15, 1843 – February 22, 1899), Swiss-American machinist and instrument maker responsible for most of the transposition of Edison’s on-paper rough sketches into reality since its hiring in 1871. On July 18, 1877, Edison was working on some ideas and drawings to perfect both the telephone and the telegraph implementing the ability to record incoming messages and repeat them to another station, what today would resemble an answering machine, “when he ran into a curious phenomenon "resembling human talk heard indistinctly"”⁸. On that date, he noted on his papers, he was experimenting with a diaphragm (“a thin, flexible disk or cone that vibrates […] in response to electrical signals to produce sound waves, as in a speaker”⁹) having an embossing point which was incising a rapidly-moving sheet of paraffin paper wrapped around a cylinder. This allowed sound vibrations to be etched onto the paper and, as Edison believed, to store and allow the reproduction of the human voice afterwards when performing a move opposite

7 Frank Lewis Dyer and Thomas Commerford Martin, 1910

8 Gene Bluestein, 1994

9 https://www.yourdictionary.com/diaphragm

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to the one followed to imprint the voice onto the sheet¹⁰. However, after some trials, he opted for the sobstitution of paraffin for tinfoil to obtain a better quality of the incision onto the cylinder. On August 12 he left Kruesi another one of his rough sketches, allowing him to spend up to $18 for its realization, and within a few days the model was officially completed. Edison began turning the revolving cylinder of tinfoil, shouting into the mouthpiece mounted onto the prototype the famous poem “Mary had a little lamb”, which the machine reproduced as soon as Edison started the device again rotating the cylinder in the opposite direction. Thomas Edison filed for application on December 24, 1877, later to be awarded US Patent No. 200521A on February 19, 1878 for what was destined to be named

“Phonograph or Speaking Machine”¹¹, the official beginning of the era of the “canned sound”. After having presented his invention to some friends, he proposed ten possible uses for it, comprising of:

1. Letter writing and dictation;

2. Talking books for the blind;

3. Aids to elocution;

4. The reproduction of all kinds of music;

5. Recording of family histories;

6. The creation of music boxes and toys;

7. Talking clocks;

8. The preservation of rare languages;

9. The recording of educational lectures, and 10. The creation of permanent telephone messages¹².

The phonograph would soon be defined as an “instrument for reproducing sounds”, which in the particular prototype developed by Edison featured “recordings” as “indentations embossed into a sheet of tin-foil by a vibrating stylus; the tinfoil was wrapped around a cylinder that was rotated as the sounds were being recorded”¹³.

A small digression might be needed, to better define the paternity of the invention. In 1906, another one of Edison most trusted coworkers – Charles Batchelor (December 25, 1845 – January 1, 1910) – would have asserted that the real date of writing of the now historical note could not have been before November 1877, justifying the erroneous date having been inscribed on the sketch with Edison forgetting to date it correctly on day one and later having to resort to a posterior alteration, yet however bearing the marks of the lapse of memory missing the corret date. The exact date would later

10 https://www.nps.gov/edis/learn/historyculture/origins-of-sound-recording-edisons-path-to-the-phonograph.htm

11 https://patents.google.com/patent/US200521A/en

12 Gene Bluestein, 1994

13 https://www.britannica.com/technology/phonograph

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be defined as November 29, 1877 thanks to the investigation of Allan Königsberg in 1969. According to this reconstruction, the functioning model would have then been ready on December 6, 1877¹⁴. This clarification is due to the semi-contemporaneity in the development of a functionally identical project by the French poet and inventor Charles Cros (October 1, 1842 – August 9, 1888), which did not patent the concept of his Paléophone until 1878 (French patent no. 124.313), despite having described its functioning on April 16, 1877¹⁵; his project applied Edison’s principle on crystal discs¹⁶, but unfortunately it is believed to never having been prototyped¹⁷. This curious concurrence seems to have been completely casual, and the two inventors did not appear to have been informed of the developments of their counterpart; there has never been contrasts on the patentity of the term

“phonograph” however, since it had already been previously used in the 1840s¹⁸.

Edison’s dream, despite the infancy of its invention, was already aimed at what would be later better defined as mass production and consumption, visualizing one phonograph per household¹⁹. As soon as the voice spread, in came orders of a copy of the machine from the most disparate places in the world, despite the poor quality of reproduction due to the tinfoil being relatively fragile, the loss in fidelity in the recording²⁰ and the low running time of each cylinder. On April 24, 1878, Thomas Edison founded the Edison Speaking Phonograph Co., including the cousin of Theodore Roosvelt (Hilbourne L. Roosevelt) and whose director would soon beGardiner Greene Hubbard, father-in-law of Alexander Graham Bell (March 3, 1847 – August 2, 1922), the inventor of the telephone. The company paid Edison $10.000 for the rights to market his invention, as well as a 20% royalty on any sale. Financed by many investors of the telephone industry as well, the Edison Speaking Phonograph Co. produced about 600 machines before stopping production in 1879 due to the absence of further demand partially caused by the product being still a work-in-progress for as far as its technique was concerned, and its novelty wearing off. In the meantime, Thomas Edison had found more interest in other projects, leaving his yet-to-be-perfected invention aside, with the public forgetting its existence as well. In 1880, Alexander Graham Bell was awarded prize money from the French Academy of Science for inventing the telephone, and with it he opened the Volta Laboratory in Washington DC.

There, with his cousin Chichester Bell and Charles Sumner Tainter, he started experimenting an alternative version of Edison’s phonograph working with wax. He wrote his father-in-law the reasons for his interest in the development of what he saw as a missed opportunity: “It is a most astonishing

14 Frank Hoffmann, 2004

15 Thom Holmes, 2006

17 https://www.nps.gov/edis/learn/historyculture/origins-of-sound-recording-charles-cros.htm

18 Thom Holmes, Ibidem

20 Louis Barfe, 2013

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thing to me that I could possibly have let this invention slip through my fingers when I consider how my thoughts have been directed to this subject for so many years past”²¹. In 1885 the three of them applied for the patent of the Graphophone, with wax having succesfully substituted tinfoil and a new design of the stylus²², and were granted the patent for recording in wax and the one for magnetic reproduction in 1886. The patent for the Graphophone would have been awarded them and successfully recorded on May 4, 1886, after which they would set up the Volta Gramophone Company to control the patents, while the American Graphophone Co. was founded once gained enough investor support, aiming at manufacturing and selling the machines²³. It was only in 1887 that Thomas Edison decided to go back to his phonograph and develop it to amend its weaknesses, applying for 17 new patents the following year before being satisfied with an improved prototype.

Edison and Bell however weren’t really fond of each other’s progresses in the field: the former accused the founders of the Volta Gramophone Company to have plagiarized his invention, while the three responded underlining the fact that his “improved phonograph” now featured wax-layered cylinders like the ones patented by Bell. Luckily, this controversy was mitigated in 1888 by the american entrepreneur Jesse H. Lippincott.

Lippincott bought for $200.000 the exclusive rights of distribution from the American Graphophone Company (only unable to distribute in Virginia, Delaware and the District of Columbia, rights in the hands of the Columbia Phonograph Company founded in January 1889), leaving the production in the hands of its creators, as well as $500.000 to purchase the patent rights of Edison’s “improved phonograph”, leaving its production to the Edison Phonograph Works. He then proceeded to found the North American Phonograph Company, soon selling distribution licenses leading to the foundation of a franchise of distribution companies in 33 regions. In 1890, they began cooperating as National Phonograph Association, yet still believing the invention only fit for dictation. As Lippincott saw no other use for the invention outside the business and administration fields and few could afford its rent fee, not mentioning the fact that stenographers could be more of use with less trouble, in the fall 1890 the North American Phonograph Company went bankrupt, with Edison taking over Lippincott’s shares. Contextually, Louis Glass, the chairman of the Pacific Phonograph Company (the West-coast licensed distributor) added a coin-in-the-slot mechanism which turned the devices from dictation machines into rudimentary juke-box playing pre-recorded cylinders, making this evolution of the original prototype so successful that their demand soared, as the investment was recovered in no time. This business was particularly successful for the Columbia Phonograph

21 Louis Barfe, Ibidem

22 Peter Tschmuck, 2006

23 Leslie J. Newville, 1959

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Company, driving the management to invest on entertainment, expecially after seeing the head firm filing for bankruptcy: they soon presented a 10-page catalog of recordings of John Philip Sousa’s United States Marine Band and the artistic whistling of their own employee and pioneering artist John Y. AtLee, catalog which would soon extend. In 1893, having completely focused on music, the company decided to rescind their cooperation with North American Phonogram Co. and take over its shares, redesigning the Graphophone to play cylinders of both projects. After a series of legal dispute over the credits to the invention, American Graphophone purchased the stocks of Columbia Phonograph and merged the two companies, with Graphophone Co. responsible for developing the models and Columbia dealing with distribution, recordings and sales. In the meantime, after troublesome times and little to no success or expansion in the project, Edison liquidated the North American Phonograph Company leading to the regional subsidiaries to file for bankruptcy, while he founded the National Phonograph Company in 1896, exclusive U.S. distributor for his own phonograph, of which he finally understood the entertainment potential, leading the phonographic industry to abandon its previous office destination in favour of music-boxes for entertainment.

While the abovementioned clashes among companies were taking place within the United States, outside of the country changes were about to happen, with Europe aiming to stay up to pace. In 1887 the Bell-Tainter Group had established the International Graphophone Company, device which entered the european market 2 years later. In 1888 instead, Colonel George E. Gouraud, granted great trust by Thomas Edison himself, took care of the establishment of the Edison Phonograph Company in London and even recorded some plays at the local Crystal Palace himself; on February 24, 1890 the Edison United Phonograph Company was established to manage the investors’ interests outside North America²⁴, company which in turn would be superseded by the new-born Edison-Bell Phonograph Corporation, which like Lippincott did in the United States would take over both sides, yet remaining unsuccessful like its predecessors. In that period the first undeclared cylinders’

smugglers started operating between the United States and Europe to profit from their reproduction.

The Edison-Bell Company, instead, had pretty much ousted Colonel Gouraud, and in December 1896 Stephen Moriarty bought Edison’s quotes in the company, squeezing him out and cutting off any tie left with the inventor. At the same time, the gradual spread of the entertainment phonograph cylinders had no intention to stop: the Société Pathé Frères, founded in Paris on September 28, 1896 by the four brothers Charles, Émile, Théophile and Jacques Pathé, in the course of seven years went on to employ more than 3.500 workers, while recording french artists and gradually expanding to transalpine ones and keeping an eye on cinematographic developments. Lieutnant Gianni Bettini

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managed instead to produce micro-phonographs, which however didn’t really take off due to their higher cost, soon to be forgotten.

While companies and shares were being heavily influenced by their owners and investors, Emil Berliner (May 20, 1851 – August 3, 1929) relocated from Germany to the United States working also as an inspector for the Bell Telephone Company. After having experimented with sound recording unaware of the developments of the phonograph, on September 26, 1887 he applied for a patent for his disc machine, tracing sound waves horizontally and not vertically and allowing a far louder sound, obtaining the patent for what would have been from then on known as “Gramophone” and perfecting the process of recording through etching the following year²⁵. The phonographs had a real problem with mass production, as they couldn’t be reproduced but required as many recorders as the cylinders being needed, while Berliner obviated the problem by pressing a negative of a metal plate first etched as positive, obtaining thus the possibility of mass reproduction, further enhanced with the right compound for not ruining reproduction as the stylus passed and allowing a more convenient use of space for storing the discs. However, investors and public in the United States weren’t particularly interested, leading him to go back to Germany, where his gramophone became a one hit wonder, soon however leaving no unsatisfied demand. After his return to the United States, Emile tried to fund his invention one more time, but before having success he had to solve one of the main weaknesses of the invention: the rotation of the disk had to be maintained through a handle, and nobody was interested in maintaining their hands locked with the gramophone, and turning it at a constant speed.

Berliner contacted thus Eldridge R. Johnson in 1896, a knitting machines producer, who supplied him with 200 motors, at the same time managing to find new investors with no previous link with the phonographic industry and recording as many traditional musical pieces as possible with the help of many local musicians often left uncredited; the choice of creating an enormous amount of recordings is mostly due to the fact that the high quality of reproduction of the gramophone was compensated by the impossibility for amateurs to record their own performances, something the sub-par (qualitatively speaking) phonograph could still allow. At the same time, both gramophones, graphophones and phonographs focused totally on traditional and folk performances, with no incentive whatsoever destined for original music. The improvements and the advertising campaigns of the newly-hired Frank Seaman led National Gramophone to announce reaching $1 million in revenue in 1898, and the success led John Philip Sousa and other famous musicians to collaborate, Sousa exclusively for the Berliner group from 1898 onwards despite his partial distaste in the abundance of “music-reproducing machines” which could lead to “a marked deterioration of

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American music and musical taste”²⁶. The featuring of artists previously working with competing firms was also possible due to the absence of exclusive performance contracts. The Group at the same time was gaining prominence in Europe as well, with the german company soon expanding in France and Spain, and a subsidiary opening in Calcutta in 1901 thanks to the close links with Great Britain.

The geographical expansion of the companies gave also rise to the first recording tours, with the aim of both recording brand-new negatives of local prominent artists to provide in each location and at the same time promoting the gramophone to the locals in order to boost its sales and reception;

matrices were then sent to Hanover to produce the records. Despite the higher quality compared to the cylinders of the phonograph, gramophone recordings still lacked a practical and comfortable way for recording multiple inputs accordingly, as the audio sources should have been placed the closest possible to the machine, and this lead to some problems in putting pianos to a greatest height than at what they were commonly used. The success of the gramophone soon lead to a series of cross lawsuits between the societies of Berliner, Edison and Seaman, in which Seaman tried to oust Berliner and create his own reproduction machine, the Zonophone, cooperating with the Columbia Phonograph Company, now able to produce both cylinders and zinc disc records and making it impossible for Berliner to do the same due to the injunction having been issued against him. Fearing bankruptcy, Eldridge Johnson went on perfectionating the product himself, shifting to wax plates leading to a decrease in costs, calling the new product “Victor Talking Machine” and the media “Victor Records”.

Emerged victorious, Johnson and Berliner decided to work more closely founding the Victor Talking Machines Company on October 3, 1901. However, it was one of Johnson’s former employees to patent the wax records on November 19, 1897, from whom the Graphophone-Columbia bought the patent. At that point, Victor Talking Machines Company was infringing the wax records patent and the Graphophone-Columbia respectively the one for gramophones, leading the two parties to prefer avoiding another time- and money-consuming lawsuit and agree on mutual use of both patents (1902), making this the year in which one could place the birth of the phonographic industry, with Victor, Edison and Columbia having the market only for themselves, except some sporadic presence of smaller competitors like Pathé which were opposed through an intense competition; the limited number of players wouldn’t alter the pattern of continuous lawsuits, model evolution and patent acquisition having characterized the now-developing industry thus far, neither would they cease as time passed. Thomas Alva Edison tried to keep up with these developments by focusing on perfecting his cylinders, but it was too late for him to gain a share of the market, already having preferred the most recent inventions.

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Since 1909, the record had then won over the cylinder as new standard in phonography, despite a recording capacity of only 2–3 min per side, competition consequentially shifting towards content more than format. Despite some minute variation among the different companies, all of them aligned to a common speed of medium, as discs spinning too fast would be ruined in the process and spinning too slow would end up in a massive, unnecessary distortion; this lead the industry to repute the speed of 78 Revolution Per Minute operating at constant angular velocity (CAV)²⁷ to be the most suitable, consecreting 78 RPM discs as the mainstream recording format, dominion which would have been undermined only decades later. The first global conflict slowed down the whole industry up to a mostly inertiatic state, state which changed abruptly at the end of World War I. The new socio- economic conditions of the decade between 1920 and 1930, paired with the massive success of the newly-invented radio, the emergence of innovative musical genres like jazz and blues, and the passage from acoustic to electric recording processes, together lead the music industry as a whole to grow significantly, more than ever before. These important development helped the phonographic industry to soften the dramatic blow it received from the terrible financial crysis happened in 1929, which without such advancements could have really been headed for an abrupt end²⁸. In the same period, in Germany, the chemical company BAST AG started developing what would become the first tape recorder, released in 1935 with the name “Magnetophon”²⁹; after the war, the concept would be seized by the Americans, and would later become a crucial example in the development of the audiocassettes. The abovementioned radio had been developed from the concept of a wireless telegraph, aiming at allowing the communication of two single devices through the aether, but unlike the already declining phonograph, it was advantaged by the newly-discovered possibility of transmitting from a single broadcasting station to several, different receivers, enhancing the “mass”

concept already having been popularized since the mass consumption of recordings. The first universally accepted “radio broadcasting” took place on December 23, 1900, by Reginald Aubrey Fessenden, followed six years later by the first radio program, but it would not be before the First World War that the Canadian and American government would issue broadcasting licenses, despite the first financers of Fessenden being more interested in a one-to-one communication system more akin to a telegraph, than a one-to-many device³⁰. In the beginning of its commercialization in the American market, radios, phonographs and gramophons were believed to be potential competitors, as “talking machines” could respond to the same needs. Analyzing in detail their functioning, it now appears that their practical usage could be likened mostly for the fact of producing recognizable

30 Thom Holmes, Ibidem

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sounds than for the effective similarity in function. In a five-year time window the radio evolved from technological marvel and revolutionary development in recording to an unavoidable presence for each household, being present in 12 million homes in 1930 and doubling that figure within 1935, giving rise to the so-called “radio days” which led many to believe it were the end of recorded music as a whole, confronted with such a successful adversary. Soon after, however, the music industry acknowledged the potential interrelation of the two products, which could work together more than disrupting each other’s market base, working towards the first prototypical integrated system of home entertainment which would later have greater fortune; this potential fruitful collaboration in place of the substitution of “physical” music recordings could be further proven by the gradual development in materials and techniques of both recording and reproduction (a key example may be the evolution of the compound employed for the fabrication of music discs, from Shellac – employed since 1896 – to vinyl – slowly gaining presence in the market since the 1930s and allowing more than 30 minutes of recording per each side of the disc³¹). In particular, music recordings were made available for radio broadcasters, offering content to be transmitted, while radio stations could promote what they were airing, as well as other products: as a matter of fact, soon the radio started exploiting at its most the advantage of being a mass communication medium, promoting advertising of the most disparate products as well as artists and phonograms and demonstrating the extreme flexibility of the radio.

This flexibility in fact was proven by the intervention of private citizens as well; the ones having access to a transmitter, and the ones having tinkered long enough to assemble their personal radio as well, soon started transmitting over the airwaves. The promotion the radio broadcasting systems allowed, however, soon began showing its darkest side with the emergence of the illicit phenomenon called Payola, “a secret payment to someone for doing something illegal in business or politics, or the act of making such payments”³²; it meant the undue influence exerted on broadcasters and disc jockeys in order to have them promote a certain product, play a certain song more or in place of another, in general the alteration of competition and consumers’ perception – a key example might be a consumer listening to a certain song with a relative high frequency, thus believing the song to be a commercial success and the author as well, despite this being an artificial “push” more than earned fame – in exchange for goods and/or money. The phenomenon had already been highlighted to the competent authorities, which as early as in 1916 believed it to amount to more than $400.000 per year, leading to its investigation and, only in 1960, the Congress of the United States to declare it a federal crime against property, therefore subject to the Racketeer Influenced and Corrupt

32 https://dictionary.cambridge.org/dictionary/english/payola

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Organizations statute³³. During the First World War, for obvious reasons of national security and military operations, the U.S. Government temporarily outlawed said amateur radio transmissions, which were reintroduced among the permitted practices after the end of the conflict. In 1927, the Federal Radio Commission was established, to be then replaced by the Federal Communication Commission. It was in that tumultuous period that the major broadcast networks like CBS (1927) and NBC (1926) started making their first steps into the american broadcasting world. As a consequence, an increasing number of newborn radio stations asked – and obtained – the federal license of access to “clear channels” devoid of amateurs’ communications, paving the way for communicating with the whole country. Like any other medium having preceded it, radio witnessed its own evolution as well, its most perceivable development being first the introduction of another broadcast standard (FM, contraction of Frequency Modulation) in addition to the already present AM (Amplitude Modulation), then the shift to the most modern one as dominant broadcast standard, as Frequency Modulation – despite being a bit more expensive, also due to the fact of being the sector’s novelty - allowed a clearer signal, granted the reproduction of stereophonic and quadrophonic sound, allowed to receive transmission even through thick walls and was less incline to produce a disturbed signal in the event of inclement weather, all features which AM could not grant. However, this shift did not occur overnight: in fact, Edwin Armstrong first patented the FM in 1933, but it took decades for it to eclipse the AM’s dominion. This isn’t due actually to a lack of promotion, as already in the 1940s the new format was already being advertised as a potential groundbreaking development, both for its aforementioned intrinsic features and the value it could offer the market, as the traditional programs on AM frequences didn’t provide that much mass media representation for groups and interests structurally having been excluded before. Yet, the American Federation of Musicians (AFM) decided not to allow existing networks to repurpose their musical programming to the then-future format, partially due to their belief in the absence of financial gains if transferring programs to FM.

Obviously, not only the AM is to be held accountable for the late adoption, as also some stakeholders were legitimately unsure of FM’s financial value; consequentially, full-scale acceptance of the format would have happened only as soon as the risk-to-reward ratio could be adequately agreed on, maintaining the format underutilized. At the same time, advertisers started developing interest in a format offering plenty of opportunities due to the success of the civil rights and women’s rights movements in the 1960s, both representing minorities nearly completely excluded from AM stations’

traditional programming based on the traditional demographics of the white, middle class bourgeoisie. This offered a greater degree of freedom for FM stations to implement newer formats targeting bigger and more diverse audiences. Radio was not the only device evolving, as 78 RPM

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discs started becoming less and less practical, expecially during the First World War during which it was vital to store as much information as possible, and the limited time each recording allowed lead to the development of the microgroove, leading to the long-player records³⁴. Columbia, at the same time, was a crucial player in the success of the 33 1/3 RPM disc, as it focused first on making available a cheap, compatible record player and then on extending its music offer with records of such format, paving the way for the next, definitive move: in 1948, as a matter of fact, Columbia started heavily promoting its new format, which was then adopted in no time. The crucial action which helped a great deal to enhance the format’s reception was the disruption of the previous monopoly approach, allowing others to employ the medium as well; this pushed further the success of the format, with only 45 RPM discs by RCA resisting the format near-monopoly. These would soon be associated with the concept of “single”, as balancing the low price with the presence of only one track per side, resulting in a general division of public into two groups, the one – mostly consisting of adult public - preferring a long-play 33 1/3 RPM disc, and a generally younger segment more likely to enjoy a commercially successful single track³⁵. The music industry then started focusing more and more on 33 1/3 RPM and 45 RPM discs, yet not discontinuing the still successful 78 RPM format; this allowed recording artists to choose among three different formats in the same time period. In the 1960s, another important and yet-existing audio reproduction format made its entry into the market, namely the cassette (also known as musicassette or audiocassette), introduced in 1963 by Phillips and based on the concept of the Magnetophone³⁶, adding up to the existing audio reproduction formats already available to the public. Despite not offering the same quality and potential of older formats, it received general support at worldwide level, most of all for allowing personal home recording which could then later be listened to (the so-called home taping). Furthermore, like Columbia did years before, Phillips licensed the patent to other firms in the field, thus widening the potential offer and making it a medium to be confronted with. Near-contemporary of the audiocassette was the Motorola Stereo8, an eight-tracks magnetic tape developed in 1966 by Motorola on commission for Ford Motor Company, which despite its easy handling and limited size did not receive the same attention, nor success.

The tangible separation in what was broadcasted between AM and FM stations helped catalyse the public’s attention to stations being more akin to their tastes, proven when the disco’s sudden explosion following Saturday Night Fever (1977) drove thousands to the new format, more inclined to program similar music than old-fashioned AM programs. This momentous shift resulted in a

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massive amount of new listeners for FM stations unwilling to go back to the eclipsing AM. At the same time, in 1979 audiocassette sales reached new heights with the introduction of the Soundabout, also called Sony Walkman, the name by which it would have been remembered later, thanks both to the possibility of listening to one’s favourite music whenever and wherever the time was believed right by the single user, as well as the listening without undue bother to the surroundings, thanks to the headphones reproduction it employed, initiating the era of consumption individualization and what would have also been called soundabout, the opportunity of listening to one’s favourite music anywhere, at any time³⁷.

1982 was the year which saw entrance on the market of the Compact Disc (then worldwide know as CD as well), “a small plastic disk with a shiny surface on which information, especially high-quality sound, is recorded”³⁸, able to store up to 76 – 80 minutes of audio content. Differently from the 78, 33 1/3 and 45 RPM discs, Compact Discs operate at a Constant Linear Velocity (CLV), not a Constant Angular Velocity (CAV), allowing thus a constant tracking speed at the expenses of a constant angular velocity. The sound isn’t engraved in the disc like in vinyl 78 RPM ones, but “transcribed”

into bits through a binary representation according to the Pulse Code Modulation (PCM) of the Bell Laboratories³⁹. Being digitally controlled, CDs can rotate at different revolutions per minute, ranging from 200 to 500 RPM, and the optical sensor of the device playing reads and decodes the binary code with the help of a laser beam, then transmitted to a DAC (Digital-to-Analog Converter), converting the digital signal into sound, soon after being amplified⁴⁰. The shift towards the laser beam helped obviate the damage caused by the continuous use of vinyl discs, which being read by a stylus happen to lose quality over time. Furthermore, the audio quality was significantly higher than the one present in other format of the period, justifying the success of the medium. This format of commercial music distribution presented fixed quality among the audio files and was devoid of encryption since its inception; this clarification is on a minor detail at the time of its launch, as “ripping” (from “rip”, defined as “a copy of a CD or DVD that you make on a computer”⁴¹) and “burning” (from “burn”,

“to copy information, recorded music, images, etc. onto a CD”⁴²) CDs was not a risk the industry had foreseen with the intensity and extension it witnessed years later. In fact, the first CD-ROMs – particular CDs used to store data – were made available to the public just some time after the introduction of CDs, and reached maturity in the 1990s, thus allowing the music industry to witness

38 https://dictionary.cambridge.org/dictionary/english/cd

41 https://dictionary.cambridge.org/dictionary/english/rip

42 https://dictionary.cambridge.org/dictionary/english/burn

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a reduced amount of ripping and burning before the practice became well-known first among IT experts and then to the wider public. CDs proved to have an unprecedented success and consequential financial gain for the whole industry, making the sector dismiss the potential threats as CDs drove the global music revenues to unimaginable heights. Furthermore, CDs managed to outsell both 78 RPM discs and audiocassettes, becoming the next trend in the music format history, also thanks to a phenomenon labelled “stock effect”, with consumers buying a CD copy of what they already owned as LP, reigniting the demand. Conversely, the general state of inertia of the industry in regard to the potential protection disadvantages of the CD was protracted way beyond the entrance of digital music distribution and web formats on the market, until the Napster phenomenon came as a shock for the entire industry in the summer 1999; this event was crucial in pushing the industry to look for a solution in what has been defined as “Post-Napster Product Formats”⁴³. In 1990, on the eve of the introduction in the American market of the Digital Audio Tape (DAT), the potential higher-quality evolution of the audiocassette – able to rival the audio quality of the compact disc, with a capacity of roughly 1GB of high quality audio - found itself promoted not as much as it could have by its own developer and main investor, with the unrelenting opposition of the Recording Industry Association of America together with the labels fearing a golden era of higher quality, home taped pirate recordings⁴⁴. Despite the introduction of Phillips-devised Serial Copy Management System (SCMS) preventing to copy the files more than once and to recopy said files, its sales were mostly destined for the professional sphere⁴⁵. Both Sony and Phillips tried to introduce the evolution of the audiocassette, respectively in the form of the MiniDisc and Digital Compact Cassette (DCC), however both failing to receive praise, particularly thanks to their compression algorythm resulting in copies featuring a lower quality than what had been initially recorded, leaving both devices soon to be forgotten with all the other previous – and soon-to-follow – attempts to introduce formats which could not keep up with an older, but much more successful format. Other than the growth in sales of the above-mentioned CD-ROMs, combining the compatibility of its predecessor with a major memory upgrade allowing it to store much more information than what was able to do its forefather, in 1997 the market witnessed the entry of the Digital Versatile Disc, better known as DVD, able to store up even more data and initially believed a potential competitor in the music medium cycle⁴⁶. This progression in the dominant recording format generally saw the success of formats granting higher quality in exchange for limited convenience, and others offering greater portability sacrificing fidelity; the mediums not being sufficiently adopted tended not to grant an adequate trade-off, thus being replaced by more convenient

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alternatives. Furthermore, the evolution of the preferred medium of the audience doesn’t always imply the disappearence of the previous ones, as in the recent years there has been a considerable return to glory of vinyls and cassettes, and the aforementioned “failed formats” still bear some popularity among collectors. Another important factor to be considered in the format progression history within the music industry is the definition of “dominant” and “popular” within the context of the music marketplace and musical culture. The market success being highlighted by recording industry research data refers to the retail purchase of new, pre-recorded, popular music at major retailers, thus not offering a comprehensive snapshot of all the ways in which musicians and fans use recording technology, but merely the uses generating income for the handful of labels dominating the industry and subsidizing market data collection, unfortunately not considering media created by independent artists and sold directly to consumers in performance venues or via artists’ websites, nor the used music retail market. Format progression, in addition, has to coordinate the adoption of the new technology across all major content providers and manufacturers, to boast consumers’

confidence in buying a format granting longevity and breadth of adoption, without which consumers will probably desert the innovation. The above presented progression of dominant recording formats is still going on, with the digital formats disrupting the traditional format replacement cycle and hinting at a new era in the phonographic industry, the change of which is yet to be clearly defined, and which saw an important step in the launch of Apple’s portable music player iPod in 2001 and its 200.000-songs music store iTunes in 2003, which thanks to an initial fee of $0.99USD or 79p per track managed to lure clients by the thousands, with over 10 million downloads within few months⁴⁷ with the clever slogan “1000 songs in your pocket”, not even mentioning the extremely user friendly interface which made it easier to buy songs rather than steal them through file sharing or peer-to-peer softwares⁴⁸. Another crucial aspect of iTunes compared to other web-based alternatives was the clear support from the major labels which helped Apple take control of the digital music distribution, despite said labels initially pushing for a $3 fee for a single track⁴⁹. An example of the influence of the development of information technology (IT) intertwined with the phonographic industry can clearly be presented in the form of electronic delivery, the transfer of information or data through the web or via satellite, like the already-present and thriving Digital Audio Broadcasting (DAB), paving the way to a more integrated entertainment industry aiming at the creation of oligopolies with a higher interconnection with device producers as well⁵⁰. Recently, there has been more focus on digital

47 https://www.telegraph.co.uk/technology/apple/10019032/iTunes-at-ten-how-Apple-reinvented-the-music- industry.html

48 https://www.theverge.com/2019/6/3/18650571/apple-itunes-rip-discontinued-macos-10-15-ipod-store-digital- music-wwdc-2019

49 https://www.theverge.com/2013/4/26/4265172/itunes-store-at-10-how-apple-built-a-digital-media-juggernaut

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subscription and “cloud” services, offering a high level of utility and access to an extensive music library, still retaining centralized surveillance and control, in a complete redefinition of the entire sector of home entertainment aiming towards integrated systems of entertainment as well as communication, with the PC – and now the smartphone as well - playing the central role of connection of different peripherals, yet with consumers enjoying a greater degree of power on what will thrive and what will fail for the first time in the music industry history. If this will be the “death of the album” as iTunes had been previously labelled⁵¹ or not, is something yet to be seen.

1.2 – Protection of intellectual property

Copyright is another crucial part of the music industry, and is defined as the legal right to control all uses of an original work for a particular period of time⁵². Its ideal origin is believed to be set in 1557 in England, when a royal charter established the Worshipful Company of Stationers and Newspaper Makers of London (until 1937 the Worshipful Company of Stationers), allowing the group of previously simple English book publishers to grant a “stationer’s copyright” to a determined publisher. This grant allowed the above-mentioned stationer to reproduce a determined work, within some given rates and practices, limiting outside competition or internal conflict among the ones having already been granted the “stationer’s copyright”, or among the original founders of the Company, providing a particular kind of market stabilization. However, the limitation this royal charter allowed soon proved themselves instrumental for the publishers in creating strong barriers to entry for unexperienced newcomers, at the same time limiting what could be published in an effective form of censorship of the press, with the implicit royal assent in the maintainment of this practice which, despite this self-explanatory negative side, allowed a higher level of control on the sector.

This consolidation of the sector in a limited number of powerful entities led soon to a form of oligopoly which, due to its concentrated capital and influence, soon detached itself more and more from the Monarchy it initially was subject to. Only in the 18th Century would this system of copyright-granting membership finally come to an end, with the lawful protection of intellectual property being then conferred on British authors by statute; this change in paradigm would soon be imitated all around Europe⁵³. Across the Atlantic instead, the Constitution of the United States itself would make it clear that the safeguard of the works of human ingenuity wouldn’t have been neglected:

in its Section 8, the Congress is granted power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective

51 https://www.theguardian.com/media/pda/2008/aug/29/thedeathofthealbum

52 https://dictionary.cambridge.org/dictionary/english/copyright

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Writings and Discoveries”⁵⁴. This choice was undertaken after a hot debate among two founding fathers, namely Thomas Jefferson and James Madison. The former believed copyright, and in general the enactment of laws protection intellectual property, to be a kind of monopoly, while the latter reputed them as a necessary evil which could encourage works of ingenuity, as granting tutelage to the ones contributing to the cultural environment, enrichment of what John Stuart Mill would call

“marketplace of ideas”. However, despite the guarantee of protection for the inventors and artists on the American soil, music would become considered within the copyrightable works only with the enactment of the Copyright Act 1831, which would later become the legal basis for the aforementioned process of commodification music had initiated long before, and for the professionalization of the music as well. But before these steps had taken place, copyright cared about another, now less discussed but still present form of commercial music product, namely scores. At that time, as the product to be protected was textual, it comes as no surprise to see music publishers as the dominators of the music industry of the nineteenth century. In this era of expansion and technological innovations - being fueled by the second industrial revolution – can be seen the first traces of lobbying by the aforementioned dominators of the industry, in attempts to strengthen and prolong their power and influence, through actions aimed towards both the reinforcement of the copyright laws they so much benefitted and the maximization of their profits through a more or less direct influence among the artists and art lovers to promote their songs; “song pluggers” were a prime example of this kind of indirect promotion of scores publishers, which through these performers would stimulate the curiosity of other performers, competitors and potential buyers. At the same time, the lobbying efforts of the publishers proved not to have been in vain: from a nearly void legal framework, American copyright law soon expanded including the tutelage of scores (Copyright Act 1831), public performances (U.S. Copyright Amendment Act 1897 (public performance right in musical works)) and “mechanical reproduction” (in detail, piano rolls and phonograph records, Copyright Act 1909). The Copyright Act 1909 was a direct consequence of the requests of John Philip Sousa which, with the help of other composers among which Victor Herbert, asked for a revision of the existing copyright law in order for it to include a fee, which should have been levied on the reproduction through mechanical supports, request which found extensive support from the music publishers lobby; the Act imposed a fee of $0.02 per each unit of music cylinders, records or piano- roll, fees which started being effectively collected after February 13, 1914 after the foundation of the American Society of Composers, Authors and Publishers (ASCAP), the organization which would have been responsible for their collection⁵⁵. In addition to these non indifferent legal changes, the

54 https://constitutionus.com/, Section 8, Paragraph 8

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copyright term to which a work was subject extended from fourteen years, then renewable for other fourteen at the expiration of the previous ones, to twenty-eight years, renewable for the same amount of years, with statutory penalties to the violators of intellectual properties shifting from pennies per page being interested by the phenomonon up to imprisonement. 1855 saw the birth of the first music trade association, the Board of Music Trade, founded by 27 music publishers with the clear aim of contrasting price-cutting of non-copyrighted music. It took this association not much time to include every major publisher; it then renamed itself the Music Publishers’ Association (MPA), with a clear aim, notably “the regulation of the music trade by fixing and sustaining a uniform and standard price for all music publishers”⁵⁶. It was the forerunner of today’s trade associations, and it would soon develop and evolve to cover in the most uniform way possible the music and entertainment sector to better protect its protegees, continuing its campaigns for obtaining better conditions, as well as not stopping its lobbying efforts, recalling and going far beyond the efforts undertaken by scores publishers not so long before. As soon as the phonographic industry proved itself to be increasingly profitable through the sale of records alone, sheet music publishers started shivering, as their advantageous position was being threatened by an industry employing an ever widening repertoire of music without paying for it, and the consumption of recorded music instead of the purchase of scores to be played at home posed a severe threat for that sector of the industry. To avoid being replaced by the evidently more successful newcomers, the music publisher lobby started intensifying their efforts for introducing a codified copyright law. In 1909 the newly-established Association actively pushed for an extension of the copyright term being way more than what had been obtained by its forerunners, namely a term long as much as the life of the composer, to which adding fifty further years. Their attempt to obtain such an enormous impact was to be concretized years later, in 1976 (Copyright Act 1976), and then exceeded again in 1998 with the Digital Millennium Copyright Act (DMCA) which will be dealt more specifically with later. The beginning of World War I obliged both the legislators and the music industry as a whole to focus on more urgent problems, halting the push towards the kind of copyright the MPA was aiming at. Soon after the international hostilities had ceased, the entrance of two revolutionary new players like the record labels and radio networks led the whole sector to adapt and extend its interests on the new formats of music reproduction, having perceived clearly the opportunities they could offer. These opportunities soon proved themselves profitable as imagined, further demonstrated when record labels and radio networks grew to the point of first reaching, then exceeding what score publishing was before their inception, following its example in consolidating their position in the market. Soon the steps undertaken by their forerunner were replicated, with the founding of trade organization and a sharper attitude towards the maintainment

56 Dena J. Epstein, 1974