Discs are in demand again – economy

The best days of “Black Sabbath” are long gone. The legendary British rock band was co-founded by Ozzy Osbourne in 1968. The inventors of Heavy Metal last performed in Birmingham in 2017, but they are still popular: “Black Sabbath” sold 75 million dollars. albums around the world – and the number is growing, still on records. According to music company BMG, the most successful vinyl records on the program for the first half of the year came from “Black Sabbath”, the late singer Joe Strummer of punk band “The Clash” and rock band “Garbage” .

But it’s not just heavy metal, rock and punk that are suddenly coming back to vinyl. The record as a whole is back – and celebrating a comeback just in time for its anniversary. Almost exactly 70 years ago, Germany’s first LP (with 33 1/3 rpm) was presented at the German Music Fair in 1951 in Düsseldorf. After the advent of CDs and online streaming services, sales dropped dramatically, they’ve been declared dead time and time again – but now things are picking up surprisingly significantly. For a long time, hardly anyone thought it was possible.

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Black Sabbath musician and co-founder Ozzy Osbourne with wife Sharon: His music always sells well, even on records.

(Photo: Vianney Le Caer / AP)

“There is a very strong trend towards vinyl,” says Hartwig Masuch, director of Berlin-based music company BMG. “In the first half of 2021, for the first time since the creation of the company in 2008, we achieved more sales with records than with CDs,” he adds. BMG was only reestablished by Bertelsmann in 2008, when the record had been down for a long time. After the release of the CD in the mid-80s of the last century, small silver records quickly surpassed the record. But now the days of the CD are over: today music is streamed online – and listened to from the record.

According to figures from the Federal Association of the Music Industry (BVMI), vinyl is currently experiencing high altitude flight. In the first half of 2021, record sales in Germany increased by almost 50 percent, the record again has a market share of almost six percent in the music market, the CD recorded a significant decline and has a share of about 14 percent. The remaining 80 percent of the German music industry’s total revenue, or around 1.8 billion euros, is now attributable to digital business models. A similar trend can also be seen in the United States. According to BVMI, only 700,000 records were sold in 2011, but in 2020 they were again 4.2 million.

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Hartwig Masuch himself made music and has been directing BMG since 2008.

(Photo: Barbara Dietl / BMG)

BMG boss Masuch, 67, was a musician himself and has been in the business for a long time; he is considered one of the pioneers of the Neue Deutsche Welle in the 1980s (when there were almost only records). Masuch believes the vinyl boom is not over yet: “We expect it will gain even more momentum in the long run. We will systematically make our entire repertoire available on vinyl. The problem: demand is so high that companies cannot keep up with production. “The production capacities of vinyl records are currently very limited, the waiting times are several months”, specifies Masuch. The raw material is scarce in the pandemic, many baling factories have stopped production after the decline of the Schallpatte in recent decades. Today there is hardly anyone left who produces records for the music industry.

The record player becomes a “cultural declaration”

But habits are changing. “For many, the record player becomes a cultural statement,” Masuch explains, adding, “For them it is the experience of consciously listening to a vinyl record and not having to go through a playlist. organized by a streaming service. ” So music as an experience. No wonder the sales of turntables are also increasing significantly: they recently increased to around 63,000 units in the first half of 2021. The shelves of electronics stores are full of different models, and Stiftung Warentest recently returned for the first time. in 36 years released a major overhaul of the turntable.

This is good news for the battered music industry: record sales are significantly higher and more and more luxury versions are offered. At the boss of BMG Masuch, for example, there is an elaborately designed box on the desk, an album by Rolling Stone guitarist Keith Richards, the outside is modeled on the light wood of his Fender guitar, inside there is not only an LP and a single, but also facsimiles of behind-the-scenes passes as well as illustrated and textual volumes. True fans pay $ 750 for this.

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Sales of record players are also on the rise.

(Photo: Angel Santana Garcia / imago)

None of this can hide the fact that the music market is changing fundamentally like no other. More recently, streaming services Spotify, Deezer, Apple, and Amazon Music have been instrumental. But now there is another great source of income and that is Youtube, the video portal which is owned by the powerful Google Group. “Youtube is becoming more and more relevant to the whole music industry, around the world,” says Masuch. This is especially true in developing countries, like South America. Income would increase considerably. “Youtube is therefore particularly interesting to address fans and consumers,” said the boss of BMG.

“Big capital has discovered the music market.

At the same time, the market as a whole is getting bigger and bigger. It is estimated that the volume of musicians’ rights that will become available in the coming years will amount to between $ 200 billion and $ 250 billion. Masuch says, “A lot is going to change there.” And BMG, behind the industry giants Universal Music, Sony and Warner by far the number four in the market, wants to take advantage of it. BMG has been very active over the past ten years and has completed over 100 significant transactions, at that time, according to its own statements, at prices significantly lower than those for which the rights books are currently being traded.

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Big deal: Singer Tina Turner has now sold her song rights to BMG.

(Photo: Georg Wendt / dpa)

But now the prices are rising and more and more financial companies are entering the rapidly growing market in search of investment opportunities and good returns. “Big capital has discovered the music market,” explains Masuch. Universal Music has just successfully gone public in Amsterdam. What’s important to artists and financial investors in this situation is efficiency and service, Masuch says. This is why BMG and the American financial investor KKR have entered into an alliance to acquire new music catalogs. The two partners know each other well. Together with KKR, Bertelsmann rebuilt the music industry from 2008 after the departure of the Gütersloh family years earlier. Then KKR said goodbye, Bertelsmann took over all the shares. BMG’s activity is doing well: in the first half of 2021, sales amounted to nearly 300 million euros for an operating result of 50 million euros.

“The list of great established artists who are looking for a reliable partner in the market is very long,” says Masuch. BMG would like to take advantage of this with KKR. About 70 transactions with a volume of about $ 1 billion are said to be “in progress”. BMG has just acquired an extensive portfolio of rights for Tina Turner. Their tubes will soon be available again more and more in vinyl.

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