Not All Vinyl Is Created Equal: Why the Music Industry Opportunity Remains

Last week, the Wall Street Journal made a declaration that cut to the heart of this record collector and music industry professional: that the “vinyl boom” is over.
The article cited Nielsen data that shows vinyl sales plateauing this year, after years of explosive growth. This doesn’t surprise me and shouldn’t surprise anyone who works in music or manufacturing. For years, the plants that survived the downturn had the opportunity to ramp up operations and get back to full machine utilization. And record labels, as WSJ called out, had an opportunity to reprint their back catalogues.

But the article also told the story of a decline in the quality of vinyl production and why two of my favorite musicians, Gillian Welch and David Rawlings, went as far as to buy their own vinyl cutting equipment to prevent cheap production of their music.
If the vinyl boom is over, why would artists like Welch and Rawlings spend over $100,000 on their own machinery? And why does it still take bands I work with up to seven months to get records repressed?
The vinyl boom isn’t over. Instead, vinyl is at a point where it can be a real industry again, one with competition, differentiation, substitutes and variable pricing. All of this should improve the experience for artists and fans alike, answering quality and cost concerns while creating new opportunities for the music industry to better target fans.

To better explain what’s happened in vinyl over the past few years, let’s imagine you’re the long-time owner of a widget manufacturing factory…. For years, there was high demand for widgets. Companies paid you to make widgets of all shapes and sizes, which they would retail to consumers. You competed for business against other widget factories and had to produce high quality, low cost goods to protect your margins and guard against rivals.
But then, widgets start going out of style…. Fidget spinners! That’s what the kids want these days! Slowly, your orders declined. You went from 24-hr operations to half-days and, even then, your machines were under utilized. Your rivals experienced this, too. Soon it was a race to the bottom, with some rivals calling it quits. You sold off some machinery, went through layoffs and tried to hang on to what accounts you have left. This kept you going for a few years as you became known as a novelty widget producer.
Then, a funny thing happened…. Widgets became cool again and you started seeing more orders come in. Since you were one of the only plants left and there was demand for your services, you raised your prices… and widget retailers were happy to pay.
Now, you are back at capacity and charging nearly triple what you did when widgets were commonplace. You’ve stopped accepting new orders because you have more than you can keep up with. You worry every morning that today might be the day your old machines break because no one makes spare parts for widget machines anymore. Sometimes you have to send out orders that you know aren’t quite right, but you know that if you lose that customer, there are ten more who want to take their place, so you keep cranking.
That’s more or less the story of vinyl manufacturing over the past thirty years. It is now at a point where all excess capacity is gone and record labels have exploited the back catalogs they were sitting on for the past two decades. It is natural that we are seeing a leveling off in terms of supply of records and, therefore, sales.
But the WSJ blamed a different culprit for the plateau: quality… and I haven’t seen any statistics that prove that. In fact, a UK study shared with the BBC in 2016 found that nearly 50% of new vinyl purchases aren’t listened to within a month of purchase. I found this hard to believe until I looked at my own collection and realized how few of my own new records I had opened. But then I opened a few records in my own collection and found warping, skipping and scratches….

During my time as a band manager, I experienced quality control issues like this on multiple pressings. Even though our engineers mastered digital tracks for vinyl, I found that other variables — like the plastic used to make the discs — could undermine the work done in the studio. This was especially frustrating because it took so long to get the final product. The last run of vinyl I ordered was quoted as a four month turnaround, but actually took nearly seven months. By the time I received the product on behalf of my client, it was far short on quality standards.
Artists feel this frustration, too. When one of my musician friends got her record back last month, she was upset to realize that the disc labels were on backwards — Side A’s label on Side B. “But what are you going to do,” she said, “send it back for a reprinting and wait another four months? My record release date is set, the tour is booked; I don’t have a choice but to put it out .” For an unsigned touring artist, like my friend, selling five pieces of vinyl at $25 can immediately put $100 profit in their pockets. Having product to sell on tour — even if it’s poorly made — can mean the difference between sleeping in the van or in a motel.

And a fan standing in front of the merch table at a dark concert venue can’t tell, at a glance, whether a piece of vinyl is good or bad. That’s not why they are buying it; they are buying it to support the band they love. This is just one type of vinyl buyer, but an important one to the bands who rely on merch revenue.
Nevertheless, if music fans are, in fact, buying less vinyl because of low quality and high prices like the WSJ claims, I would argue that it is a good thing. It would create room for new entrants to challenge the incumbents, create competition and holds plants more accountable on quality. It would also reduce the amount of time bands have to wait for vinyl to be produced.
This would also create a bigger market for record players and accessories. No matter how high-quality the record, it is going to sound like garbage if it’s played on a cheap record player (in the same way that high-definition digital tracks will sound low-res if you’re using $10 earbuds).
This moment in time should remind the music industry is that not all vinyl is created equal and there is an opportunity for better market segmentation. Plants are already tackling re-pressings, first-time pressings, indie albums, special editions and mass market products. Within those categories, there is room for both handcrafted vinyl, like the kind Gillian Welch and David Rawlings are pursuing, and mass production that prioritizes quantity over quality. There is room to serve the audiophiles, the hipsters, the novice collectors and the kids who want to own a piece of music for the first time.
The music industry has taken full advantage of the easy wins in vinyl that led to explosive growth. But vinyl’s boom isn’t over so long as the industry doesn’t rest on its laurels. Now is the time to introduce competition, differentiation and segmentation in to the mix, to better serve the variety of artists and fans who are invested in its success.
