Use It or Lose It

One casualty of the endless roll-up of entertainment, media and consumer electronic companies into ever larger “media conglomerates” is culture itself. An article in the New York Times two years ago (4/25/00) signaled BMG’s decision to curtail much of its classical production and called into question its long-term commitment to classical repertoire. BMG is the owner of the RCA Red Seal and BMG Classics divisions as well as RCA Victor Jazz and Bluebird labels spanning roughly 75 years of recorded history. Sony, the current owner of the Columbia Records Classics, Columbia Jazz and Legacy, is perpetually reassessing costs, code for library reductions. Universal Classics, the roll-up of Deutsche Grammophon, Philips, Decca, Polygram and Mercury Classics, arguably five of the richest classical libraries in the classical world, has severely trimmed the backlists of those once great catalogues to a mere sampling of their once great musical offerings . They also own Verve and Impulse. Warner Music a relatively minor player in classical was poised to acquire EMI, the original owner of Angel and current owner of Blue Note, along with Virgin to create the fourth player in the majors league. The deal was scuttled by larger rollup ambitions with AOL.

The merger of entertainment libraries, consumer electronics, and network distribution companies into global entertainment companies is occurring at a dizzying rate and largely without regulatory notice. In three decades, most of the relevant classics, jazz or indigenous “heritage libraries” have undergone at least one, if not more, changes of ownership. There is nothing intrinsically wrong with change of ownership; it happens every weekend at lawn sales. Heritage libraries, however, are not Tupperware. They evolve into cultural patrimony. There is a stewardship responsibility for cultural heritage, just as there is such a responsibility for historical places or environmental sanctuaries.

As the Anti-trust Division of the Department of Justice glances fleetingly at these international roll-ups and applies their “Does it create a monopoly?” criteria to the concept of “public good,” no consideration is given to the often-priceless cultural value of these libraries and their future stewardship. The same argument of course can be applied to book and film libraries

In the more regulatory-conscious sixties, the Anti-trust Division took apart Columbia Records saying that it was “vertically integrated,” owning everything from Columbia Artist Management to a chain of retail stores and everything in between. This was found to be anti-competitive. Columbia dutifully disintegrated. The reintegration of key elements of the Columbia holdings is complete and infinitely more powerful as it has now added the consumer electronics hardware and technology one needs for playback and storage. Today, we know it as Sony.

When mergers come up for regulatory scrutiny today, we do not pay much attention to transferring assets. They are private property. When does private property take on public interest? When it assumes overarching cultural, historical, social or environmental value. When it serves a broader public good. Recorded music libraries became “intellectual property” early in the century with amendments to copyright law and achieved full property status in 1976 earning the encircled P for a recorded phonogram. The “information age” was beginning in earnest and “intellectual property” became increasingly bankable as more sophisticated storage, broadcast and playback hardware made possible greater and greater revenues from its distribution, sale and licensing.

The genesis of many music libraries was entrepreneurial, driven by an individual’s fascination with music of the time. Like editors, they picked and chose carefully what and whom to record, embedding what they found in history. Whether it was conservatory or popular heritage, the likes of John Hammond, Norman Granz, the Erteguns, Leonard Chess, the Lomaxes, Mose Asche, Jack Holzman, the Rounders and Robert Craft sought out and recorded what has become a priceless musical patrimony.

Page two, April 14, 2002, William H. Schubart

Families, communities and nations define themselves by their cultural heritage. That cultural heritage has evolved from a mixture of artistic and commercial interests into what have become great broadband digital libraries that can be distributed in homes, schools, libraries and community gathering places. The original libraries were the lifeblood of small entrepreneurial businesses. Now they are the digital assets of global entertainment enterprises. As such, the criteria for, and commitment to, marketplace availability changes. A small business may thrive on aggregate sales of 50 units a month of each of 300 titles whereas a global enterprise will engineer its resources to generate sales bursts of millions of units of just a few titles. The unending demand for Billie Holiday, Hank Williams or the Budapest String Quartet’s recording of the late Beethoven Quartets may constitute little more than “evergreen” sales revenue, yet culturally it is no less important than the latest Britney Spears or InSynch release.

Perhaps the time has come to embed stewardship criteria in the regulatory review process. If AOL were to buy Angel, Verve & Rounder, would it not be appropriate to ask them to file a plan for stewardship, that is a plan to maintain general catalogue availability. AOL’s return-on-investment analysis will differ markedly from, say, Rounder’s. Inventory costs money. If sales do not warrant distribution of the entire catalogue at AOL’s scale, they might offer deleted titles, to an independent licensee at a mediated or statutory rate, much like the compulsory mechanical license in publishing, As a third option, they might donate the rights with a positive tax consequence to a recognized patrimony steward like Smithsonian Records or The Library of Congress.

It is apparent that some plan of cultural stewardship needs to be considered. This ought to apply to major literary, film and music libraries at the very least. There may well be a role here for the National Endowment for the Arts and the National Endowment for the Humanities as they are the statutory guardians of our culture, now that they have been paroled by Mr. Helms and the far right.

William H. Schubart is a former Chairman of Resolution, Inc., a media management and fulfillment company in South Burlington, Vermont and is formerly Chair of the Vermont Council on the Arts and the Vermont Business Roundtable and a co-founder of Philo Records.

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