Friday, January 15, 2016

Why the So-Called "Vinyl Boom" May Be Bad News For Electronic Music

Written by David Garber — Dan Hill runs Above Board distribution, a London-based company that handles pressing and distribution agreements, commonly referred to as "P&D deals." His client rolodex namechecks iconic imprints like Crosstown Rebels, Rekids, and Hotflush Recordings, which work with Above Board to get records pressed and placed in retail outlets. At a time when vinyl sales in the US are at their highest since the introduction of the CD in 1989—reaching a whopping nine million albums in the first half of 2015, versus 14 million in the entirety of 2014—you'd think that business would be better than ever. Yet, even with skyrocketing sales industry-wide, the independent dance labels Dan represents—and Above Board itself—often feel like their records are getting lost in the mix.

"Record labels have had to accept that it takes a lot longer to make records now," Dan says over email, nodding to the much-chronicled production delays that are gripping the vinyl industry. As he recently explained to the Guardian, the long queues at record pressing plants have nearly tripled the time it takes for Above Board's inventory to get pressed, up from around four weeks to two-to-three months. "[Delays] harm cash flow if you pay out an artist advance, or spend on graphic design or mastering," he explains to me, "and it's taking a lot longer for labels to recoup this money."

The overload of albums contributing to these delays—and inundating the plants with extra orders—include high-profile pop albums like Adele's record-breaking 25, which sold 22,000 vinyl albums in its first week, the third-largest in Nielsen's history. According to Nielsen's 2015 music report, Pink Floyd's Dark Side of The Moon, The Beatles' Abbey Road, and Miles Davis' Kind of Blue all cracked the top ten in vinyl units sold. The number ten spot went to the Guardians of The Galaxy soundtrack. As articles have been suggesting for nearly a decade, vinyl is back in vogue; but now, it's reaching a whole new level of mainstream, and corporations are cashing in. There's even a star-studded show on HBO, quite literally named Vinyl.

You can buy records just about anywhere now, from online marketplaces like Discogs, Juno, and eBay, to local record shops, and yes—Urban Outfitters, which, contrary to popular belief, actually isn't the world's biggest retailer. That's Amazon, which sold more turntables than any other home audio product this past holiday season. Over in Britain, the country's biggest music retailer, HMV, sold a turntable every minute. There's even word of Whole Foods—and UK supermarket chain Tesco—adding records to their stock of grocery items.

With an allotted $222 million total revenue during the first two quarters of 2015—and headlines suggesting that services like Spotify and Apple Music, far from out-competing labels, might actually be contributing to rising vinyl sales with streams—there's a lot of money floating around in the record business right now. But is a vinyl boom, as journalists are calling it, really the best term to use? Or is vinyl just being marketed differently, by companies that have more power than most? And if that's true, how does all this impact independent dance labels?

As a world-renowned DJ and owner of Chicago's seminal house-centric record shop, Gramaphone, Michael Serafini has witnessed firsthand the changing
tides of record sales over the past decade. Serafini doesn't necessarily buy into the so-called "vinyl boom," in that he doesn't believe that new consumers being drawn to the fold actually care about records as a medium. Instead, he sees the change in sales as the result of major labels repackaging classic records as eye-grabbing collector's items, and non-music retailers utilizing the medium's "cool factor" to help sell other items. "Vinyl is a marketing tool for those places," he says of companies like Urban Outfitters. "They can afford to stock popular vinyl, whether it's classics or EDM, and bring in young people to pick up a record and buy a pair of pants."

They couldn't care less about what [people are] buying because they don't make much money off that—it's more about bringing attention to the bigger items," he continues. "The music they sell isn't for a true aficionado."

Major retail stores couldn't care less about what people are buying because they don't make much money off that—it's more about bringing attention to the bigger items. The music they sell isn't for a true aficionado." — Michael Serafini, Gramaphone Records

Serafini may have a point: a 2015 study by London-based ICM Unlimited discovered 34% of consumers buying records don't even own or use a turntable. When I talked to him over the phone, Above Board's Dan Hill said he noticed a sharp rise in classic, collector-style albums reissued from major labels in 2015, albums he stressed can usually be bought for mere dollars in a used record bin. After building the world's first pressing machines in the 1960s—then turning their backs on vinyl to sell CDs and digital music in the late 90s and early 00s—major labels are returning to the vinyl market, and they're crowding the indies out of the production line.

"When we first started doing Razor-N-Tape, we were on a six-week schedule, and now it's up to 12 weeks," says JKriv, one half of the Brooklyn-based independent label (with Aaron Dae) behind underground club hits by artists like Dimitri from Paris. "We have to work with much longer lead-times than we did before." Like many other dance imprints, R-N-T has suffered the consequences of what JKriv describes to me unequivocally as "major labels repressing useless crap that clogs up the plants that were used mainly by small labels like ourselves." Because of the delays, they've also experienced the added pressure of having to ready releases they want to sell at Record Store Day—a biannual celebration of vinyl that typically marks the highest-revenue days of year for labels and record stores alike—up to seven months in advance, due to an external mandate from the organization. But for labels that work record to record, planning that far ahead is a difficult task; there are too many moving parts to keep track of, including cover art, mastering files, and even the productions themselves.

Although electronic vinyl sales are technically increasing—last year's Nielsen report cited 572,000 LPs sold in the genre, versus 249,000 albums in 2012—the sharp rise in units over the last few years doesn't account for smaller, independent labels, whose finances may be on the decline. And with less money on hand, it's even harder to go up against the expensive premiums and massive orders that majors provide to plants.

Simply put, the existing vinyl production infrastructure can't keep up with the demand; according to data collected by the owner of the world's largest pressing plant, Tom Vermeulen, there are only 50 pressing plants worldwide, and 19 in the US. While the States have seen the opening of a handful of new plants over the last five years—including Stereodisk in NJ, Hit-Bound Manufacturing in NY, and a forthcoming Third Man Records plant in Detroit—few would-be entrepreneurs are in any rush to open up shop, due to the prohibitive cost of machinery.

The record world is the rare industry that hasn't evolved with advances in technology; machines run on old, out-of-production parts. According to a 2015 FACT article, a single pressing machine will run you upwards of $100,000, and plants have been known to shell out $5,000 for a single screw. Along with the machines, many of the people who perform tasks vital to the pressing process, such as electroplating and mastering, are aging out of the business. "People who master records have dropped off the face of the earth," says Serafini. "It's affecting the music, too, because when you press things on vinyl you have to make sure it's mastered properly, or it will compromise quality."

Ton Vermeulen, who owns Record Industry—the vinyl pressing facility in Haarlem, Netherlands that holds the title for the largest plant in the entire world—has seen the effects that major labels have had on production queues. Vermeulen bought the company in 1998, a time when business was at a decade-wide high, with sales at around $150 million worldwide over the course of the year. By 2006, those numbers had plummeted to under 50 million dollars, no doubt due in part to the rise of digital file-sharing. He stills runs the plant today, and does business with everyone from the so-called "big three"—Sony, Warner, and Universal—to local Dutch techno labels like Clone Records.

Record Industry produces around 30,000 records daily, operating 33 presses as well as an in-house mastering and cutting room; everything—including sleeve printing—is done under one roof. Currently, the plant maintains a steady stream of production from 7AM to 11PM daily, across two shifts; Vermeulen tells me he has hopes to increase output to 50,000 records a day, with the addition of a third. With the constant onslaught of orders, Record Industry struggles to satisfy impatient customers, both major and indie. "[Demand is] so much that we can't press everything in time and we're moving backwards," he says. "Of course, majors use a lot of our capacity, but smaller labels order big quantities as well."

Back across the pond, on a rainy fall day in New York, I paid a visit to Brooklynphono, a smaller plant owned by husband-wife duo Fern and Tom Bernich, a couple of underground dance music lovers who count NYC techno iconoclast Levon Vincent as a client and friend. As I pulled up to the cinderblock building in the rapidly gentrifying Sunset Park neighborhood of Brooklyn, a small stencil of a turntable on the door was the only indication of the operation going on inside. Upon entering, I was hit immediately by the smell of a variety of pungent substances and chemicals, complemented by an orchestra of pumping noises belonging to the plant's five presses, including a seven-inch press that was rescued from a local scrapyard.

Founded in 2005, Brooklyn Phono is one of only three plants currently operating in the city, including Brooklyn Vinyl Works and Hit-Bound Manufacturing. (Following the 2012 closure his long-running Brooklyn plant EKS, owner Will Socolov reportedly has plans to open up a new shop in the area). Tom and Fern have been in business for over 10 years, surviving through the slump of the late 00s into the busy period of the present. Unlike Record Industry, however, Fern says the higher demand hasn't had much of an effect on their standard, 2-3 month production lag-times. Brooklynphono currently has an output of 2000 12" records and around 750-1000 7" records per day—all pressed over a single, 8-hour shift. Over the years, Tom says, he and Fern have managed to streamline their operation to get the most out of their shifts, materials, and staff. They've designed their business to prolong the sustainability of their machines, instead of simply pressing as much as possible.

"The [profit] margin for us is much smaller [than it is for bigger plants], so if you're pressing large volumes and you're using four or five machines instead of three, you can make some money," Tom says. "The medium-sized guys are healthy, and the large companies with 20-plus machines have to be doing really well." According to Tom, for medium-sized plants like Brooklynphono, the key to turning a profit is through building a loyal fanbase and paying attention to quality. "If you make a good product and charge a reasonable price, you'll be here the next day," he says.

"If you make a good product and charge a reasonable price, you'll be here the next day." — Tom Vernon, Brooklynphono

Brooklynphono is no stranger to dealing with the majors, but the company does its best to keep up with orders from regular smaller clients, too. "We have the opportunity to make enough money and pad the nest to protect us in a dry spell," Tom says of working with the majors. "I understand taking in more work than you can consume and delaying a lot of smaller labels who have kept you going in the slow periods. We're fairly well-balanced so that we can keep up with everyone, but we charge a premium to the majors, which helps us keep up with [the bigger plants], and maybe make extra money to buy another machine or build something that'll be here for another ten years."

Independent dance labels have their own ways of surviving and thriving in the midst of the record glut. Justin Carter—co-founder of Brooklyn party collective and house and techno label Mister Saturday Night (with Eamon Harkin)—is a diehard wax fanatic. The pair started their label in 2012; as with the DIY parties they occasionally host on Saturday nights around the city (and every Sunday in the summer), they insisted on doing everything themselves, from stamping to distribution.

"We quickly became aware that there are these bottlenecks in the production system of records in the States," Carter tells me. "It's a pretty hobbled industry." After a couple of years, Mister Saturday Night realized they needed a bit of help getting to the front of the pressing line, especially amidst other labels paying more or further in advance. Eventually in 2013, they opted for a production deal with a company called Crosstalk, to whom they paid a commision to manage production and manufacturing while themselves retaining total ownership over the records and acting as distributors. Eventually, they moved on to a traditional P&D deal with a company called FIT Distribution in Detroit.

Along with said deal, Mister Saturday Night adopted the strategy of pressing two records at once. This offered them a way of staying ahead of inevitable pressing delays, allowing them to stockpile pressings in advance of anticipated release dates, instead of waiting for the pressings to arrive one by one.

"It's hard to know when things will get done." — Aaron Siegel, FIT Distribution

Decades-spanning British institution Mute Records, home to famed experimental electronic acts like Depeche Mode and Moby, has experienced the effects of the bottleneck in its own way, mostly with struggles to restock popular albums. "Titles like M83's Hurry Up, We're Dreaming have both suffered stock outages because repressing can sometimes take upwards up to 6 months," Mute's head of marketing and vinyl production, Nicole Blonder, says over email. While Mute tries to stay ahead of the game by re-ordering records well in advance, the label still has found itself without stock on a record for months. "Fans get frustrated, they don't understand, and we feel them," she says. "It's anxiety-producing to say the least, and hurts our bottom line at its worst."

Though many distributors who work with majors are profiting from the higher demand, those who work solely with indies are also feeling the pinch. Aaron Siegel of Detroit's FIT Distribution is no exception. With a client list that includes iconic dance labels in the US like Theo Parrish's Sound Signature and Juan Atkins' Metroplex, he says he's had to adopt tactics for getting around delays, and managing expectations between pressing plants and impatient label owners. "It pisses off the pressing plants when people constantly ask, 'When's it coming out?'" he says. "I don't say the release date; it's hard to know when things will get done."

For the independent record business to survive and thrive, it needs to find a way out of this bottleneck. It needs fresh, talented faces to pick up where many skilled artisans who perform tasks like mastering and electroplating have left off. It also needs new pressing plants, new pressing machines, and more sustainable ways of producing and maintaining them [Newbilt Machinery's new system is a great start, but still will run you upwards of $160,000]. Perhaps most importantly, as Michael Serafini predicted, it needs consumers to grow tired of buying gift item records, and for major labels to stop pressing them.

"Fans get frustrated, they don't understand, and we feel them." — Nicole Blonder, Mute Records

Of course, imagining a world full of pressing plants with shiny state of the art machines and non-existent lag-times is something of a pipe dream. "It's going to be someone who really has the passion for it," says Justin Carter says of the would-be plant entrepreneur. "Demand outstrips the supply chain, but it's not intense enough for someone to make a new pressing machine, which would probably take millions of dollars." Even with sales spiking, we're still world's away from the golden age of vinyl in 1973, when the singles industry alone was bringing in upwards of 500 million dollars in the US. "Even though there's more demand for vinyl, just how much more demand is there?" asks Carter. "We're not even getting close to the amount records produced during the age when if you wanted to listen to music, you had to buy a piece of vinyl."

Nevertheless, some people are still breathing new life into the industry. According to an interview with Pitchfork, there's rich vinyl aficionado Jack White, whose label Third Man Records has plans to open a 10,000-square-foot plant of glitzy new machines in Detroit. And as of last year, there's a similar operation in Kenilworth, New Jersey, called Sterodisk, a self-described "one-stop-shop" that includes a mastering studio and record-pressing facility. It was opened in 2015 by former Brooklyn record pressing plant employee Leandro Gonzalez and with only one semi-automatic machine, the plant specializes in high-quality, low-volume pressings, strictly for independent labels.

No matter the changing tides of the wider music market, one thing's for sure: in the dance community proper, vinyl is here for the long haul. Via email, American techno artist Ambivalent (aka L4-4A) suggests that true music fans and DJs will always be collectors at their core. "Every DJ I know who [plays vinyl] does it out of love and is a fan at heart," he says. "A real fan wants to own something that they can remember and hold." He continues, "I've never stopped buying vinyl, even though I also play music digitally, and that's always a reminder to me that it's not about utility, it's not about efficiency or convenience. It's about valuing something that lasts."

For the independent label owners working tirelessly to get their records pressed and shipped, it's not about making quick cash and selling millions of attention-grabbing albums; more than anything else, it's about getting the music out there on a format that sounds good and feels meaningful. "There's a laundry list of pros and cons of vinyls, so it's not really the best format ever, but it has its time and place," Tom admits to me over at Brooklyn Phono. "If somebody's put a lot of energy into pressing a record, and then there's a crowd of five or 10 thousand people enjoying it—then that's what it's all about."

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