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Music formats and law: commercialisation of 45-rpm records

The iPod, iTunes, MP3, Blu-ray and Digital Rights Management are now familiar to us.

It may seem the technological, commercial and legal competition between various music formats vying for the digital music future is taking us into a radically new era. It is. It's changing valuations, ratings, royalites and revenues.

But the moves being made by the players have historical precedents. We can learn to be better at technology forecasting if we know that history. It can help whether your area of innovation is music or kitchen sinks.

Speed war begins

Consider how the humble 45-rpm record became a dominant format for popular music from about 1955 and for decades after. My interest arises as a technology, IT and entertainment industry lawyer. This record format played a part in adding terms and expressions such as "singles", "one-hit wonder", "A-side and B-side", "number one with a bullet", "top 40" and "payola".

Leaving aside the formats that came before and after them, first there was the 78-rpm, then the 33⅓-rpm format versus the 45-rpm format for music records. RPM stands for "revolutions per minute", the number of times a gramaphone record spins around per minute. The 78 revolved 78 times in a minute, the 33⅓-rpm that many times and the 45-rpm that many times.

By 1948 the 78-rpm was a mature and established format for recorded music. Victor (which became RCA Victor in 1946) would alone sell a billion 78s by mid-century.

So why did RCA Victor shift in 1948 to kill the 78 and replace it with the seven-inch 45-rpm format for records? Also, how did RCA Victor go about commercialisation of the 45? It's a story about personal and corporate rivalry, timing, consumer trends and brilliant execution of classic commercialisation logic.

The story is told in loving detail in the book "45 RPM: The History, Heroes & Villains of a Pop Music Revolution". The triggering moment was a Sarnoff-Paley meeting in April 1948. David Sarnoff (1891–1971) and his RCA Victor team were invited to meet with William S. Paley (1901-1990), who led Columbia Broadcasting System. At the time these were the two biggest record companies in the US.

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David Sarnoff, Time 1951

By 1948 Paley's techies at Columbia had perfected the 33⅓-rpm long-play (LP) record. In their vision it would replace all 78s. They wanted their competitors to standardise on the new proposed 33⅓-rpm format.

At the meeting Paley's proposed to Sarnoff that RCA Victor should use Columbia's 33⅓-rpm format and help make the recorded music pie a bigger market for RCA Victor and other record companies.

At the meeting Sarnoff immediately recognised the potential of the high fidelity of the 33⅓-rpm format. An added benefit is that they were made of vinyl, a less brittle substance than shellac used for 78s.

Yet Sarnoff refused Paley's licensing deal under which Columbia said it would press RCA Victor's music on 33⅓-rpm format LPs for a reasonable fee until RCA Victor built its own long-play record presses. Sarnoff did not want to make the pie bigger for all, he wanted more of the pie for RCA Victor.

Columbia seems to have simply been motivated by a desire to avoid a format war if 33⅓-rpm format records were indeed successful in replacing 78s. Columbia had no patent on the 33⅓-rpm format (aspects of it had been in the public domain for years) and only a trade mark over the term "LP". Yet Sarnoff said no.

How the 45 was commercialised

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RCA Victor 45-rpm player, 1949

Necessity is the mother of invention. Famous for his ego, and back at his New York Rockefeller Centre headquarters, Sarnoff insisted that his engineering team find an alternative format to compete against 33⅓-rpm format LPs. They settled on the 45-rpm format remarkably quickly because it had been developed but kept in Victor's research labs with no place to go in the late 1930s. It could fit less music on it, but it was perceived to have several advantages which could distinguish the format in the market. Records in the 45-rpm format were first released in early 1949 together with a thick spindle RCA Victor record player.

Over the next few years RCA Victor turned the 45-rpm into one of the most successful formats in recorded music history. How did it do this? "45 RPM " includes many moves and industry developments that contributed to the successful commercialisation of the 45 in the five years from the April 1948 meeting to mid-1954. They include the following things RCA Victor did or gained from:

  • Maintaining confidentiality during additional R&D work for the 45 in a project begun after the Paley-Sarnoff meeting and code-named "Madame X".
  • Selection of technology which had significant superior performance - both the LP and the 45 used narrower grooves compared to the 78.
  • Applying the benefits of vertical integration - RCA Victor used its capacity as a manufacturer, unlike Columbia, of phonograph machines; in modern parlance RCA Victor had hardware and software businesses.
  • Promoting to an appropriate demographic - the convenience and price of 45s suited their initial major target market - young children, who by the mid-50s had become teenagers hooked on buying 45s.
  • Improving graphic design - instead of treating record sleeves as a utilitarian envelope (as 78s tended to do), their cover art was improved thus from 1949 colour and photos regularly appeared on sleeves.
  • Targeting market or channel niches to gain near-monopoly power - the 45 targeted popular music, rather than classical and theatre music that went onto LPs.
  • Entering into market-shaping licensing deals by offering the fourth largest record company, Hollywood-based Capital Records, a deal too good to refuse. The deal was that RCA Victor would press 45s for Capital until Capital could set up its own production facility in Los Angeles. By January 1950 RCA Victor had all of the Big Six record companies on board producing 45s (ie RCA Victor, Columbia, Decca, Capital, MGM and Mercury).
    Image
    Seeburg M100B Jukebox, 1950
  • Advertising the benefits of the 45, eg their fidelity over 78s but particularly the ability to have automatic record changers at a speed faster and safer for the platter than any other format at the time. In all RCA Victor allocated US$2 million to launch the 45 in the first six months.
  • Adding style and making selection easier by colour-coding 45s into seven "sparkling identifying colors" to match the style of music, eg midnight blue for George Gershwin's Rhapsody in Blue.
  • Riding off related technologies, namely the jukebox revolution. This was boosted in 1950 by Seeburg, a Chicago manufacturer, which unveiled the M100B jukebox, which held 50 singles.
  • Catching style and fashion waves, namely the rise of rhythm and blues and other African-American styles, with independent labels hungry to manufacture on them, including new market entrants such as Chess, Aladdin, King/Federal, Duke/Peacock, Modern, Gotham, Specialty, Jubilee, Imperial, Atlantic and many others.
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Capital Records Building, LA

As a format the 45 won over the 78 by 1954. A year later Capital Records began construction of its new LA corporate headquarters, conceived by an architectural graduate student named Lou Naidorf to resemble a stack of 45 records on a turntable. Then in 1955, RCA Victor acquired young Elvis Presley from tiny Sun Records and so began the invention of the teenager.

The teenager, a term hyphenated at the time as "teen-ager" due to its recent coinage, came to centre stage and remained the 45s core market through the 50s and 60s.

Six axioms for successful technology commercialisation

This story of the 45 reflects some of the concentrated axioms long observed in technology commercialisation.

The success of the 45s is grounded in what we can recognise as classic commercialisation logic. Useful here are the following six axioms, principles and prerequisites for successful technology commercialisation, as recorded in the brilliant Betz technology management book referenced below.

  1. Unless a new technology offers really new functionality or significant superior performance, it will not succeed as an innovation.
  2. Technologies are systems, and until the system as a whole is complete and competent enough for an application, a new technology cannot succeed.
  3. A new technology defuses into use for several reasons, and the rate of diffusion varies.  Accordingly the rate at which a new market grows depends on many factors.
  4. Although the customer determines ultimate success or failure of an innovation, the criteria on which a customer judges may be multidimensional and customer judgment may change over time.
  5. Successful products in a new technology depend as importantly on standards and infrastructure as on performance.
  6. Because of a variety of factors, both technical and economic, a radically new technology usually requires a new business organisation for successful innovation.

Keep this as a checklist when you are next evaluating whether your technology or offering is ripe for effective commercialisation.


References:

Jim Dawson and Steve Propes, 45 RPM: The History, Heroes & Villains of a Pop Music Revolution (Backbeat Books, San Francisco 2003).

Frederick Betz, Strategic Technology Management (McGraw-Hill, New York, 1994).


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