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1999: The Year the Record Industry Lost Control
It was supposed to be just another bumper year for the record business. The industry was firing on all cylinders and growing exponentially; CD was king and bringing in phenomenal sums of money. The good times, culturally and financially, were rolling.
Yet by December 1999, at the dawn of the new millennium, a bomb had been set squarely under the core business – the arrival of digital as we know it today.
The story of 1999 is one of who had it, who lost it and who wanted more. It was a year of chaos for an industry that had shaped the 20th century, had grown complacent and was quickly having to adapt to a very different and an infinitely less certain future. It was one of the most pivotal, lucrative, exciting and turbulent years the record business has ever experienced.
And this is how it happened.
Yet by December 1999, at the dawn of the new millennium, a bomb had been set squarely under the core business – the arrival of digital as we know it today.
The story of 1999 is one of who had it, who lost it and who wanted more. It was a year of chaos for an industry that had shaped the 20th century, had grown complacent and was quickly having to adapt to a very different and an infinitely less certain future. It was one of the most pivotal, lucrative, exciting and turbulent years the record business has ever experienced.
And this is how it happened.
747 pages, Kindle Edition
Published March 7, 2024
10 people are currently reading
92 people want to read
About the author
Eamonn Forde
9 books5 followersEamonn Forde is a music business journalist who has been writing about all areas of the music industry for the past two decades. Prior to this, he worked in academia, completing his PhD in 2001. He is currently reports editor at Music Ally and a regular contributor to IQ, The Guardian, The Big Issue, Q and others. He was twice named Music Business Writer Of The Year at the Record Of The Day Awards. His first industry book – The Final Days Of EMI: Selling The Pig – was published by Omnibus in February 2019.
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March 8, 2024
“The Web will be a great place to find music. It will make the music of the world more accessible” – Todd Rundgren, 1998
“We will never be in the business of making our music digital and degrading its value dramatically as long as we are continuing to sell CDs” Sir Colin Southgate, EMI CEO, 1996
For some lucky people, listening to music is all they need. Some don’t even bother to collect all the releases, like that rare Portuguese CD single with the extra hidden live tracks. A somewhat smaller number, like Eamonn Forde, and like me (I think there must be more of us) are also fascinated by the business of music.
This is Forde’s third industry focused tome, having previously written about the demise of EMI (The Final days of EMI: Selling The Pig) and the management of musical estates (Leaving The Building: The Lucrative Afterlife of Music Estates). It’s a lot more of an engaging read than it sounds, honest. This time Word and Q alumni Forde has chosen 1999 as the tipping point that saw the record industry not so much disrupted, but dumped on it’s head, as the internet and digital music kicked the legs out from the record companies and retailers.
Forde divides the book into sections that explore a number of different themes; the record companies, the retailers, the emergence of the mp3 as the dominant digital music format, pirates and those charged with bringing them to account as well endeavors such as digital copy protection. There are some wonderfully cheesy chapter titles - “I want my mp3”, “Who do you think you CD-R”, “Marauder on the Dancefloor” … you get the idea. Bowie’s gets a section to himself on account of how keen he was to embrace digital (remember he had his own ISP, BowieNet) and how accurate his vision proved to be.
There is a wealth of detail in the book and Forde’s research is fastidious. A sizable number of record company / retail executives were interviewed by Forde, including Edgar Bronfman, who created Universal out of Seagram and PolyGram, the biggest player in the 90’s and still a musical behemoth to this day. He also makes extensive use of articles for trade press sources like Music Week to provide the context for much of the story. There’s a generous tip of the hat to the British Library at the end as critical facilitator of his research.
The book opens with an assessment of the record companies, who had turned CDs in to a cash cow. Having overseen and engineered a significant profit premium through the migration from vinyl to CD, Forde describes the toxic mix of defensiveness and disbelief that their dominance could be challenged alongside a total, determined lack of vision that paved the way for first Napster, then Apple then Amazon not just derail their gravy train, but eat it with their lunch and dinner too.
Record companies had used CDs to generate a tsunami of cash. As a new format CDs offered a premium return over vinyl and cassette, the price pushed to almost exactly double that of an LP. CDs rejuvenated back catalogue by selling consumers product they already bought in another format. But there was even more to grab as the contacts with musicians didn’t include this new format, so the royalty rates were pegged 20% lower whilst doubling the amounts artists were charged for packaging.
Forde provides an important reminder of the timeline of key events. The first CD was Billy Joel’s “52nd Street”, released in Japan in 1982. The first CD player went on sale in the UK in 1983 for £545 (close to £1.8k today). It took EMI 4 more years to see the value of putting The Beatles onto CD. And 2010 before it made iTunes. Meanwhile the first website established in 1991, and by 1999 there were over 3 million. iTunes appeared in 2001, superseded by Apple Music in 2015. Napster went bankrupt in 2002 but the name lives on, bought and sold half a dozen times, most recently as 2022. Spotify had been active in Europe sine 2008 reaching the US in 2011.
Initially pigeon-holing the internet as nothing more than a marketing tool, the major record companies refused to accept it as a selling opportunity, not just in the early days of dial up connections and floppy discs, but even past the point where companies like MP3.Com proved the viability of online licensed sales despite being denied content from the majors. Although each record company had advocates, particularly amongst the independents, the majors remained Canute like. Mistrustful of licensing any of their songs, fearful of seeing their margins from CDs erode, record companies prioritized growth by acquiring each other, unwilling or unable to consider whether digital music was a threat or an opportunity. Forde gives numerous examples of the industry’s technical illiteracy, just one example being the special permission Warner’s required staff to get for an office internet connection – in 1999 - whilst other companies had staff working on computers at home because they weren’t connected at work.
The picture for retailers was even bleaker. Stuck in an abusive but co-dependent relationship with record companies they didn’t trust, they found themselves not knowing whether to stick (bank on fans favouring physical purchases over digital) or twist (abandon physical and embrace digital, or at least try them in parallel), which made going bust almost inevitable.
Pivotal in the story of the decline of the CD is the humble single. Having transitioned from 45’s to CD singles, the major record companies saw an opportunity to build even more revenue by abandoning CD singles (in the US at least) due to costing as much to manufacture as a full CD album, but retailing for less than half as much. Sales were expected to migrate to full albums, and this it cleared the way for CD album releases that were little more than singles padded out with much more mediocre filler. Unmentioned is the close cousin which was the “Best of” CD that would have one previously unreleased track. The unintended consequence of their avarice – and what was evidently a lack of understanding of what their customer base actually wanted – they unwittingly fueled interest in downloading, which at the time the majors were still refusing to license.
A problem with such fastidious research is that as much as it is a strength, it can also get in the way of the story. Forde’s writing style is easy to follow but the book has numerous detours into the subjects like millennium bug, format wars (mp3 vs mp1 and mp2 , AAC) and the IPO aspirations of digital music start-ups that while they add a lot more content, it’s at the expense of moving the story forward. Forde talked extensively to executives in the industry at the time, but given how many tell similar stories there’s a diminishing return to namechecking and giving us the job title of each one.
There’s also a sense that the book rather fizzles out, closing with a look at Napster, simultaneously seen as the devil incarnate but also attracting venture capital investments as well as eventually funding from BMG (followed by ownership). Forde acknowledges that Joseph Menn’s “All The Rave: The Rise & Fall of Shaun Manning’s Napster” is a definitive account so he restricts his account to Napster’s early days which rather robs the tale of final dénouement where pretty much everyone loses their shirt.
That said, this is an epic piece of work, and in terms of the ascent of digital it’s only telling the first part of the story, bowing out before downloads die an even quicker death than CDs as access to music replaces ownership as the next major market disruption, and the majors prove that old dogs can get very rich once again from the old tricks they already learned. Hopefully Mr Forde will be back at the British Library soon.
“We will never be in the business of making our music digital and degrading its value dramatically as long as we are continuing to sell CDs” Sir Colin Southgate, EMI CEO, 1996
For some lucky people, listening to music is all they need. Some don’t even bother to collect all the releases, like that rare Portuguese CD single with the extra hidden live tracks. A somewhat smaller number, like Eamonn Forde, and like me (I think there must be more of us) are also fascinated by the business of music.
This is Forde’s third industry focused tome, having previously written about the demise of EMI (The Final days of EMI: Selling The Pig) and the management of musical estates (Leaving The Building: The Lucrative Afterlife of Music Estates). It’s a lot more of an engaging read than it sounds, honest. This time Word and Q alumni Forde has chosen 1999 as the tipping point that saw the record industry not so much disrupted, but dumped on it’s head, as the internet and digital music kicked the legs out from the record companies and retailers.
Forde divides the book into sections that explore a number of different themes; the record companies, the retailers, the emergence of the mp3 as the dominant digital music format, pirates and those charged with bringing them to account as well endeavors such as digital copy protection. There are some wonderfully cheesy chapter titles - “I want my mp3”, “Who do you think you CD-R”, “Marauder on the Dancefloor” … you get the idea. Bowie’s gets a section to himself on account of how keen he was to embrace digital (remember he had his own ISP, BowieNet) and how accurate his vision proved to be.
There is a wealth of detail in the book and Forde’s research is fastidious. A sizable number of record company / retail executives were interviewed by Forde, including Edgar Bronfman, who created Universal out of Seagram and PolyGram, the biggest player in the 90’s and still a musical behemoth to this day. He also makes extensive use of articles for trade press sources like Music Week to provide the context for much of the story. There’s a generous tip of the hat to the British Library at the end as critical facilitator of his research.
The book opens with an assessment of the record companies, who had turned CDs in to a cash cow. Having overseen and engineered a significant profit premium through the migration from vinyl to CD, Forde describes the toxic mix of defensiveness and disbelief that their dominance could be challenged alongside a total, determined lack of vision that paved the way for first Napster, then Apple then Amazon not just derail their gravy train, but eat it with their lunch and dinner too.
Record companies had used CDs to generate a tsunami of cash. As a new format CDs offered a premium return over vinyl and cassette, the price pushed to almost exactly double that of an LP. CDs rejuvenated back catalogue by selling consumers product they already bought in another format. But there was even more to grab as the contacts with musicians didn’t include this new format, so the royalty rates were pegged 20% lower whilst doubling the amounts artists were charged for packaging.
Forde provides an important reminder of the timeline of key events. The first CD was Billy Joel’s “52nd Street”, released in Japan in 1982. The first CD player went on sale in the UK in 1983 for £545 (close to £1.8k today). It took EMI 4 more years to see the value of putting The Beatles onto CD. And 2010 before it made iTunes. Meanwhile the first website established in 1991, and by 1999 there were over 3 million. iTunes appeared in 2001, superseded by Apple Music in 2015. Napster went bankrupt in 2002 but the name lives on, bought and sold half a dozen times, most recently as 2022. Spotify had been active in Europe sine 2008 reaching the US in 2011.
Initially pigeon-holing the internet as nothing more than a marketing tool, the major record companies refused to accept it as a selling opportunity, not just in the early days of dial up connections and floppy discs, but even past the point where companies like MP3.Com proved the viability of online licensed sales despite being denied content from the majors. Although each record company had advocates, particularly amongst the independents, the majors remained Canute like. Mistrustful of licensing any of their songs, fearful of seeing their margins from CDs erode, record companies prioritized growth by acquiring each other, unwilling or unable to consider whether digital music was a threat or an opportunity. Forde gives numerous examples of the industry’s technical illiteracy, just one example being the special permission Warner’s required staff to get for an office internet connection – in 1999 - whilst other companies had staff working on computers at home because they weren’t connected at work.
The picture for retailers was even bleaker. Stuck in an abusive but co-dependent relationship with record companies they didn’t trust, they found themselves not knowing whether to stick (bank on fans favouring physical purchases over digital) or twist (abandon physical and embrace digital, or at least try them in parallel), which made going bust almost inevitable.
Pivotal in the story of the decline of the CD is the humble single. Having transitioned from 45’s to CD singles, the major record companies saw an opportunity to build even more revenue by abandoning CD singles (in the US at least) due to costing as much to manufacture as a full CD album, but retailing for less than half as much. Sales were expected to migrate to full albums, and this it cleared the way for CD album releases that were little more than singles padded out with much more mediocre filler. Unmentioned is the close cousin which was the “Best of” CD that would have one previously unreleased track. The unintended consequence of their avarice – and what was evidently a lack of understanding of what their customer base actually wanted – they unwittingly fueled interest in downloading, which at the time the majors were still refusing to license.
A problem with such fastidious research is that as much as it is a strength, it can also get in the way of the story. Forde’s writing style is easy to follow but the book has numerous detours into the subjects like millennium bug, format wars (mp3 vs mp1 and mp2 , AAC) and the IPO aspirations of digital music start-ups that while they add a lot more content, it’s at the expense of moving the story forward. Forde talked extensively to executives in the industry at the time, but given how many tell similar stories there’s a diminishing return to namechecking and giving us the job title of each one.
There’s also a sense that the book rather fizzles out, closing with a look at Napster, simultaneously seen as the devil incarnate but also attracting venture capital investments as well as eventually funding from BMG (followed by ownership). Forde acknowledges that Joseph Menn’s “All The Rave: The Rise & Fall of Shaun Manning’s Napster” is a definitive account so he restricts his account to Napster’s early days which rather robs the tale of final dénouement where pretty much everyone loses their shirt.
That said, this is an epic piece of work, and in terms of the ascent of digital it’s only telling the first part of the story, bowing out before downloads die an even quicker death than CDs as access to music replaces ownership as the next major market disruption, and the majors prove that old dogs can get very rich once again from the old tricks they already learned. Hopefully Mr Forde will be back at the British Library soon.
November 24, 2024
-Pro: the biggest pro, which easily outweighs all of the cons combined, is that this over 500 page book about a relatively niche topic manages to weave an interesting story accessible to anyone, with twists, turns, and playful humor. This book, despite its size and potentially foreboding subject matter, is an interesting, fun and easy read.
-Con: Names. Sorry, I really can’t keep track of who Bill, Steve, Brian and Larry are. I know they’re executives of this record label or that music retailer. But you introduced this person to me 200 pages ago. Give me a refresher, please.
-Con: Chronology. The way the book is organized makes it seem that the events discussed took place in the order in which they’re mentioned in the book. This is not the case. Napster is discussed toward the end of the book, but the Napster debacle was actually concurrent with the stand-off between the labels and music retailers over selling CDs in grocery stores, and with the labels’ battle with MP3.com, for example. Both were discussed much earlier in the book than Napster.
-Con: The author has a viewpoint. This is just my personal preference, but in this type of anthology, I prefer when the author simply reports the facts and provides light analysis, allowing the reader to come to their own conclusions, rather than attempting to convince the reader of what is “right” and what is “wrong”.
-Con: Proofreading. Minor nitpick, but this book contains quite a few typos.
-Con: Names. Sorry, I really can’t keep track of who Bill, Steve, Brian and Larry are. I know they’re executives of this record label or that music retailer. But you introduced this person to me 200 pages ago. Give me a refresher, please.
-Con: Chronology. The way the book is organized makes it seem that the events discussed took place in the order in which they’re mentioned in the book. This is not the case. Napster is discussed toward the end of the book, but the Napster debacle was actually concurrent with the stand-off between the labels and music retailers over selling CDs in grocery stores, and with the labels’ battle with MP3.com, for example. Both were discussed much earlier in the book than Napster.
-Con: The author has a viewpoint. This is just my personal preference, but in this type of anthology, I prefer when the author simply reports the facts and provides light analysis, allowing the reader to come to their own conclusions, rather than attempting to convince the reader of what is “right” and what is “wrong”.
-Con: Proofreading. Minor nitpick, but this book contains quite a few typos.
November 5, 2024
Fascinating read and great insight into a tumultuous time in both music and technology! Loved all the primary modern interviews with so many key players from the time period and getting their post mortem thoughts on what transpired. I appreciate that many realized how wrong they were about their thoughts on where the industry would be going into the 2000s at the time. But the author also does a great job showing how none of us were prepared for how much technology would change our lives in the 2000s. Highly recommended read for those interested not just in the music industry, but the early dawnings of Silicon Valley and the internet.
March 21, 2024
An Interesting book which makes technical events fascinating as a fan of music
I liked the range of interviewees
A very minor note it would have been nice in the appendices to note HMV survives even in reduced form.
I liked the range of interviewees
A very minor note it would have been nice in the appendices to note HMV survives even in reduced form.
Did Not Finish
March 17, 2026Stopped reading. Too academic
Displaying 1 - 5 of 5 reviews