IN LATE July, when record industry giant CBS laid off 300 employes -- 15 percent of its work force -- some observers did a quick reading of its pulse and declared the patient moribund and, possibly, incurable. They pointed to the dull, arthritic condition of radio, to the splurge of home taping and record rentals, to the fact that 84 percent of all records don't make back their costs. One headline shouted "The Day the Music Died." It was widely noted that concert attendance was down, that record sales were a "fraction" of the previous year.
As it turns out, that "fraction" was nine-tenths of the previous year's gross, an expected downturn during an extended recession -- and a great deal of that is attributable to illegal home taping. "There's as much recorded music being acquired by individuals in homes as ever, but there's less being paid for," says Stanley Gortikov, president of the Recording Industry Association of America. "In our henhouse, the poachers now almost outnumber the chickens."
Alan Greenspan, former chairman of the Council of Economic Advisors, estimates that up to $1 billion a year in lost revenues can be treated to home taping. Gortikov goes even further, saying that for every record budget today, another one is illegally taped.
"These aren't the best of times for any industry," adds Clive Davis, president of Arista Records and the man responsible for making Columbia Records an industry leader. "But the growth rate over the previous two decades was so extraordinary that when you get a decline, its effects and impact are exaggerated."
While reports of the record industry's demise are greatly exaggerated, the maladies linger on. There have been other disturbing periods: the 1940 copyright battle in which ASCAP withdrew all its licenses from radio, looking for a higher rate; the musicians' strike in 1942, which prevented any commercial recordings for almost two years; the shift in 1948 from 78s to long-players; the payola scandals in the '50s and '60s. Those storms were weathered, but one of the biggest battles looms ahead as advancing technology clashes with the concept of copyright.
Between 1960 and 1978, the industry experienced a strong upward spiral, from $600 million in sales in 1960 to $4.13 billion sales in 1978; sales more than tripled between 1968 and 1978. But those 1978 figures were inflated by such all-time sellers as "Saturday Night Fever,"(Illegible Line)