Columbia Records

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Columbia Records

founded: 1886

Contact Information:

headquarters: 51 w. 52nd st. new york city, ny 10019 phone: (212)445-4321 fax: (212)445-5523 url: http://www.columbiarecords.com

OVERVIEW

Columbia Records has come a long way from its beginning at the end of the nineteenth century, although its product remains basically the same. From the 1880s to the present, the company has sold prerecorded sound. A music industry pioneer in both technology and content, Columbia Records continues operating as one of the four label groups of Sony Music Entertainment Inc. (SMEI), a global recording company. The other three label groups within SMEI are Epic Records Group, Sony Classical, and Relativity Entertainment Group.

Columbia Records originated in the late 1880s as the Columbia Graphophone Company of Bridgeport, Connecticut. The original company was built upon the experiments of scientist Charles Sumner Tainter and Chichester A. Bell. Bell, a cousin of telephone inventor Alexander Graham Bell, was an engineer. In 1886 the two received a patent for a wax-coated cardboard cylinder on which sounds could be recorded. Their machine, the Graphophone, made its official debut in Washington, D.C., three years later.

The relationship between Sony Corporation and Columbia Records dates back to 1968, when CBS, which then owned the Columbia label, joined with Sony in order to expedite its expansion into the Asian market. Twenty years later, Sony acquired the CBS Records Group. Sony Music Entertainment Inc., including the Sony division of which Columbia Records is a part, is a truly international recording company boasting more than 9,000 employees.

COMPANY FINANCES

As one of four label groups within Sony Music Entertainment Inc., Columbia Records does not independently report its financial results; they are included in the Sony Corporation's posted net earnings. For fiscal 1998, ended March 31, 1998, SMEI reported net earnings of $1.67 billion on revenue of $50.73 billion, compared with net income of $1.13 billion on revenue of $45.7 billion in fiscal 1997. In fiscal 1996, Sony's reported net earnings of $512 million on revenue of $43.3 billion, compared with a net loss of $3.3 billion on revenue of $44.8 billion in fiscal 1995.

ANALYSTS' OPINIONS

"What I have learned over the years is that with patience comes success," Columbia Records President Don Ienner told Billboard Magazine. "I've learned that desperate people do desperate things, and we're not desperate, and our artists are not desperate. Desperation is easy—to be wild and crazy and run the sprint—but I want to be here for the long-distance run. I'd rather run the marathon than the 50-yard dash."

HISTORY

The Columbia Records of today can trace its roots to the Columbia Graphophone Company and the nineteenth century experiments of Chichester A. Bell and Charles Sumner Tainter. Their invention, the Graphophone, which came nearly 10 years after Thomas Edison's tinfoil phonograph, employed a recording stylus that traced sound vibration-induced sound patterns onto a cylinder of wax-coated cardboard.

The North American Phonograph Company, a maker of office dictating machines, was spawned by the purchase of controlling interests for both the Graphophone and Edison's phonograph. Regional subsidiaries across the United States received rights. However, once the invention entered the entertainment field, a clear leader emerged. The Columbia Phonograph Company, a subsidiary for the Washington and Baltimore area, led the pack with its recordings of popular tunes, speeches, military marches, and other sounds.

In 1895, Columbia already was producing hundreds of cylinders a day. In 1891, Columbia offered its first catalog, and in 1900, it boasted a recording collection that surpassed the 5,000 mark. The cylinder, however, was a platform destined to be obsolete. By 1901, the Gram-O-Phone, an invention by Emile Berliner, which opted for flat discs with a lateral-cut track, had proven itself as the better quality, longer-lasting platform. That same year, Columbia released its first seven-inch discs. By 1904, the company was producing 78 rpm discs, as well as double-sided records. Three years later, the company obtained the Velvet Tone record, an indestructible disc commissioned to Guglielmo Marconi. By 1914, Columbia had stopped producing cylinders and had become the Columbia Graphophone Company. The next technological advance came in 1948; Columbia released the 33 1/3 rpm long-playing record, which quickly became the industry standard for sound reproduction.

In addition to its role as a technological pioneer, Columbia led the way in terms of musical achievement. Stars of the Metropolitan Opera in New York saved their voices for posterity in Columbia recordings as early as 1903. The company contributed to the ragtime dance phenomenon with its 1911 release of "Alexander's Ragtime Band," by Irving Berlin. In 1916, Columbia set an American precedent of recording symphony orchestras when it captured the sounds of the New York and Chicago orchestras. The following year, New Orleans' Original Dixieland Jazz Band recorded at Columbia Studios in New York. By 1919, the record industry was worth $150 million, with Americans buying more than 25 million 78 rpm records a year. To strengthen its hold, Columbia acquired the Otto Heinemann Phonograph Corporation (Okeh) in 1926 and brought on board such stars as Louis Armstrong, Bix Beiderbeck, Clarence Williams, and Mamie Smith.

FAST FACTS: About Columbia Records

Ownership: Columbia Records is a division of Sony Music Entertainment Inc., which is a division of Sony Corp.

Officers: Don Ienner, Pres.

Employees: 9,000 in Sony Music Entertainment, Inc., which includes Columbia Records

Chief Competitors: Columbia Records' major competitors include: EMI Group; Philips Electronics; PolyGram; Universal Studios; and Viacom.

The 1930s saw further mergers and acquisitions within this industry. In 1934, the American Record Company-Brunswick Record Company (ARC-BRC) purchased Columbia and Okeh. Four years later, William Paley's Columbia Broadcasting System (CBS) bought ARC-BRC. Columbia soon began to sign recording contracts with artists, including the biggest names in jazz. Count Basie, Duke Ellington, Benny Goodman, and Billie Holiday were just a few of the many artists on the Columbia Recording Corporation's high profile roster.

CBS Records saw tremendous growth throughout the 1960s and 1970s. The Columbia House Company emerged as the company's direct mail order club, and by the end of the 1990s, it was operational as part of a joint venture with Time-Warner Inc., the world's largest direct marketer of music and videos. In an effort to expand into the Asian market, CBS joined the Sony Corporation to form CBS/Sony in 1968. Ten years later, CBS Records became the first U.S. record company to pass the billion-dollar mark, with worldwide sales of $1.2 billion.

In 1988, Sony Corporation acquired the CBS Records Group. Ten years later, Sony Music Entertainment Inc. was a massive global recording company with more than 9,000 employees worldwide. In 1994, Sony regrouped into four labels. One of these labels was the Columbia Records Group, made up of Columbia and the WORK Group, which in turn has its own family of labels. The other three label groups within SMEI are Epic Records Group, Sony Classical, and Relativity Entertainment Group.

STRATEGY

Columbia's strategy for success, in one word, is "innovation." Since its inception, the company has been in the forefront of technological innovation. At the end of the twentieth century, as a member of the technologically inclined Sony family, this trend remained unchanged. Likewise, it continues its role as a pioneer in the music industry.

In 1998, in a market saturated with new, high-priced musical products, the company adopted a new strategy: the "developing-artists retail program." With this approach, prices for albums by lesser-known, newer bands would be reduced until a certain quota were sold. Once the albums passed the targeted sales threshold, the price per recording would be raised to that of better known artists. This strategy encourages consumers to try unknown artists without having to spend the same mount of money they traditionally would have spent on an established artist.

Don Ienner, president of Columbia, has attributed his company's success to its commitment to developing its artists, its careful selection of a new management team, and a more open-minded outlook. "Two years ago, I started thinking we needed a new face," he told Billboard in 1996. "I felt we needed to get people in here who believed as strongly as I did in the artists at Columbia Records and in Columbia Records itself."

CHRONOLOGY: Key Dates for Columbia Records

1886:: Chichester A. Bell and Charles Sumner Tainter receive a patent for their Graphophone
1891:: Columbia Phonograph Company sends out a catalog of its popular tunes, speeches, and other sounds recorded onto Graphophone cylinders
1901:: Columbia releases its first seven inch disc when the Gram-O-Phone flat proves to be the better product
1904:: Columbia begins producing 78 rpm discs as well as two-sided discs
1913:: Columbia stops producing cylinders and becomes the Columbia Graphophone Company
1926:: Columbia takes over the Otto Heinemann Phonograph Corporation bringing over stars such as Louis Armstrong and Clarence Williams
1934:: American Record Company-Brunswick Record Company (ARC-BRC) purchases Columbia
1938:: CBS buys ARC-BRC
1948:: Columbia releases the 33 1/3 rpm long-playing record, which becomes the industry standard
1953:: CBS launches Epic Records
1968:: CBS forms a joint venture with Sony—CBS/Sony—to market American records in Japan
1978:: CBS Records becomes the first U.S. record company to pass $1.2 billion in worldwide sales
1988:: Sony Corporation acquires CBS Records to become Sony Music Entertainment Inc.; CBS/Sony becomes Sony Music Entertainment (Japan) Inc.
1994:: Sony reorganizes into four labels: Columbia Records, Epic Records, Relativity Records, and Sony Classical
1998:: Columbia adopts the "developing-artists retail program" to encourage consumers to try lesser-known artists

INFLUENCES

Columbia Records was among a number of record labels that had expressed unhappiness with what they saw as an unwelcome trend in the industry's Grammy nominations and awards. In recent years, industry insiders have increasingly complained that the nominations and awards seemed out-of-step with what was really happening within the U.S. recording business.

Responding to the Grammy's sensitivity to the industry's discontent, Columbia Records President Don Ienner said of the Grammys in early 1998: "They certainly have made an effort and a lot of it has paid off in a more well-rounded and responsible way of getting nominations and awards." Ienner admitted that key nominations for several Columbia artists accounted for at least some of his enthusiasm.

CURRENT TRENDS

The 1980s saw two revolutionary developments in the recorded music industry. The 33 1/3 rpm long-playing record, or LP, was on its way out. Sony, with help from CBS, introduced its compact disc in 1982. The new, laser driven medium, with its crystal-clear tonal quality, would spell the demise of the record-turntable paradigm that had dominated the industry for so long. At the same time, the music video was born. An artist could not succeed only on the merits of his or her music alone; no self-respecting pop musician could expect to hit the charts without releasing an accompanying promotional video.

The final decade of the twentieth century brought a number of changes for Columbia Records and the recording industry as a whole. Consolidation efforts that had brought Columbia Records and other labels into the Sony fold continued at a rapid pace throughout the business. In order to better compete, in 1994 Sony Music Entertainment Inc. reorganized its holdings into four label groups: Columbia Records Group, Epic Records Group, Relativity Entertainment Group, and Sony Classical.

PRODUCTS

Since 1994 Columbia Records Group has seen a number of chart successes. In 1996, the company managed to push the dormant band Journey back to Top 40 success. While Columbia continued to earn solid money with mainstay musicians such as Neil Diamond, Mariah Carey, and Alice in Chains, it also managed the successful debut of many new bands, including the Fugees, the Presidents of the United States Of America (which disbanded by 1998), dog's eye view, Nas, and Stabbing Westward. In addition to rock and pop music, the company boasts artists in many popular genres, such as rap, hip hop, country, and Latin.

At the end of 1997, Columbia Records released Diana, Princess of Wales: Tribute, a two-CD collection of recordings by some of the world's best known singers and groups. The collection raised money for The Diana, Princess of Wales Memorial Fund, and recordings represented an industry-wide collaboration between major record companies and top international artists.

CORPORATE CITIZENSHIP

Columbia Records and Sony Music Entertainment Inc. believe they have a responsibility to the communities in which they operate and attempt to give back to those communities whenever possible. In the spring of 1992, as part of the national "I Attend" be-in-school program, Columbia announced a series of surprise appearances by its recording artists at high schools across the United States. The program attempts to provide students with an incentive to attend school every day. For its part, Columbia awards a private concert (by a Columbia artist) to the participating school in each designated area that records the biggest overall percentage increase in attendance between January 26 and May 1, 1998.

GLOBAL PRESENCE

While Columbia Records is based in the United States, it is part of a huge international conglomerate operated by Japan's Sony Corporation. It draws talent and business from around the world. Columbia's recordings are sold around the globe, and its artists reflect the international diversity of Sony.

SOURCES OF INFORMATION

Bibliography

"columbia records." company profiles, 10 october 1990.

"corporate fact sheet." sony music entertainment inc., 1997. available at ttp://www.music.sony.com/music/pressinfo/corpfact.html.

"a history of columbia records and epic records." sony music entertainment, inc., 1997. available at http://www.music.sony.com/music/pressinfo/hist.html.

"sony corporation." hoover's online, 20 may 1998. available at http://www.hoovers.com/premium/profiles/41885.html.

verne, paul. "columbia thriving across the board." billboard, 7 september 1996.

"world of sony music: a thumbnail history of sony music." sony music entertainment inc., 1998. available at http://www.music.sony.com/world/aboutus/history.html.