Marc Takaishi

(Marc Takaishi)

Extended Play: Vinyl Fans Flocking to Format Creates Supply Issues

By Features FOXBusiness

Vinyl sales keep on rocking. Even in an age when you can listen to thousands of songs on your phone or almost anywhere, millions of people are returning to the roots of recorded sound on its original format.

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Well maybe not all the way back to “Mary Had a Little Lamb,” but vinyl fans will be seeking special editions and enjoying in-store concerts across the country on Saturday as part of the eighth annual Record Store Day celebrations, which have grown to become a big red letter day for many music shops.

“Record Store Day is, by a long margin, our busiest day of the year in terms of sales,” says Josh Madell, co-owner of New York City’s Other Music. “It brings attention and money to stores, it’s a big day.”

While Record Store Day was created to bring foot traffic back to the stores in an age of downloads from home, it also helped bring more attention—and sales—to the vinyl format. 

And what was initially dismissed as a trend has played on beyond a single day. “The reason I’m so bullish on vinyl is not how well Record Store Day has done, it’s how the other 51 weeks do year after year,” says David Bakula, senior vice president Industry Insights for Nielsen Entertainment. “Vinyl just keeps crushing where it was in the past. When there’s no promotion, people are getting it in quantities they haven’t (in a generation).”

Just Because A Record’s Got a Groove…

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The physical medium has gotten to be such a big business it’s disrupting the music industry again—this time from the bottom up.

Sales of the venerable platters have been rising exponentially in recent years, albeit from a low base, as digital downloads and streaming dominate the marketplace.

Nielsen reports vinyl sales reached 9.2 million units in 2014, a 50% leap from the prior year. And they haven’t slowed down, rising in the first quarter by 53% over the same period a year ago.

Some critics try to needle fans of the format by pointing out vinyl accounts for just six percent of physical music sold, while enthusiasts note the share is growing; sales have nearly quadrupled in the past half decade alone as the cd loses its appeal.

Observers say the vinyl movement has gone mainstream. Gotye’s 2012 #1 hit “Somebody that I used to know” included the line: “Have your friends collect your records” and Nielsen’s Bakula says, “It’s not just about new vinyl and ultra-hip vinyl, it’s still about people adopting vinyl. You are in the process of getting more customers.”

Another Record Year?

A closer look at vinyl sales reveals the very first Record Store Day (RSD) on April 19, 2008 was a tipping point for the industry.

And while there have been articles this year carping about how commercial the day has become and favoritism by labels and bands with exclusive content, that first RSD’s timing was propitious and the clarion call was met with enough enthusiasm to skip the needle from trend to zeitgeist.

Stephen Brower, Sr. VP of marketing and A&R development for Vanguard Records, is pragmatic on the subject, “(RSD) dovetailed at the moment the digital age became more prevalent, it was a recoil towards collectability and possess-ability. I think it was invented as a celebration of the independent record store, not to save vinyl. I think it’s a flashpoint in the renaissance.”

Making Music the Old Fashioned Way

While vinyl is flourishing again, the format’s production process could slow the comeback. Industry insiders note surging demand has caught the music business flat-footed and unable to supply discs fast enough. Plus the just-in-time inventory system does not work well for vinyl because it takes so long to get from press to the record store.

“The consumer is used to digital perfection,” explains Brower. “When you master the .wav file, it’s ready for consumption. With vinyl, it’s plating, pressing, and you have to review test presses. When we skirt close with an eight-week turn time, you hold your breath that the test press is correct.”

Source: Robert Gray

Grant McCallum, director of digital media with Barsuk Records,  explains another part of the supply issue is stocking, “Vinyl is nice for labels and distributors because it’s a one-way sale. Once it’s out the door we never have to worry about it again. The flip side of it is that stores are less likely to take risks on stock levels, as they know once they buy it they need to sell it.”

But McCallum says the bigger issue is getting them pressed in the first place: “My gut sense is that the biggest factor facing the continued growth of vinyl is the lack of pressing plants. Turnaround times continue to increase every year…Deciding on production quantities is much harder than it used to be. We’ve had to be less conservative since we know that if we run out of a title and have to start from scratch, it’ll be four plus months before we get more vinyl into stores.”

Other Music co-owner Madell concurs, “Production is a huge issue in the vinyl market because a lot of new releases and big releases are not available on vinyl when they should be…it’s either not available or sells out immediately and is not available again for weeks or months. If you miss that window, it’s not as easy to sell it again.”

Meanwhile, the record pressing plants are running full-tilt to keep cranking out the discs.

“We’re working 24 hours a day, six days a week,” says Jay Millar, director of marketing for United Record Pressing, North America’s biggest record plant. United opened in 1949, “the same year the 45 (rpm single) debuted,” notes Millar, adding that the Nashville facility turns out some 30,000-40,000 records per day in claiming 30 to 40% share of the vinyl market.

United is so busy it’s turning away business. A note on its website says the plant can’t accept orders from new customers, although the company is expanding and Millar says they aim to triple output by year’s end.

“(Demand) is stronger than anyone expected,” Millar adds. “It’s likely to plateau at some point. It’s pretty hard to predict when, it feels like it’s constantly growing.”

When You See A Chance…

Mark Rainey has been in the music business for nearly two decades, running his own label and music shop in Huntington Beach. But he has uprooted his family and moved thousands of miles north to Portland, Ore., to help open a brand new pressing plant—Cascade Record Pressing.

“It’s what the market is demanding,” Rainey says, adding that he’s not alone in trying to start a capital-intensive business pressing vinyl with machines that are no longer made. “Since we started researching and developing the plant, we’ve seen the price for presses go up and up and up. Every time there was an article about the vinyl resurgence, the asking price doubled.”

Rainey didn’t divulge how much Cascade paid for six presses, but he noted last year the machines ran between $5,000 and $20,000. Now, prices for the retooled presses can reach $250,000. ‘It’s a limited commodity, but because no one is making them they cost whatever the people holding them say they cost.”

And while the plant nine miles south of Portland won’t open for a few months, the orders are already piling up. “We do have people waiting. We have metal parts in our QC room to put in the molds. That’s the least of our worries,” he says.

Rainey says he’s not worried about investing at the top of the market, as he’s getting calls into his TKO Records back in California from young girls seeking vinyl versions of boy band albums. “People are speculating it’s a trend. I don’t see it that way. I’ve watched it grow gradually over the past eight years at the retail store,” the music entrepreneur says. “You can’t go out and find used Pink Floyd and Led Zeppelin albums anymore. I used to sell them for a dollar.”

Still Rainey and other music industry experts don’t expect sales of the platters to return anywhere near the peak 344 million LPs the Recording Industry Association of America reports were shipped in 1977—the centennial of Thomas Edison’s recording of “Mary Had a Little Lamb.”

These industry insiders do see cds continuing to diminish and a niche vinyl market expanding and offering a physical alternative to the convenience, and sterility, of digital files in an on-demand world.

Madell asserts, “It may not be the most convenient format but that’s not what music’s about. It’s about having a good time. The connection to vinyl is very genuine and I think it will continue to grow.”

Millar, from United Record Pressing, has an alternate take on the supply-demand imbalance, which he says makes vinyl special. “There’s an implied scarcity that’s great about vinyl in a way. It’s a non-returnable product so people keep it close to the vest. I think people enjoy searching for that record. There’s something we all enjoy in the hunt, there’s something about the chase.”

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