Paper presented at Second Annual International Conference on Cultural Economics and Planning, sponsored by the Association for Cultural Economics, Mastricht, Holland, May 26-28, 1982.

The market for recorded music has been one of the fastest growing segments of the leisure-time field over the last 30 years. The development of new products such as stereo equipment and the tape recorder, and more recently cassette and cartridge tapes, provided a thrust for this growth. Nevertheless, there have been few economic studies of the recorded music industry. (p. 132).

Most of the firms in this industry are subsidiaries or affiliates of conglomerate enterprises or privately held companies for which information on profits is very limited. These companies either do not separately report the financial results of their record operations in sufficient detail for economic analysis, or they do not report their record operations at all. Consequently, it is impossible to evaluate the profit performance for firms in the industry.

This industry clearly has an oligopolistic market structure, as evidenced by the concentration figures presented. Competition in the industry is less price oriented and more product differentiation oriented. This is consistent with the fact that demand appears to be price inelastic. Barometric price leadership is a common practice; record album list prices are an excellent example of focal point pricing . One way the major producers differentiate their products is by offering multiple labels, but the main form of product differentiation is the provision of different recordings by different artists, each of whom generally has an exclusive contract with a recording company or master producer.

The growth of the industry and the relative ease of entry into the industry are undoubtedly the primary factors contributing to the trend of deconcentration in the 1960s. However, the fact that the industry has experienced increasing concentration for most years since 1970 is of some concern. These increases appear to be due to mergers and acquisitions, changes in distribution patterns, and shortening of radio playlists. Nevertheless, it does not appear that concentration has resulted in price increases beyond what can be attributed to the general rate of inflation. (p. 141).

CONTENTS
Structure.
Competition.
Concentration.
Pricing behavior.
Conclusions.
Notes [bibliography].

Tables:
     1. Concentration for phonograph records, record blanks and prerecorded tapes 
         (SIC 36520).
     2. Concentration, best selling albums (record and tapes).
     3. Concentration, combined best selling singles and albums.
Notes [bibliography].

Paper presented at Second Annual International Conference on Cultural Economics and Planning, sponsored by the Association for Cultural Economics, Mastricht, Holland, May 26-28, 1982. The market for recorded music has been one of the fastest growing segments of the leisure-time field over the last 30 years. The development of new products such as stereo equipment and the tape recorder, and more recently cassette and cartridge tapes, provided a thrust for this growth. Nevertheless, there have been few economic studies of the recorded music industry.