Why Hasn’t the Music Industry Supply Chain Responded to the Vinyl Resurgence?

If you read any of the articles about the “vinyl resurgence” in the music industry, it’s easy to understand why record companies, artists, and fans are getting so excited. The pendulum has swung ever so slightly from music fans streaming music on their phones and tablets to buying an actual physical object -- a 12” slab of vinyl. It’s revolutionary (pun intended).

If you’re a music fan of a certain age, you will remember the LP being the dominant music format for a few decades. That lasted until the mid-1980s, when cassettes had a brief boom. Then, by the early 1990s, CDs moved in, which led inevitably to MP3s, file sharing, and now streaming. But LPs have always had a certain level of credibility amongst audiophiles and many hardcore music fans.

One can, and many do, argue about their sound quality, artistic integrity, and associated snobbery. However, one thing that we need to really think about is this: If people want to buy LPs, what is the established supply chain to get the LPs produced, packaged, and shipped to these listeners? And also, if more and more people want to buy these new LPs, how can the supply chain change to accommodate the increased demand?

The vinyl resurgence surprised many, and the industry has been slow to react in many ways. The main reason they have been slow is understandable. In the United States of America, in 2015, 12,000,000 new LPs were sold, up from 1,000,000 in 2007 (Source: Wikipedia).

How many plants actually produce the LPs -- cut the master, press and package all those vinyl discs? The answer will surprise you: 20. There are 20 independent companies in the United States who make these LPs. 20. Twenty. Just 20.

In an article by Vish Knanna on Pitchfork, he talks about one in particular: Rainbo Records in Los Angeles, California. They operate 24 hours a day, often 7 days a week to keep up with demand. And the other companies are experiencing the same level of success, all of which would have been unheard of 10 or 15 years ago. So, what’s the problem with the supply chain in this case? Why don’t we have dozens of new producers opening their doors to produce records?

According to Rainbo account executive Rick Lepore: “The start-up costs would be astronomical. Getting a hold of presses is pretty much impossible; there’s no one making new presses so, if you want to start up a plant, getting a hold of presses would be very difficult. There’s nowhere to get them. And you need people with very precise technical skills, and finding those people who can run those presses is very difficult.” Another issue with current vinyl production is plain to see if you wander the aisles of your record shop or check out online listings: “special editions”. Many labels are appealing to collectors with “special” colored vinyl in countless combinations.

That means a lot more work on the production end. “[An artist will] want to do a run of 500 but they want 200 in green, 200 in blue, and 100 in red and that really slows everything down through put-down, where we do a run and then have to stop and clean up the press each time,” says Lepore in the Pitchfork article. “Then with the packaging, we used to just put in the jacket and we’re done.

Now quite often there’s inserts, people want to put in their download cards and stickers and that happens quite a bit.” So, there doesn’t seem to be an easy solution to this particular supply chain problem, but it would be fascinating to get a closer look at the ins and outs of these supply chains to see if there are places for improved efficiency. Perhaps running a number of what-if scenarios, and utilizing a more nimble solution that lets planners know sooner and act faster would help alleviate some of the challenges. It certainly is an interesting case study in what happens when there are defined production limitations, and a sudden surge in sales.