Large record companies, ignoring weak sales figures for Christian music, continue to move aggressively in purchasing Christian recording labels.
On February 28, the Zomba Group bought Benson Music Group, the last remaining large independent Christian music company, for an undisclosed sum. Zomba, the world’s largest independent music company, purchased Brentwood Music three years ago and the Reunion label in October 1996.
That leaves only three corporations holding all major Christian labels: Zomba, EMI (which owns Sparrow, Star Song, ForeFront, and GospoCentric), and Gaylord Entertainment, which bought Word Records from Thomas Nelson in January for $120 million.
Twenty-five Benson employees, about 20 percent of its staff, have been laid off as a result of the acquisition. Another 25 people displaced in the purchase have moved to other positions.
“In a business sense, the acquisition was a matter of creating critical mass,” says Jim Van Hook, president and chief executive officer of Brentwood Music. “We wanted to create a big enough base to be efficient.”
Executives of secular companies such as Zomba and Gaylord believe Christian music is a sleeping giant, like country music, with growth potential in untapped markets.
“The lyrics speak to faith, and we believe the audience for this type of message is huge,” E. W. Wendell, president and CEO of Gaylord Entertainment, told his employees in a February meeting. “All that is needed is someone like Gaylord Entertainment to help expand the audience, like we did with country music.”
BREAKTHROUGH UNLIKELY: However, Van Hook and music industry observers, including John W. Styll, publisher and executive editor of Contemporary Christian Music magazine, say such a boom will not happen. They say all that separates Christian music from other forms are the Christocentric lyrics—but that is a big difference. Listeners uninterested in Jesus will not flock to Christian music.
“It’s not going to explode like country because it’s not like country,” says Styll. “Listeners are loyal, but it’s a small core group of listeners.”
Van Hook predicts there will be some incremental growth as Christian music is distributed beyond Christian stores. But he says the industry is more volatile than ever.
Van Hook notes that 1996 proved to be a disappointing year for Christian record companies.
Benson, which includes subsidiary labels Diadem and Tattoo, has been racked by substantial losses in recent years. In addition, Integrity Music, a praise and worship label, lost $3.2 million last year. Warner Alliance laid off half of its staff in February. Before being purchased by Gaylord, Thomas Nelson experienced severe stock devaluation.
Van Hook says the only Christian music company to show a healthy profit last year was Brentwood, which carries the popular band Jars of Clay. The group’s first album sold more than a million copies.
Industry observers believe Zomba’s purchase of Benson was motivated not so much by the company’s current artists but by its 95-year-old publishing division, which holds 46,000 copyrights.
LICENSE BATTLE: Meanwhile, the Christian music industry is embroiled in a battle over copyright licensing.
The argument has created strange bedfellows, with, on one side, the National Religious Broadcasters (NRB), classical and foreign-language radio stations, and the National Restaurant Association. These groups are fighting against music-licensing companies allied with Christian record and publishing companies.
At issue are license fees the radio stations must pay for each song. The licensers offer both a blanket license where stations pay an annual fee for all music on the organization’s repertoire and a license where stations pay individually for each song.
The most popular format in religious radio—with more than a quarter of the market—is teaching and preaching. These stations do not want to purchase a blanket license but say the fees for the per-use license are far too high and too complicated. Stations must, for example, notate and pay for every song played over the air, even if it is part of a church service or a syndicated program.
“The per-program rate is three to four times as high as the blanket rate,” says Russell R. Hauth, executive director of the NRB music license committee. “So even if you’re a station using only 25 percent of your airtime with music, you’re paying as much as a station that plays music 24 hours a day.”
The NRB is proposing a simpler per-use fee that would cost 10 percent of the blanket license fee.
Music-licensing organizations accuse religious broadcasters of being miserly. They say proposals offered by the nrb would cost composers and publishers millions of dollars in lost income.
“This could be very destructive to people who are writing music,” says Van Hook. “The rates for a couple of songs are so low, it’s fair play.”
The NRB is fighting its war both in the courts and in Congress. Rep. Jim Sensenbrenner (R-Wis.) and Sen. Strom Thurmond (R-S.C.) introduced bills February 13 on behalf of the organization. On the judicial front, the NRB music license committee is awaiting a decision in its lawsuit against the American Society of Composers, Authors, and Publishers (ASCAP).
Claiming in its suit that ASCAP does not offer a genuine economic alternative to its blanket license, the NRB is the first radio group to challenge ASCAP in court. A ruling from the South New York Federal District Court is expected this summer.
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