Depression and Consolidation 1925-1940

Unfortunately, the boom in talking machines was drawing to a close. Even before the general downturn in consumer spending in the 1930s, the recording industry was in decline. At first, the culprit seemed like excessive competition. Over 150 companies were making records or record players by about 1920, and they were all trying to undercut each other's prices. But the radio also acted as competition. Radio broadcasting began in some parts of the United States around 1922. During the 1920s, regular broadcasts began in many areas of the U.S. and Europe. Radio networks appeared, which linked together stations and promised to bring in massive advertising revenue. The companies running these networks spent lavish amounts of money to create special programming that was more spectacular than what was available on records. Despite the poor sound quality of the early radios, people were attracted to the programs and bought fewer records. The downturn was disastrous. The size of the industry in the U.S. alone declined by about one half in the early 1920s, then stabilized for the rest of the decade. Manufacturers introduced an improved form of record in the late 1920s called the "electrical recording," hoping to lure customers back. This used microphones and electronic amplifiers in the studio to make the records, but could be played back on the old horn talking machines. Some manufacturers also introduced combination radio-phonographs. While these new technologies helped a little, when the Great Depression came the record companies were too weak to survive on their own. The phonograph division of the Thomas A. Edison company was the first to go, folding in 1929. Victor was bought by the Radio Corporation of America, and Columbia was purchased, appropriately enough, by the Columbia Broadcasting System. Most of the other names in the industry simply disappeared. In the 1930s, records continued to be sold in relatively small numbers. Classical music enthusiasts continued to buy records, but they were not a huge market. The radio broadcasters bought a fair number of records. There were new opportunities, too. When the talking motion pictures arrived, for a few years they actually used discs before switching to a system that put the "soundtrack" right on the edge of the film. In fact, the motion picture industry was where the real action was in the sound recording industry in the 1930s. Sales of recording equipment to motion picture producers sponsored research in improved technologies. The first stereophonic recordings released to the public were part of a motion picture, Walt Disney's Fantasia. It was only in the late 1930s that the number of record discs sold began to climb back toward the highs of the 1920s. This was partly due to the gradually improving economy, particularly in the United States. It was also due to the growing number of jukeboxes in use. Jukeboxes consumed large numbers of records because they were usually changed every week or so. But the industry was still in trouble.