David Gold founder and CEO of Vinyl Israel, VINYL.CO.IL is an online record store

Has Elvis left the building?

When digital format sets the tone and the discs and stores disappearing from the industrial landscape, the old actor’s presence do not give up while growing demand for vinyl records rising. What will be the future of the music industry and is it the right time to open the first Israeli online vinyl record store?

We are music lovers, living, breathing and speaking notes, never look after the sound that will make us feel whole again, youthful innocence, first experiences. Falling in love, and feeling of love, Music always remind us the moments and create tomorrow’s memory moment.

I dont have a particular preference of the media in which the artist chooses to show us the product, Cassette, MiniDisc, Vinyl, Tape reels, CD, Mp3, as long as the finished product is of good quality and it’s driving my senses, make me feel and think.

Various media have evolved over time and progress, sound accessibility and market perception has changed. Most of what we take for granted in the music business today is brand new. A decade ago there was no iPod, YouTube, Facebook or Apple iTunes. A decade from now, the industry will be very different than it is today. The music industry has been utterly ripped apart by the impact of technology and social media and will never be the same again. New structures and strategies for driving revenue and opportunity are forming and new approaches to the business of music are working more successfully than past approaches.

While CDs media drops and vanish, stores are closing one after the other, there is one old player who gets to relive & rebirth, the Vinyl.

Records on the distribution shelf of Vinyl co il Israel


In the 1950’s Vinyl LPs were introduced into the marketplace and along with radio – crystalized an industry. Vinyl records changed the very nature of how music was enjoyed. Recordings fixed a musical performance in time and stamped it onto a piece of plastic. They made it possible to shift both time and space for people, so we could now enjoy music anytime and anywhere. They also fundamentally changed the way music was delivered – no longer was a piece of music played live, with different players and interpretations every night making the music more dynamic. Instead, the songs were played exactly the same – over and over again – turning music into a product instead of an experience.

It is a format change, and the record industry had its chance when Napster first came out. It was the combination of the Internet and the MP3 file that sparked a young college student named Shawn Fanning to invent the first Napster software that allowed people to trade and share song files. Almost overnight, kids around the world were tapping into Napster and trading songs and discovering new music using the Net. A huge community formed. They (record industry) had the chance to license Napster for all their music, If they had done that the recorded music industry would be in a much more healthy state than it is today, or ever will be again. Instead, the recording industry decided to sue Napster. And while it may have won that battle, it turned out to be just one skirmish in a war that would see the free exchange of music only increase.

The record business has never really been good for the vast majority of musicians. A dirty little secret of the music business is that 95% of artists never recouped their royalty advances. Labels have been notoriously unfair to their artists. Artists have always had to make their money some other way – through touring and performing – from songwriting – or selling t-shirts, hats to make a living in music. Or working at Mickey D’s.

But everything is changing. Today artists and their managers sit in the middle of a musician enterprise and can make things happen on their own. This is redefining the music business. Technology has shifted the power base from the record labels to the artists and mangers, and the music fans. Performer and patron are meeting again with direct relationships between artists and their fans enabled by technology. Artists today are more likely to get promoted by major brands than record companies. Their managers are setting this up for them.

Brands like Pepsi, Red Bull, Tag, Bacardi, and Nike are breaking new bands, and TV shows like Grey’s Anatomy, CSI, and House showcase new artists each episode. Getting on a show like this can be like winning the lottery for new artists, not unlike the old record deal.

Many new structures are forming that will help artists develop their fan bases and enable a career in music for smart people.

Last year, only 13 of the approximately 77,000 album releases sold over a million copies. We are in an entirely new era for recorded music. Those that are using recorded music to drive sales of other things like merch and tickets and books and DVDs and personal appearances and teaching gigs are making some money. But the odds of making a living from record sales are at an all time low and auguring into the earth, unless something unexpected happens.

According to new survey from the Gartner group we see:

  • Online music revenue from end users will grow more than 31% by the end of the forecast period: from $5.9 billion in 2010 to $7.7 billion in 2015. By comparison, consumer spending on physical music (CDs and LPs) is expected to slide from around $15 billion in 2010 to around $10 billion in 2015.
  • Online music subscription services, such as Spotify, will be the main growth sector in this market, showing fivefold growth from 2010 to 2015. A la carte sales will drive the bulk of overall revenue.
  • The highest growth rates will be in regions such as Latin America and the Middle East and Africa, which have not historically been strong in paying for tracks or albums from online services or stores (although perhaps stronger in paid-for ringtones from their service providers).

Cloud Storage

One important court case and some service provider maneuvers are bringing more focus to nascent “cloud music” market, a market according to Gartner believes will comprise two distinct flavors: personal cloud entertainment services, which, in the case of music, include subscription services such as Spotify, MOG, Rhapsody and Rdio; and cloud storage lockers, such as those offered by Google and Amazon, and Apple’s forthcoming iCloud offering. These features allow consumers to create cloud-based backups of their digital music files, no matter their origin (ripped CD or social CD ripping for file-trading systems).

While Amazon’s and Apple’s implementations are tightly tied to their online music stores, Google’s, thus far, is a stand-alone service (actually it’s more like a feature of a nonexistent music service than it is a stand-alone service). With Google and Amazon, users can get applications for their smartphones or media tablets that enable the streaming of files in their cloud locker. According to press reports, Apple will enable the same capability with its Match service ($24.99 per year) that will hold up to 25,000 song files. Now, the difference is that Amazon and Google force the user to literally upload copies of their music libraries to the cloud account. Apple, however, has reportedly struck deals with the labels and rightsholders so that the iCloud service, via its forthcoming Match feature, can scan the user’s main iTunes music library, and if iTunes has licensed the same songs/ albums, iTunes will populate the user’s Match account with those songs/albums, instead of going through the network-intensive step of moving files between the user’s PC and the cloud. According to Gartner, they believes this is the kind of offering one can do by engaging directly with the labels.

However, a recent court decision in the case of a suit brought by label EMI against MP3tunes has apparently cleared the way for cloud-locker services such as those from Google and Amazon to allow consumers to store their music files in a cloud account without requiring licensing deals from rights holders. EMI filed a copyright infringement suit against MP3tunes for, among other things, allegedly facilitating copyright infringement by the service customers. While there were many issues in the case that were not decided, the judge found that cloud storage locker service providers are not responsible for the alleged copyright infringements of their users, so long as the service provider removes infringing content at the request of the copyright holder (the “safe harbor” exemption in the Digital Millennium Copyright Act). For all cloud storage locker providers, Amazon and Google included, this removes one legal uncertainty for their services. Whether or not labels and publishers will challenge those companies in court about the streaming capability remains an open question. Visit Gartner for more information

Music is starting to flow all around us. It is available on the internet, on mobile networks, wifi, 3G and your home. People have all sorts of media formats & labels for recorded music they collect. But for some, who call themselves Phonofeelers, there’s something about the process, about the revolving vinyl and its relation to the needle that runs along the grooves and brings the music to life. its about the sound quality, the concept and approach, a perception of life, music life.

While global music industry suffers from the decline in prices and lack of demand for CDs, the record prices and demand remain constant and even increase, nobody foresee it coming. According to The Nielsen SoundScan (Click to see full report), For the fourth consecutive year, more vinyl albums were purchased in 2011 than any other year.

  • In 2011, vinyl album sales nearly reached the 4 million mark with 3.9 million sales. That shattered the previous record of 2.8 million LP album sales in 2010.
  • Note that 67% of all vinyl albums were purchased at an independent music store during 2011.
  • Vinyl album sales in 2011 were up 36% compared to 2010 and accounted for 1.2% of all album sales.
  • Nearly 3 out of every 4 vinyl albums purchased were a Rock album in 2011.

The visionary, exceptional David Gold is one of these phonofeelers persons decided to take the matter forward, and created the first Israeli online Vinyl record store “Vinyl.co.il“.

Q: Why Records?
David: With the appearance of CDs,  the marketing and sales of vinyl records drastically decreased. The first CDs  came with apologies for bad sound quality printed on them, which were later removed. Digital recordings (such as MP3) gradually took over the CDs, but now the vinyl records are coming back as a more reliable and high quality media format.

Q: Who is the target audience of the Vinyl product?
David: Generally, all music fans. Those, who enjoy more than MP3s while running, or driving a car. Those could be old aged collectors as well as young music fans or DJs.

Q: Which companies in Israel are producing record and whether there is demand from the locals artists to publish materials on records?
David: As far as I am aware of, there is only one Israeli company manufacturing vinyl records – CDI Ltd. They mainly manufacture CD/DVD records and other digital media, but recently, they also began manufacturing vinyl records, which is also a good indication for the growing demand for them. I am also familiar with several underground bands releasing their music on vinyl records. Apart from this, I am certain there are others, who release or at least want to release music on vinyl.

Q: Is the demand for records is more for nostalgic materials or that there is also demand for new materials?
David: There is demand for everything. Classics were and always will demanded. New music on vinyl records is gaining popularity, which encourages musicians to release their music on vinyl.

Q: What your motives for the decision to open an online shopping site entirely dedicated to records and related equipment?
David: I began seriously purchasing records in 2007. I could not find a decent store in Israel, not to mention a store, where I can buy modern and new records. Record brushes or sleeves were out of the question. There were and still are small stores all around Israel – they mostly sold old records and the few new records they had were very expensive. The last resort was ordering via the Internet in stores outside Israel, but then I encountered a few problems as well: It took long time to receive the package, which sometimes did not even arrive, it was impossible to pay in split payments and in many cases the delivery cost as much as the records themselves, or even more. All these factors pushed me towards filling the almost empty niche.

Q: Is this store dealing in new or re-released vinyl or used, or both?
David: We sell all kinds of records – new and used (and re-released too). We also have a record condition rating system.

Q: Global music industry suffers from the decline in prices and lack of demand for CDs, while on the other hand record prices and demand remain constant and even increase. How do you explain that?
David: With the development of the Internet, access to music became significantly easier – nearly every new recording can be found on the Internet on the day of the release. This significantly reduced the popularity of CDs as a media format.
Vinyl, with its aura of vintage and nostalgic, has proven that it is not not only superior to all other formats in sound quality, but is also the most durably physical music carrier. Modern collectors prefer two formats: vinyl and digital formats.

Q: Beatport, Traxsource, Whatpeopleplay sites who dealing with digital formats are major players & affect the vinyl business, How records are compete with the digital market?  
David: The majority gains access to music via mass media – TV and radio. Mass media mainly promotes commercial music, while true artists, who create music for the sake of it, remain almost unknown. With the development of the Internet, people have got the chance to explore and gain access to all music. Thanks to the Internet, the public awareness is gradually increasing and that is not only in the field of music.

The major labels are now facing the piracy problem – CDs can be easily replicated and converted to different digital formats, but it is impossible to perfectly replicate the sound of an analog vinyl record on a computer, so apart from simply being a high quality media format, the  vinyl records may help counter music piracy to some extent.

The global industry releases music with the primary intent of making money and not necessarily delivering high quality music. Commercial music is intended to be popular for a short period of time and then forgotten and replaced by other music. This allows maintaining a constant flow of sales. Since this is a proven and working business strategy, the record companies have no logical reason to change it.

Q: Have you considered to be independent label except just selling records?
David: Yes, I am interested in promoting certain artists and re-releasing some albums, but I am not certain when this will become reality.
At the moment, I am completely dedicated to enriching the Israeli market with modern, new (and not only) records and accessories.
I аm also cooperating with a local electronic label “Dope Records”. Hopefully, some day we’ll start pressing our own LPs.

Q: What do you foresee to the global music market & vinyls?
David: The global changes have already begun. Some large and small labels went down because the mainstream CD/DVD media format declined in popularity. Many small labels replaced these, including net labels. I think that the major labels are not yet certain what they will do next. The majority will buy music in digital formats, such as MP3 and FLAC. CDs will be released for marketing and the popularity of vinyl will rise to an unknown extent.

Credits/ Digital Cowboys, Gartner.

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