How to make a high-resolution record label

How to make a high-resolution record label

Date: 9 Jun 2009
Time: 00:00

Location: Royal Academy of Engineering
3 Carlton House Terrace
London SW1Y 5DG

See below for location map.

Lecture by Philip Hobbs of Linn Records

Phillips Hobbs is a Producer and Audio Consultant at Linn Records Ltd. He first worked for Linn in 1982, leaving to study on the Tonnmeister course, returning to Linn in 1987 after graduating. Philip’s main roles at Linn have been in music recording and speaker design. Philip described himself as being the ‘worst sort of communicator’, because, according to him, he is both ‘Scottish and an engineer’.

Philip talked tonight of how Linn’s business has been ‘transformed over the last 3 years’ by the introduction of their music download service, a service where the customer can choose the download quality all the way to 192kHz, 24bit and where all the downloads DRM-free.

Linn History

Phillip gives a ‘two minute trip down memory lane’ of how Linn started

Linn was founded by Ivor Tiefenbrun as an offshoot of Castle Precision Engineering, a machining company who made parts for such things as aircraft and Rolls Royce. The original home of Linn, Linn Business Park gave Linn it’s name, and Linn established it’s HiFi  pedigree with the Linn Sondek LP12, a record player still in production today.

Linn expanded its product range and has made amplifiers, CD players, active loudspeakers and Digital Stream Players which stream files from hard disk.

Linn The Record Label

Like many other hardware manufacturers, Linn developed an interest in the recording industry. The initial motivation was to make recordings to test the reproduction capability of the LP12 and to investigate vinyl cutting lathes to the same end, but Linn has subsequently blossomed into a serious audiophile record label with many original recordings.

Traditionally focused on classical music, Carol Kydd was the first Linn ‘proper jazz artist’ and Linn released her first album in 1983. Linn made an initial pressing of 7000 records, selling them through record shops. In 1984, Linn hooked up with a  band called Blue Nile, releasing their first album ‘A Walk Across the Rooftops’. Blue Nile were keen to sell lots of records and Linn ‘spent hundreds of thousands trying to get them to release their second album’. Philip, who was designing speakers for Linn at this time, estimates the total bill in relation to Blue Nile to be just under £1 million. By 1992, Linn were working on building their classical catalogue in the ‘standard boutique label’ philosophy by focusing on recording quality.

By 2006, Linn had around 250 titles and had established distribution in Japan and America. In Philip’s words, the business ‘was a complete catastrophe’, as it was ‘not economically viable to sell CDs in commercial retail space’, a trend, according to Philip, that had been developing since the 1990s. Philip recalls that the situation had become so bad by 2006, Linn were faced with a decision either to leave the record business altogether, or to find some radical new approach – to find ‘a way to get back to the customers’ avoiding ‘the frustration that traditional retailing gives to many companies, and record companies in particular’, namely that ‘the company is so far away from the people they’re selling to’.

Download Revolution

The conclusion at Linn was that they needed to use the internet ‘to connect directly to the customers without compromising on quality’. At this time, Apple’s I-Tunes service was well established and, thanks to the widening availability of fast broad-band services, the ‘possibility you could sell someone 1GB of data’ was becoming a reality.

So Linn built a web site where customers could download music directly – similar to the I-Tunes idea, but with a unique selling point – the ability to provide downloads up to 24-bit 192khz sampling rate (and loss-less), where the customer is free to choose the download resolution/sampling frequency from studio-master down to MP3-level quality.  Like I-Tunes, customers can buy individual tracks or whole albums with the higher quality downloads commanding a higher price tag.

According to Philip, despite an initial cost of £100k, the site is now profitable after around 2.5 years of service.

Philip stated the more traditional music distribution method of physical  media in shop-retail results in around a 15-20% share of the ticket price being returned to the record label. For example, if a CD retails for £15, £2.5 for the record company would be considered as ‘doing pretty well’. With the download service which operates in the absence of ‘middlemen’, the margins increase considerably. Philip estimates that the download business returns around 80% of profit, and further,  their  profits would probably increase were they to move entirely away from physical media, (which Linn continue to support out of loyalty to a minority of, presumably similarly loyal,  customers).

High Quality Master Recordings

A key factor that made Linn’s Hi-Res download business viable was their long-term focus on making recordings of the best quality possible, a commitment which had led them to make many of their master recordings at 96kHz or 192kHz. This resulted in a ready supply of high-resolution back catalogue. This situation was, according to Philip, in contrast to many other record companies whose masters were typically made/archived at 44.1khz or 48kHz.

Customer Focus

Linn have a base of around 120,000 customers. With their focussed direct-marketing approach, a Friday evening email-newsletter often results in many £1000s or business by Monday from their download service.

Philip also points out that these direct marketing activities rarely offer significant discounts (which would reduce profits)  – usually, they are simply aimed to draw the customers attention to some new material or other works that may be similar to previously purchased material.

Download Usage – how are the customers using the downloads?

Philip sees 4 main customer types split by playback method.

  • PCs with sound cards, Windows Media Player, I-Tunes etc.
  • Portable Devices (I-Pods, Zune etc.)
  • Burn-to-Disc – customers making CDR/DVD-R copies
  • Streamed Media Players – from Linn and others – files streamed from local server

The DRM Issue

Linn considered the possibility of using DRM to protect their downloaded material, but at the time the web site was being prepared, it became clear to Linn that DRM just didn’t work sufficiently well. According to Philip, many people felt that moral arguments eventually killed DRM but wonders whether it was in large part due to an inability to make smoothly working system (and without imposing excessively limiting restrictions on the customers).

Download Formats

Offering such a wide range of download quality options has provided Linn with some interesting statistics on the decisions customers make when offered a quality/cost choice.  Despite price differentials, In 2007, 25% of purchases were of the ‘studio master’ quality. By 2008, the figure had rising to around 50%, and so far in 2009, this seems to have risen further to around 70%. Of the CD quality albums downloaded, customers are showing a 50/50 split between choosing FLAC and WMA.

Additionally, of those customers who purchased studio master quality downloads, where they were offered a choice between 96kHz or 192kHz,   80% chose  the higher rate in spite of the fact that many players can’t play 192kHz!

Further, Phil is convinced that around half the customers who have purchased  studio-master quality downloads don’t currently have the playback equipment to support the sample rate/bit-depth they bought. His conclusion is that given a choice, Linn’s customers prefer to buy the best quality available. If this seems odd, there may be some logic here, and in some way maintaining the Linn tradition. The original Linn LP12 can be upgraded all the way to its current production specification. This ability to upgrade has been a Linn philosophy, at least for the LP12, for many years. By upgrading the equipment, the customer can benefit without buying into a whole new format. If the customer buys the Studio Master, the data they get is all that was recorded – it is essentially ‘as good as it will ever be’ – and with such a music collection, future equipment upgrades may offer further sound improvements when replaying the original material, in many ways similar to vinyl.

High Resolution Benefits

Philip made an impactual demonstration of the potential enjoyment offered by high resolution and high quality recording by playing Handel’s Messiah conducted by John Butt (and where Philip was himself the recording engineer). Unbeknown to the audience, the recording began at rate of 88.2kHz/ 24-bit, but as playback progressed, the bit rate dropped to 44.1khz 16 bit, then to 192kb mp3, then to 96kb, mp3. Although these differences were not immediately obvious to all, (at least in the listening environment in which they were presented), Philip described how it was common for the listeners attention to progressively drift to other matters as the bit-rate dropped, they ‘tend to get bored and start thinking about something else’. This certainly described my personal experience with surprising accuracy.

Streaming Player

Philip briefly demonstrated one of the Linn Streaming Players which offer one possible method of replaying the downloaded material. One of the benefits Philip sees for customers with this type of equipment is a significant increase in convenience. Gone are the walls of CD/LP shelves, replaced by a compact hard-disk-based server and controlled via a little application on their I-Phone, a use case Philip describes as ‘addictive’.

The Future

Linn are beginning to diversify. They have taken on a couple of small labels and are offering downloads for them alongside their own material. For those interested in purchasing downloads, Linn’s web site may be found at http://www.linnrecords.com/ and test files for evaluating quality (and compatibility)  can be found at http://www.linnrecords.com/linn-downloads-testfiles.aspx

The AES would like to thank Phillip for his fascinating talk. I’m sure many members were greatly encouraged to hear that there are still many customers for whom recording quality something worth paying for.

Report by Nathan Bentall

Edited by Keith Howard


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