Revolutions Per Minute

For Czech company GZ Digital Media, vinyl records bring it all back home again

This article first appeared in The Prague Wanderer, a web magazine produced by students at New York University in Prague.

Left for dead at the height of the CD revolution, vinyl records are proving that what goes around comes around. As sales increase, it might surprise some to learn that the largest vinyl record manufacturer in the world is not located in the United States or Asia but in the former Eastern Bloc.

The GZ Digital Media vinyl factory in the Czech Republic has endured not only a mutating music industry -- from the CD to the advent of digital, downloadable music -- but also the transition from being a Communist state-owned factory to an international leader for a niche market that was supposed to be dead.

Petr Levenec, head of sales for GZ, theorizes that vinyl is back in vogue once again because listeners are looking for a nostalgic, physical experience in the wake of the rising number of digital music sales, which account for 20% (about $4 billion) of all music sold worldwide, according to a 2009 report from the International Federation of the Phonographic Industry.

"Customers like to have something substantial to hold in their hands or put on their shelves," Levenec said.

Presently, the company's biggest clients are the major American music labels, like Universal Music Group, Warner, and Sony EMI. They have pressed records for small, independent artists, as well as superstars like Madonna, the late Michael Jackson, and U2.

GZ ships about 5.5 million records per year. GZ's largest market is the United States, where the company delivers 10 tons of vinyl a week. In a recent Czech government newsletter interview, GZ's general manager, Zdeněk Pelc, boasted that the company "delivered one million records to California alone last year."

Riding the wave of the revitalized format, GZ has stepped in to fill a void left by several bankrupt European record manufacturers; in doing so, they have become the world leader in record production, surpassing the biggest American producer, United Record Pressing in Nashville, Tennessee, by half a million records per year.

On his fingers, Levenec ticks off a list of his defunct competitors -- Media Motion in the Netherlands, ODS in Austria, EDC Blackburn in the UK.

Yet despite the unbridled success of this previously state-owned company, the Czech Republic itself continues to be GZ's smallest client.

"The country isn't used to buying music yet," says Levenec. "Everyone is more concerned with getting things cheaply, so they don't want to spend money on nice packaging."

Coupled with the exponential rise in digital music sales, and the demise of the compact disc, vinyl records have experienced a 35% sales increase over the previous year. According to Nielsen SoundScan, the US music industry's official sales information source, more than two million records sold were sold in the first 11 months of last year -- more than the number of records sold throughout all of 2008.

Founded in 1951 in the village of Loděnice, about 10 kilometers west of Prague, GZ manufactured gramophone records and recording tapes for nearly 40 years under the Communist regime.

The company pressed its first compact disc in 1989, the year of the Velvet Revolution, and the beginning of its history as a privatized company.

"We hardly pressed any vinyl in 1993 and '94 -- maybe 100,000 to 200,000 records a year," Levenec said.

Jan Macháček, an economics journalist for the Czech weekly Respekt, compares the business climate of the post-revolution Czech Republic to the "wild west," and attributes GZ's success to their adaptability and refusal to stop making vinyl records.

"There was no regulation after the revolution -- about 3,000 companies went on the auction block and got privatized through an experimental voucher system," he said. The vouchers could be bought by anyone older than 18 years of age, for shares in any of the companies up for sale to private investors -- mostly Austrian and German at first, then an influx of American and Japanese buyers.

"The older assets were stolen or they disappeared," Machacek said. In terms of prolonged success, "there might be a dozen similar companies left, but none with success like this."

Evžen Kočenda, a professor of economics at Charles University (Univerzita Karlova) in Prague, also cites the role of luck in the company's success story: "They kept all of the old equipment for pressing records after the revolution, instead of liquidating it, so a new interest for vinyl did not catch them off guard."

Not surprisingly, Levenec touts the merits of vinyl over digital and says he never downloads music. Macháček, also a guitarist for the Czech rock band Garage, likewise prefers the sound of a record.

"If you have a musical ear, you feel the difference. It's more lively. You can feel the heat of the music," he said. "Whenever I hear a CD skip, it feels like I'm hearing the zeros and ones. You realize how synthetic it is."

Michael Stasiak hails from Tacoma, Washington. He studies English literature and journalism at New York University.

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