Why the great vinyl shortage is over

0:00NPR.

0:11This is The Indicator from Planet Money. I'm Darian Woods, and I'm here today with music reporter Justin Barney from member station WNXP in Nashville. Welcome, Justin. Thanks for having me, Darian. What have you been listening to? Darian, beam bop, boom, boom, boom bop, bam. The kind of stuff I'm on you wouldn't understand. I'm listening to Kendrick Lamar. Of course you are. I've been a big fan since Good Kid, Mad City, but of course he's done a lot since then. Yeah, his new album GNX is flying off the shelves, selling close to 100 ,000 copies on vinyl recently. That is a lot of vinyl. We've covered on the show before how there was this big vinyl shortage a few years ago.

0:51It was a disaster and named The Great Vinyl Shortage. Well, good news today. The vinyl shortage is over. Hooray! And that is largely due because of one company based in a small village in the Czech Republic that has come to dominate the vinyl manufacturing industry. For this year, we have a realistic plan to press about 70 million records and we can do theoretically 50 percent more. Today on the show, how a small Czech company went from pressing vinyl for the Eastern Bloc to becoming the biggest vinyl manufacturer in the world, and how that has become a problem for its competitors.

1:43This message comes from NPR sponsor Capella University. Sometimes it takes a different approach to pursue your goals. Capella is an online university accredited by the Higher Learning Commission. That means you can earn your degree from wherever you are and be confident your education is relevant, recognized, and respected. A different future is closer than you think with Capella University. Learn more about earning a relevant degree at capella.edu. Support for this podcast and the following message come from Recorded Future. Every day, millions of cyber threats compete for attention. But only a few truly matter to your business.

2:21As a leading threat intelligence company, Recorded Future cuts through the noise with precision intelligence. That's why top banks and governments trust them. Because security leaders don't just react. They foresee, spotting the signals that others miss and acting before threats become setbacks. Recorded Future. Know what matters. Act first. This message comes from Grammarly. From emails to reports and project proposals, it's hard to meet the demands of today's competing priorities without some help. Grammarly is the essential AI communication assistant that boosts your productivity at work so you can get more of what you need done faster.

2:59Just a few clicks can tailor your tone and writing so you come across exactly as you intend. Get time back to focus on your high-impact work. Download Grammarly for free at grammarly.com slash podcast. That's grammarly.com slash podcast. To understand how a Czech company came to end the vinyl shortage and become a giant under capitalism, we first need to go back to the 1900s. At that time, it was Czechoslovakia, and they were basically the Midwest of Europe. They made stuff. And then after World War II, there was a coup d 'etat, and Czechoslovakia became a communist country. And they needed exactly one factory for music and built Gramofonov Zavody.

3:41English translation? Gramophone Record Factory. Its role was to produce music for the Eastern Bloc. Usually these were very pro-government, pro-communist, and either very political or that easy, cheap pop stuff that would not make any damage by listening to. That is Michael Sturber. He is the CEO of the company that is now named GZ Media. He started as an assistant purchaser in 2003. One day the CEO came over to him and asked him how he liked working there. He said that he was bored and they could do better. Now he is the CEO. The company began with sort of safe pop music back in the day. At the time, the biggest artist was a gentleman called Karel Gott.

4:36Yep, certainly sounds like it weren't too many damage by listening to this. Not exactly rage against the machine. Very safe. Yeah, yeah. Then again, I don't know what the words are. It could be secretly subversive. You never know. We will never know. Any Czech speakers could help us out there. In 1989, the communist government fell and their state-owned business became private. Being a state-sanctioned monopoly for almost 40 years really gave GZ a leg up in the competitive world of capitalism. They built up their plants over all those years with expensive equipment, and newcomers found it hard to compete.

5:11The problem was the vinyl industry was in the tank. Because most of music listening happens in the car, and you can't play a vinyl record in the car. Cassettes and CDs took over. Presses in the United States were in shambles. Almost every press closed. Even at GZ, vinyl pressing was down to a drip. The lowest output of the company was in 1993. And at that time, that year, we made only 400 ,000 records in that particular year. So around 2005, something unexpected happened. Vinyl started coming back. This was peak hipster era. So fixed gear bikes, handlebar mustaches, and the feeling of physical vinyl records.

5:57I was part of this, like many friends. I inherited my dad's record collection. So much, Rod Stewart.

6:09That's not exactly hipster error, but we'll take it. I became a regular at my local record store, Rushmore Records in Milwaukee. I stood in long lines on record store day, hoping to get a limited edition color variant of the White Stripes Elephant, the one with Seven Nation Army on it. Okay, now we're talking.

6:35This was the first vinyl boom. And with vinyl sales rising across the world, GZ went all in. It was time to expand to North America. They established Precision, a manufacturer in Canada, and gobbled up Memphis record pressing in Tennessee. And then the pandemic hit. With no restaurants to go to or concerts to attend, people bought records. And the second vinyl boom began. The entertainment industry publication Luminate reported that vinyl sales more than doubled between 2019 and 2021. So it was the golden time for us. The second boom started a gold rush in manufacturing. A bunch of new vinyl manufacturers popped up, but they still couldn't keep up with demand.

7:21Because it's an expensive and complicated process. There are a mystifying amount of small steps involved in pressing a vinyl record. All right, so big breath here. You have to mix and master for vinyl. You've got to etch the music into lacquer. Nickel plate the lacquer to create a stamper. Stampers squish vinyl. Then it's packaged, sleeved, and shrink-wrapped. And many of these steps were outsourced. This is where Jeezy changed the game. They started making their own machines to take care of all those small steps so they could do everything in-house. In business, we call this vertical integration.

7:56GZ is the only fully vertically integrated vinyl manufacturer in the world, allowing them to do things on the cheap. We spoke with Piper Payne at a small vinyl manufacturing plant just outside of Nashville. They've been a growing problem for 20 years. Yeah, now it's come to a head because they're buying up other plants and putting people out of business. or they're just literally undercutting over and over and over again. It's hard. Piper's plant still has to outsource many of those steps, and those costs add up. Plus, she's using old machines to press the vinyl. These presses over here, they're old.

8:33As you can see, all of our equipment is not, nothing in this building is brand new. In a record plant, remember, everything is hot and it's trying to burn you or knock you on the head or cut you or trip you. I hope you didn't see this as a threat. A warning at best. And actually, Piper bought those old machines off GZ. And meanwhile, GZ was expanding and innovating. And it just built a new plant in Nashville called Nashville Record Pressing, just minutes away from United Record Pressing, swallowing up demand and contracts and printing a lot of records. Since GZ opened up Nashville Record Pressing, the gold rush is now officially over.

9:19The end of the COVID boom has returned vinyl demand to a normal 7 % growth. And now there is more capacity to make vinyl than there is demand for it. A lot of plants are struggling. That is Mark Michaels. He is the CEO of United Record Pressing, the biggest U.S.-owned vinyl plant. Every year they make about 9 million records. And every year GZ Media makes over 70 million. You know, the industry probably won't have 200 manufacturers 10 years from now because it's hard to survive. It's going to be hard for everybody to survive. What can I say? I want to be tough. Like you want to excel. That's the nature of human being.

10:03Like I want to win. And winning for GZ means records on the shelf. So when you want to listen to a record at presses, like Kendrick Lamar's GNX, you can just play the song TV Off as loud as you want. Mustard! You're a true fan. Kendrick, if you're listening, Justin is a true fan. We love it.

10:33This episode was produced by Lily Quiroz with engineering by Robert Rodriguez. It's fact-checked by Sierra Juarez. Cake and Cannon is our show's editor and The Indicator is a production of NPR.