(6 May 2016) FOR CLEAN VERSION SEE STORY NUMBER: 4034525
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A Czech company is the big winner as a revival of vinyl records gathers pace.
The record maker is set to open a brand new factory in Canada this summer because of booming demand.
GZ Media is also finalising a deal to acquire a majority in an existing vinyl plant in the United States.
STORY-LINE:
It may already be the biggest vinyl plant in the world. Now Czech company, GZ Media - a major player in the global vinyl revival - wants to conquer America. And Asia is coming next.
Vinyl records have been staging an unprecedented comeback, and GZ Media, based in a small town located just south west of the capital, knows something about ups, and downs of the music industry.
Built behind the Iron Curtain, the company, previously known as Gramofonove Zavody Lodenice, has been making vinyl records since 1951.
When CDs began to take over the market, the output hit rock bottom in the mid 1990s with just 300,000 records a year. At the time, the company thought the days of vinyl were numbered.
Now the company's fortunes have been reversed and expansion is imminent.
"At the moment we export an absolute majority of what we produce and about a third of our production ends up in North America. So when we think about our plans for the future and investments and a strategic course for our firm it is a logical step for us to open a new factory in North America. Because we have a quite strong customer base there," says Michal Sterba, GZ Media director general.
Rebounding from the bottom, a slow but steady growth was replaced with an ongoing boom around 2010 and those who survived the previous decline benefited from it.
GZ Media's output increased to 13.7 million records in 2014, jumped to 18 million last year and the company estimates it could be as high as 25 million this year.
That's a big chunk of the world market, which is estimated to have produced between 90 and 100 million records last year, though official figures are not available.
"We keep saying that nothing will grow forever, everything has its limit and only a fool would think that if we grow by 30 percent now that it will continue for decades. It's absolutely clear that the demand will saturate and it can stagnate or even decline, after all it's a fashion. Personally I would expect the growth to continue for another two or three years," says Sterba.
As a result of a $10 million investment, the new joint venture with a partner in Canada - Precision Record Pressing - begins operations in Burlington near Toronto in August. Its production capacity should reach 3 million next year and between 5-6 million in three years.
And another project follows. GZ Media is about to acquire a majority in an existing vinyl plant in the United States with a capacity of 3 million records. Sterba would not reveal details.
According to the Recording Industry Association of America (RIAA), revenues from vinyl albums were soaring last year by 32.2 percent year-on-year to reach $416.2 million - confirming the strong comeback that defies a global trend of moving from physical formats, such as CDs and vinyl, to digital ones, such as streaming and downloading.
Vinyl albums still have only a tiny share of the overall market for music, some 3 percent globally, the International Federation of the Phonographic Industry (IFPI) said.
The figure is slightly higher, six percent, in the United States.
Coping with the demand is a tough challenge for all producers. GZ Media operates 24/7 and its presses even continue over Christmas.
It has, however, a competitive edge over the others.
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