CBS Records Is Back, Jack

In a blast-from-the-past moment, CBS (NYSE: CBS  ) announced the relaunch of its historic CBS Records music division. Under its Columbia and Epic labels, CBS was a juggernaut in the music industry until it sold its labels to Sony (NYSE: SNE  ) in 1988. Some of the best-selling records of all time -- Michael Jackson's Thriller and The Eagles' Their Greatest Hits -- were the handiwork of CBS.

I'm waxing nostalgic over the news. While I was still in college, my band Paris By Air was signed to Columbia in 1987. After a short run at Columbia and then Sony, we wound up doing well on on this side of the millennium, with more than 500,000 downloads before the site was shut down.

That digital tack will be a big part of the new CBS Records. The label's focus will be digital distribution through its own site, as well as through Apple's (Nasdaq: AAPL  ) iTunes. The company will ultimately outsource the CD production to third parties.

This certainly doesn't sound like the same prerecorded music titan of days gone by, but CBS is taking a smarter, more cost-conscious approach this time. Small contracts and bunt singles are admirable approaches to a dicey music industry that has been burned way too often when it shoots for the fences -- like when EMI had to pay $28 million to buy out Mariah Carey's contract.

So why go with CBS when popular unsigned artists can go it alone in this digital age? Well, for starters, CBS will be helping its artists by getting their music on popular CBS primetime shows. Other outlets include CSTV, The CW, Paramount's syndicated shows on other networks, and video distribution through CBS' Innertube offering. CBS was spun off by Viacom (NYSE: VIA  ) earlier this year, so it can't be too bad to have the parent of MTV and VH1 as a friend.

No, the majors like Warner Music Group (NYSE: WMG  ) and Vivendi Universal won't be quaking in their melodic boots over this announcement. However, CBS Records is back -- even if it's without its flagship labels. And that's a catchier tune than you may think.

Longtime Fool contributor Rick Munarriz has always loved his keyboards, whether they are synthesizers, pianos, or the computer kind. He does not own shares in any of the companies in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.TheFool has a disclosure policy.

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10/21/2016 4:00 PM
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