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The Sound of Berlin
Subculture and Global Music Industry1
Ingo Bader and Albert Scharenberg
Berlin booms–but only with respect to culture and more specifically music.
While the vision of being one of the leading cities in the global economic net-
work has failed dramatically after reunification (Scharenberg 2000; Krätke
2004), it is, ironically, precisely deindustrialization that has turned Berlin into
a node of creativity and cultural production. The musical styles most closely as-
sociated with the Berlin music scene–i.e. New Wave, Techno, Electro, as well
as, in the national context, HipHop–originated in the urban ruins of deindus-
trialized Detroit and Manchester or the dilapidated Bronx. In Berlin, the free
space that urban movements fought for in the 1980s and 1990s facilitated the
development of a lively subculture.
To explain the city’s rise to an “alpha World Media City” status (Krätke
2002), it is insufficient to simply look at the city’s overall economic perfor-
mance. In fact, Berlin’s marginal position in the highly decentralized German
city network has not changed much since reunification. Therefore, institution-
alist approaches to cultural economy are not able to sufficiently explain Berlin’s
rise to a central node of the global music economy. We argue that the main
reason global players and major music industry associations have moved their
headquarters to Berlin is the city’s dynamic club and music subculture.
Our case study is empirically based on qualitative fieldwork about the music
economy, in particular participant observation and 20 guideline-based inter-
views with representatives of music-sector companies and associations, as well
as with administration employees between 2001 and 2005. Interviews were
carried out with representatives from both the formalized firm-based section of
the music industry (major and independent companies), and from the more in-
formal club scene. In addition, we consulted Berlin’s culture press, local news-
1 | Source: Bader, I. and Scharenberg, A. (2009) The Sound of Berlin. Subculture and
Global Music Industr y. International Journal of Urban and Regional Research 34.1,
76-91.
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papers and administrative publications, as well as empirical data obtained from
statistical agencies and business registers.
In the following, we discuss firstly the flexible integration of small busi-
nesses into the networks of global players. Secondly, we examine the relation
between Berlin’s economic decline and the city’s specific urbanity. Thirdly, we
analyze the development of the specific urban music scene and its styles. In
doing so, we follow Amin and Thrift (2007: 158), who make the case that this
approach “adds a whole new raft of possibilities and connections to contempo-
rary cultural studies of the urban.” We conclude that subculture is more than
a force of attraction for the creative class, and that Berlin’s attractiveness for
young and creative people does not correlate with a general economic success,
as Florida (2002) argues.
CREATIVE INDUSTRIES AND THE CITY
Most observers agree that an urban context and atmosphere is essential when
debating the potential locations for enterprises in the cultural economy. How-
ever, this is not only true concerning their economic activities, but also with
respect to musical innovation and production. It is no accident that most mu-
sic styles are closely connected to certain cities–New Orleans and Jazz, De-
troit and Motown, Chicago and House, Manchester and Brit-Pop, and even
Nashville and Country. Without the urban density and the specific local con-
ditions, their development would not have been feasible. Even though many
large cities develop a local music style, only a few of them receive an interna-
tional response, and still fewer become important nodes of the global culture
industry.
Following the collapse of the dot-com bubble in 2000/2001, the creative
industries and the so-called creative city have increasingly become the new leit-
motif for urban development. The debate was triggered by Florida’s book “The
Rise of the Creative Class” (2002). Florida stresses the importance of so-called
“soft” location factors, in particular as a pull-factor for the creative class (i.e. the
workforce of the knowledge-based and creative industries). The attractiveness
for this class is supposed to be the decisive element for the city’s economic
success. While Florida’s book has had strong repercussions in the arena of city
politics–in particular in the areas of economic policy and city marketing, it
has met with strong criticism, too (Scott 2006; Peck 2005). For instance, Scott
(2006) argues that Florida does not have any theoretically grounded and em-
pirically based understanding of the urban cultural economy and its embed-
dedness in post-Fordist urbanity. In understanding urban culture primarily as
a “soft” location factor, Florida’s approach, according to Scott, falls back behind
the institutional theories which focus on the dynamics of cultural production.
Bader/Scharenberg: The Sound of Berlin 241
The global city debate shows that services produced for the global market
need urban centers, i.e. global cities. The same is true for the cultural indus-
try; it is also organized in a global network of (a few) cities with a great deal of
cultural production (and productivity). These cities have come to be known as
media or culture cities (Krätke 2002). Here, the controlling mechanisms of the
global cultural economy, which are part of the heavily centralized distribution
network, are concentrated. Krätke’s analysis of the institutional embeddedness
and global networking of this industry offers conceptual starting points for the
explanation of Berlin’s rise to an alpha World Media City, defined by Krätke
(2003: 616) as following:
“An alpha world media city had to have more than 17 of the 33 global media firms (i.e.
over 50 percent of the global players analyzed here) in its location area (first threshold
value) and more than 60 business units from among the global media firms included
had to be present (second threshold value).”
According to Krätke, the globalization of cultural production enhances the
importance of control functions and thus of global media corporations (Ryan
1992). At the same time, the industry’s tendency to re-agglomeration fosters the
formation of inner-urban clusters. However, even Krätke does not really come
to terms with the enterprises’ choice of location since he focuses on control
functions and agglomeration economies. We thus want to supplement Krätke’s
theory by focusing on the creative input of the production process of cultural
goods and on the organizational changes in the cultural economy. Our example
will be music in the context of the cultural industry’s economic restructuring:
How significant is urbanity–and, more precisely, Berlin’s specific urbanity and
(sub)culture–for this production process?
At this point, Santagata (2002) defines “creative districts” as regions of flex-
ible production which generate the specific cultural and institutional forms
of networks of small enterprises. This concept draws on the concept of “in-
dustrial districts” (Sabel 1992). Due to the fact that within the production pro-
cess, cultural and technological knowledge has become more important, this
approach–though already developed in the early 1980s–regained influence in
the scientific debate during the 1990s. The connection between the knowledge
generation process and a specific social environment as well as institutional
setting explains both the rise of agglomerations of the creative economy in gen-
eral, and the latter’s spatial selectivity vis-à-vis local institutional settings and a
locally specific urbanity.
These approaches also offer valuable insights, which help explaining
Berlin’s rise to an alpha World Media city. Creative economies are based on
networks of flexible specialization and a vertically disintegrated production
process (Scott 2000). Technologies and work processes that are used for the
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production of cultural goods often contain a high degree of tacit knowledge
and, increasingly, specialized computer technology. In general, the production
is dominated by networks of small and medium-sized enterprises, which are
dependent upon each other due to their specialized input and output, although
large companies often participate in the same networks. Because works in the
tradition of Piore and Sabel (1984) tend to overestimate the networks of small
enterprises as the new organizational model of Post-Fordism, we rather want
to follow Amin (2000) as well as Scott (2001: 11ff.) in proposing different types
of incorporation of small enterprises–so-called “independents”–into globally
operating corporations of the music industry.
Networks of music production are organized in highly complex forms.
Among other things, they need a highly specialized and trained workforce.
The size of the agglomeration–or, more specifically, the labor market–mini-
mizes the risk for employers as well as for employees (Scott 2000). Contrary to
Florida’s assumption of a new and fairly homogenous “creative class,” employ-
ment within the cultural industry is visibly divided (Peck 2005: 757f.). The
industry’s work force, i.e. artists and their productive environment, make their
living through creativity, which in turn is dependent on living conditions. The
settlement (and financial promotion) of individuals engaged in the cultural sec-
tor is foremost determined by two factors. On the one hand, a large segment of
the creative economy is based on precariousness–their industries are pioneers
for unregulated working conditions. Because of their mostly low income, cheap
rent prices are an important “location factor” for the creative scene in Berlin.
Additionally, creativity is not only an individual quality (of an artist); it is deeply
rooted in the interaction and mutual stimulation of a creative field (Scott 1999).
Furthermore, agglomeration eases the formation of a network-specific institu-
tional infrastructure. In sum, cultural production is based upon the develop-
ment of complex and extensive–and hence largely urban–agglomerations in
the form of cultural districts.
Beyond the demands on the local labor market, context and detailed pro-
cesses within creative economies are only generally addressed within insti-
tutional theories. Those theories do not take into account the specifics of the
cultural production of goods. It is precisely this aspect that needs to be ex-
plained; otherwise, the fact that other industries have not–despite the gov-
ernment move to Berlin in 1998–experienced similar economic booms, can-
not be understood. With its experimental music scene, Berlin has become the
most important location and an international first class node for the global
music industry. We want to show that the importance of the city’s cultural
economy is mainly based on local subcultures and their everyday environ-
ment. This is not only relevant because of its symbolic qualities as a “soft”
location factor which may be used for city marketing purposes. At the same
time, it is an important part of production networks and, therefore, an inte-
Bader/Scharenberg: The Sound of Berlin 243
gral part of local economic policies. For this reason, we want to first outline
the societal conditions which have turned subculture into an important field
in the global music industry.
THE IMPORTANCE OF SUBCULTURE
“Subcultural flair” is of great importance to major record companies. Connell
and Gibson (2003: 113ff.) link the new significance of local music and “niche
markets” to the differentiation of lifestyles. The demand for mass products, i.e.
mainstream music, decreases, while consumers increasingly ask for diversified
products. One of the main reasons for this new demand is social distinction
derived from these products, which can be used for self-stylization. Subcul-
tural, local music is particularly suited for this kind of distinction, because
it is linked to quality and creativity and differs from the mass market due to
its local, but also subcultural and rebellious character (Hebdige 1979). Going
back to Bourdieu’s (1984) term cultural capital, Thornton (1997) proposes the
term subcultural capital that she defines as accumulated subcultural knowl-
edge signalizing status in the form of “hipness.” It is embodied in style, such
as a particular haircut, or in a record collection similar to libraries in middle-
class households. Hipness, i.e. subcultural capital, emerges through delinea-
tion from the mainstream and allows social ascendency across the established
classes. This delineation has an important function of social distinction, in
particular with within youth culture. Since “youths, from many class back-
grounds, enjoy a momentary reprieve form necessity” (Thornton 1997: 206),
they also spend money for this purpose. This can economically explain that
subculture, i.e. hipness, has been integrated into the products of the music
market, and that “the single sales chart is mostly a pastiche of niche sounds
which reflect the buying patterns of many taste cultures, rather than a mono-
lithic mainstream” (ibid.: 205). Therefore, subcultures are more than a coexis-
tence of lifestyles. Difference does no longer necessarily signify opposition or
resistance to a hegemonic culture, as the Birmingham Center of Contemporary
Cultural Studies (CCCS) put it, but also competition for (sub-)cultural capital.
Independent labels founded during the 1970s and 1980s represented an at-
tempt to create alternative economic structures beyond a music industry which
is only interested in commercial success. Their purpose was to autonomously
produce and distribute creative, experimental (and thus subcultural) music. In
contrast, underground culture in East Berlin’s inner-city districts was from its
beginnings around 1990 in part entrepreneurially oriented (Gdaniec, 2000);
the contradiction between commercial and non-commercial was rarely as pres-
ent as it used to be in the earlier Punk and Independent movement. The club
culture’s “heroes came in the form of radical young entrepreneurs who had
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started up clubs and record labels, rather than the poets and activists of yester-
day” (Thornton 1997: 208).
The marketing of niches links products to local history and thereby appro-
priates the sound of the street (Scharenberg and Bader 2005)–not only with
respect to cultural products, but also concerning the symbolic revaluation of
gentrified neighborhoods (Allen 2007; for Berlin see Diederichsen 1999). Au-
thenticity is the connection to the local, and it embodies the lifestyle of local
subcultures. Because it is used to maximize profits through diversified styles
and local sounds, authenticity is becoming an important element in the strate-
gies of the global music industry. The major labels’ marketing is no longer
solely directed at the mainstream, but looking for differentiated lifestyles (and
lifestyle images)–and it is even producing them itself. In sum, subcultures can
no longer be understood primarily as a cultural attack against the mainstream
and as standing outside the music industry (if they ever were). Rather, they
become increasingly important as niche markets.
But a vivid subculture merely arises in cities that are booming and entirely
gentrified. This matches Hall’s (2000) finding that the development of creative
milieus and the attraction of creative people is a matter of transitory phases,
which are open to experiments, rather than something taking place in cities
that are at the peak of economic prosperity:
“But these talented people needed something to react to. We noticed that these [crea-
tive cities] were all cities in transition: a transition forward, into new and unexplored
modes of organization. So they were also societies in the throes of a transformation in
social relationships, in values and in views about the world” (Hall, 2000: 646).
There is a fundamental contradiction to Florida’s thesis involved here: While
Florida takes it for granted that a creative milieu correlates with economic suc-
cess, the situation in Berlin is quite different. Generally, such a milieu evolves
particularly within those cities that have to deal with a collapse of their eco-
nomic base. It is precisely the most deindustrialized cities and regions that
“smell” their chance as “shrinking cities” and attempt to attract creative people
(Scharenberg and Bader 2005). This milieu is more often than not connected
to–or at least related to–a social movement protesting against the restructur-
ing of cities. Just as Peck (2005) has questioned the correlation between the
creative city index and growth, Jeppesen (2004) states in his comparative study
of five European cities that it is rather those cities and regions without a strong
creative milieu that have the highest growth rates (such as Galway in the North
of the Irish Republic).
Now the creative class Florida talks about tends to prefer gentrified neigh-
borhoods and thus a specific form of urbanity (Peck 2005). However, there are
certain differences: Whereas global control functions and highly specialized
Bader/Scharenberg: The Sound of Berlin 245
production-services tend to be concentrated in gentrified inner-city neighbor-
hoods of booming metropolitan areas, our findings support Hall (2000), who
argues that creative processes and cultural innovation–and particularly the
creation of niche products–tend to be concentrated in declining cities. There-
fore, a branding strategy using a city’s subculture may enhance the city’s sym-
bolic value, but simultaneously undermines the everyday conditions necessary
to sustain the creative process itself.
THE MUSIC INDUSTRY DISCOVERS BERLIN
In Berlin, the music industry has become an important part of the urban econ-
omy. It is, within the concept of “creative cities” (Florida 2002), increasingly be-
ing seen as a key to the success of the regional economy. Despite the industry’s
crisis–from 2001-2003, the German music economy lost about 40 percent of
its turnover–the German music industry (including retail) in 2005 produced a
turnover of 24 billion Euros (32.17 billion US-Dollar) (Senatsverwaltung 2006).
However, after Universal Music Germany, MTV Central Europe, and many oth-
er music labels and service providers moved to Berlin, the market share of the
city’s music industry has increased significantly. Starting with the global play-
ers’ relocation to Berlin, a dynamic pull has developed which to a significant
degree is based on agglomeration economies (Scott 2000). From 2000 to 2005,
the turnover of Berlin’s creative economy has risen by nearly 23 percent to 18.5
billion Euros (24.8 US-Dollar) and 23.5 percent of the city’s overall turnover.
The music industry’s share of the creative industry’s turnover is 5.5 percent
(Senatsverwaltung 2007).
Although Berlin has been troubled by persistent economic problems that
have been discussed intensively (see Scharenberg 2000; Krätke and Borst
2000; Krätke 2004; Krätke and Taylor 2004; Brake 2005), the city has been a
winner of the music industry’s economic crisis and has become an alpha World
Media City on a global scale (Krätke 2002 and 2003). In times of its overall
decline, in Berlin it has increased not as much as all of its creative industry, but
significantly by 4 percent (Senatsverwaltung 2007). We follow Krätke’s argu-
ment that the cultural economy is a central economic field, on which the city
should concentrate in their economic policy, in contrast to the failed global city
policy after re-unification:
“Berlin, in par ticular, could take the message spelled out by this analysis as a reason to
make the cultural economy and the media industry core areas of its economic develop-
ment policy and to further enhance the ‘local’ creative potential of the cultural economy
as an important attractiveness factor for a world media city. […]. Th[e] reputation [as a
cultural metropolis in the 1920s] can now be restored on the basis of current economic
Berlin Contested
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developments and exploited for the development of the city. However, while Berlin is
still not a global city, […] it is a first-rank global media city in terms of being a center for
cultural production and the media industry with a world-wide significance and impact”
(Krätke 2003: 618).
The settlement of music companies and corporations, however, is still one of
the few fields in which Berlin’s economy could resist its overall decline. Between
1995 and 2005, the city’s Gross Domestic Product has decreased by 8.5 percent
(Wall Street Journal 2006). Next to tourism, low-skill services and the culture in-
dustries, only a few highly specialized creative and knowledge-based industries
managed to flourish (Brake 2005), but they are not able to replace the employ-
ment and economic power of the former industries. Even though the strategic
focus on certain creative and service industries—and in particular on culture
and music economy–seem to be without alternative, it is not without problems.
The core problem of the city’s economy, i.e. the lacking industrial base, remains
untouched by this strategy (Helms 2000). Before the city’s reunification, West
Berlin played a rather marginal role in the decentralized German city network
and had huge structural deficiencies, because it experienced a first wave of
deindustrialization already right after World War II. Therefore, specific “Berlin
subsidies” were used to keep alive some assembly line production of mass prod-
ucts. After the fall of the wall, most branches of the East Berlin economy were
no longer globally competitive. Contrary to the high-flying visions of the early
1990s, Berlin did not become a global city. Even compared to other metropolitan
areas in Germany, Berlin’s economy still commands very limited economic con-
trol capacities (Krätke 2001). In effect, “the great hope of a metropolitan service
economy” did not materialize; the city is currently merely “the ‘capital of clean-
ing squads and private security firms’” (Krätke 1999: 333). Moreover, the global
city policy accelerated the city’s financial decline (Krätke 2004).
However, one important “industry” moved to Berlin in the late 1990s: gov-
ernment. Though the overall economic impact on the various sectors of the
city’s economy differed, this move was very important for the music indus-
try–being in Berlin now means being close to political decision-makers. This
closeness is very important, because the control of copyright –and also the
making and changing of laws–is central to the functioning of profit-gener-
ating music industry (Reinbacher 2004; Nuss 2006). For instance, influenc-
ing the political regulation of the marketing of music via lobbying was one of
the main reasons for Universal Music national branch to come to Berlin. On
the other hand, this does not sufficiently explain that the music industry has
restructured around Berlin as a central node more so than any other industry
deriving an advantage from this closeness.
In any case, local networks of creativity are important for musical innova-
tion (Lovering 1998: 37) and also for subculture as an important part of these
Bader/Scharenberg: The Sound of Berlin 247
networks. T he global music indust ry is rooted in local communities (Scott 2001)
and “is based on place-specific socio-cultural milieus” (Krätke 2004: 527), but
its sales are mainly based on the back catalogues of the few superstars of inter-
national music. Berlin derives its increasingly important role mostly from the
production of innovative niche products catering to an international market.
With respect to musical innovation, Berlin has been an important city
for a long time. But there was hardly any significant creation of value within
the city until the late 1990s. The term “music capital of Germany” only made
sense–and hence became established–after Universal Music Group Germany
and other large companies had moved to the city (Bader 2004). This image
was strengthened after other important actors in the music industry–such as
Germany’s largest music fair Popkomm, various medium-sized labels, and the
most important national associations of the German music industry–moved
to Berlin as well. Although Universal Music is the label with the highest sales
rates, it likes to emphasize its closeness to Berlin’s local, subcultural music
scene.
To a certain degree, Tim Renner, at that time CEO of Universal Music
Group Germany, exemplified this strategy at the time of the company’s move
(Renner 2004). Renner still likes to emphasize his love for punk music. In
Germany, he was the first to sign independent bands via major record compa-
nies; Rammstein later became the most successful of these bands. For a while,
Renner was regarded as the darling of the German music industry, because
he was able to profitably integrate a music that used to be the soundtrack of
rebellion into the major record companies. The eventual dismissal of Renner
in January 2004 demonstrates that his strategy remains disputed within the
music industry.
BERLIN AND SUBCULTURE: CITY, SPACE, AND STYLE
Today, Berlin is one of the most important cities for electronic music world-
wide. At the same time, it has kept its experimental, self-made and innova-
tive character. This has made Berlin different from many other cities, where
nightlife diversity exists only as simulated “air” controlled by large entertain-
ment companies or breweries (see Hollands and Chatterton 2003). This “ex-
periment and laboratory situation” has enhanced the attractiveness of the city
as a site for the music economy. The best-known labels of Berlin’s electronic
music scene – such as Tresor Records and Kitty-yo –are expressions of the
local creative districts. Social scientists and government reports, for the most
part, notice only those actors that have an economic output which is statisti-
cally measurable, i.e., next to labels, enterprises from other parts of the value
creation chain such as sound studios, music publishers, producers of music
Berlin Contested
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instruments, music clubs, concert agencies and fairs (Obert etal. 2001; Keßler
and Reinhard 2004; Senatsverwaltung für Wirtschaft 2005). The anchorage
of these actors in a local scene is usually not taken into account. However, eco-
nomically marginal actors, such as temporary and semi-legal clubs and bars
or record stores, are important places of communication for the local networks
of creativity (Schyma 2002). They are meeting points and thus contribute to
the development and diffusion of musical styles. Their temporary and non-
commercial (or less commercial) character allows for experimentation as small,
though still market-oriented labels. Here, people that may later start economi-
cally successful enterprises meet for the first time, get to know (and trust) each
other and start an informal exchange of ideas, concepts, etc. Well-known local
labels and clubs mirror the complex processes that have created the specific
“Berlin-type” music after the fall of the Wall (Vogt 2002). To a certain degree,
this music is rooted in West Berlin’s alternative culture of the 1970s and 1980s.
During the 1970s and 1980s, a lively and politically rebellious subculture
evolved in Charlottenburg, Kreuzberg, Schöneberg and other inner-city dis-
tricts of West Berlin. It was based on new social movements (squatters, com-
munity organizations), gay scene and student milieu, and culturally located
between Punk, Industrial, and Neue Deutsche Welle (the German counterpart
of New Wave and the first pop music in German language that dominated the
national charts for some years; Teipel 2001). Small labels, sound studios, and
party and club organizers founded networks aimed at counter-culture activi-
ti es. T he spec ific geog raphy of the cit y of West B erlin –as an “island” wit hin the
GDR surrounded by the Berlin Wall–had turned the city, and in particular the
south-eastern part of Kreuzberg, into urban periphery. Kreuzberg, a traditional
working-class neighborhood with a lot of small trade and “backyard factories”
(Hinterhoffabriken), became a central location for Turkish immigration, and is
still the city’s poorest district. The controversy about redevelopment caused the
squatting of empty houses, warehouses and other buildings as clubs, bars, and
living space. One example is the famous club SO 36 that has been the center
of the scene from which “Einstürzende Neubauten” evolved as the arguably
best-known act of the 1980s Berlin underground. Next to the City West (the
area between Bahnhof Zoo and Savignyplatz)– where, among others, Mute
Records, BMG Berlin and clubs like the Dschungel (Jungle, Berlin’s heart of
the Neue Deutsche Welle) were located–this area (including Universal Music
and MTV) became the basis for the second important cluster of Berlin’s music
industry (Bader 2004).
The Hansa Studios provided the connection to the international music
scene, where stars like Nick Cave, Iggy Pop and David Bowie worked and pro-
duced during the 1970s and 1980s. They also lived in West Berlin for a time and
were as deeply influenced by the local music scene as they in turn influenced
the city. The Hansa Studios not only provided artists with physical infrastruc-
Bader/Scharenberg: The Sound of Berlin 249
ture, but was simultaneously “a location, with a political and cultural style, that
somehow combined pre-war hedonism with post-war political tension” (Conell
and Gibson 2003: 105).
However, Berlin may have been internationally known for its music scene
and musical expression. But as a location for the national and international
music industry, it did not play any significant role. In this respect, Cologne,
Hamburg, and Munich were the leading cities in the Federal Republic (Scha-
renberg and Bader 2005).
The fall of the Berlin Wall in November 1989 changed everything for Ber-
lin –and also for its music and “spirit.” The center of subcultural activities
moved to the eastern part of the inner city. Areas used for subcultural music
proved to be pioneers for the settlement of music companies. Some of them
simply moved to these locations, but many evolved directly from subculture
(e.g., Tresor Records and the Tresor club) (Hegemann 2005).
For the city’s contemporary club culture, this radical change proved to be
the spark. It was only then that Techno became a mass phenomenon in the
city, though its roots can be found in the hedonistic gay scene in the city dis-
trict Schöneberg (Westbam 1997), and in the electronic avant-garde that thrived
in West Berlin during the 1980s (with bands like “Einstürzende Neubauten”).
Right after the fall of the Wall, the new freedom met with a specific urbanistic
situation in East Berlin, characterized by massive vacancy of commercial and
residential buildings as well as the city’s deindustrialization. How the urban
youth of the 1990s saw itself is reflected in the new centrality of the audience:
People were no longer just passive consumers, but–as dancers–constitutive
elements of raves. The slogan of the first Love Parade in 1988–“Friede, Freude,
Eierkuchen” (a German saying, meaning “everything is fine,” literal meaning:
peace, fun, pancake)–shows a renunciation of the depressed, but also highly
politicized spirit of the Berlin underground of the 1980s:
“Raves take place largely in postindustrial landscapes, transforming rundown warehou-
se sites into timeless, de-localised, and de-realised spaces, where obsolete industrial
infrastructure is juxtaposed to state of the art technology to create a surreal, almost
virtual world – a fun factor y” (Richard and Kruger 1998: 163).
The local music scene, and in particular electronic music, reflects the quick lo-
cal transformation right after the fall of the Wall. At the same time it can only
be conceptualized in the context of the global development of electronic dance
music, as it is marked by the Techno music of the Black inner-city of Detroit
(Henkel and Wolff 1996), and the Acid-House of the mostly illegal warehouse
parties in English deindustrialized cities (Ingham etal. 1999). Techno music
from Detroit, in turn, became famous primarily through the Berlin Techno
scene. This demonstrates how processes of postmodern urbanism spatially and
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historically framed Berlin’s local electronic music scene. Similar to HipHop
(Scharenberg 2004), Techno evolved in the context of the deindustrialization of
cities, and in Berlin it found its most significant expression.
The use of vacant buildings was possible, because in East Berlin ownership
status of land and property was often unclear during the early years following
reunification. Therefore, the administration had no cause to interfere with the
temporary use of these locations. Even after the reassignment of ownership
according to the “unification treaty” between FRG and GDR from 1990, it of-
ten took years until the administration decided about legal claims. Since many
clubs and other subcultural users appropriated the spaces of their activities for
only a few months, those persons who otherwise may have had the responsi-
bility to legally interfere did not have a survey of the East Berlin underground
scene.
In addition, many of today’s clubs and other sectors of the urban music
economy have their roots in these squats. After the fall of the Wall, most of
the important actors of Berlin’s club music have gone through an “illegal
phase”–such as the Tresor (the club of the founders of Tresor Records) and the
Love Parade as an internationally known event that attracted one million people
at its peak in the late 1990s (and is commonly described as one major example
of festivalization of local urban policy). However, temporary appropriation, i.e.
the creation of “temporary autonomous zones” (Bey 1991) free from state and
institutional control, was not limited to cultural use; living space was squatted,
too. In addition to about 140 squatted buildings, many vacated apartments were
squatted without much controversy. This was one of the reasons for the migra-
tion of young and creative people to the city’s eastside. Next to Berlin’s image
as a stronghold of youth and subculture, the low costs of living were a major
factor for this migration–low or no rents, cheap food, and a subculture that,
at least right after 1989, was not particularly commercial. Furthermore, the
city’s subculture and nightlife have long differed from other (German) cities
because Berlin lacks a closing time and has less little regulatory interference
(Bader 2004).
Because of the temporary character of club culture and the exclusive (and
excluding) advertisement via flyers (Riemel 2005), the spatial manifestation of
Berlin’s club culture is hard to assess in terms of quantity. The media’s percep-
tion, but also the academic understanding, is dominated by those locations that
started as illegal clubs and later became commercially successful. Small, tem-
porary locations or clubs playing music that differs from what is globally mar-
keted as Techno via the Love Parade often go unnoticed. In the early 1990s, this
club scene used to be mainly located in Prenzlauer Berg and in Berlin-Mitte
(around Hackescher Markt). These districts have since been thoroughly gentri-
fied (Bernt, 2003), and the scene has moved to other districts and areas–first
to Friedrichshain, and more recently “back to its roots” to the area around
Bader/Scharenberg: The Sound of Berlin 251
Schlesische Straße in Kreuzberg (Bader 2008). This scene has produced vari-
ous styles of electronic music, as they are presented at the independent music
fair “Marke B” (Brand B; see Gut and Fehlmann 2005). Together with German
“ghetto-style” HipHop and world music2, they have in recent years replaced
Berlin’s image as “Tekkno City.”
The experimental and innovative character of these underground locations
is made possible by the temporary character of these illegal clubs and bars,
which are permanently threatened by closure, and by entry restriction via codes
and “informal” advertisement that can only be read and understood by the cor-
responding target group. Ambience and style can only be maintained, if a cer-
tain size is not exceeded, and if the audience is in line with the club or bar and
thus represents its particular “character” (Ballhausen 1999).
Underground is always at the same time subversive and elitist. Access lim-
its and separation from the mainstream make possible the avant-garde char-
acter, but they also mean exclusion. This shows how the subculture of tempo-
rary clubs and bars with their partly illegal practices could in Berlin go hand
in hand with the gentrification of city districts, as demonstrated especially in
Berlin-Mitte and Prenzlauer Berg. The subculture of temporary clubs and bars
was not only integrated into urban restructuring, but also into the innovative
processes of the cultural economy. Its elitist character fits the self-stylization
of the new urban middle classes. The locations’ character has thereby changed
as well. Non-commercial, dingy, self-made basement clubs have become rare.
Increasingly, they are being replaced by “chic” and thoroughly styled bars as
well as by a simulated and “ready-made” subculture.
NEW FORMS OF ECONOMIC COOPERATION
In order to use the potential of subculture and local creative districts, major
labels commonly open a local branch. But spatial proximity is not only neces-
sary at the level of cities; local production clusters are also formed at an intra-
urban level. For instance, Low Spirit Recordings, a sub-label of Bertelsmann
Music Group (BMG) that is one of the major sellers of techno music and the
label behind the Love Parade, is located close to BMG. A similar proximity can
be found in the cluster at the Oberbaumbrücke (the bridge connecting Kreuz-
berg and Friedrichshain) with Universal Music Germany, MTV Central Eu-
rope, and various smaller labels and other musical enterprises: reproduction
and distribution enterprises, which take over those parts of Universal Music’s
2 | After the demise of the Love Parade, Berlin’s largest music event today is the “Car-
nival of Cultures of the World,“ World Music as well as HipHop are both, though quite
differently, linked to the migrant communities.
Berlin Contested
252
production process that have been outsourced (and which depend on an urban
environment), choose a location close to this major record company. This is
particularly the case for mastering studios, graphic designers and advertising
agencies (Bader 2004).
This spatial proximity also allows for the acquirement of new contacts to
other labels, since personal contact and trust are central to business within
the network of creativity. Concerning production-oriented services, this is a
general phenomenon. Sassen (1991) has argued that personal trust is one of
the reasons that specialized services are still highly centralized – despite all
“disembeddedness.” As it is largely tacit knowledge, musical knowledge is an-
chored locally, too, and it is integrated in networks based on reciprocity (Scott’s
“creative field”). The innovative potential of networks of creativity is bound to a
certain place and can thus primarily be used in close personal contact. For the
success of a label, tacit knowledge about the scene is crucial. With respect to
subculture, knowing musicians and being known within the scene is a precon-
dition for signing musicians, precisely because for these actors, in contrast to
major record companies, trust is a central category for cooperation.
Local agglomerations of flexible production–the networks of creativity–are
integrated into the global music market via transnational corporations (see
Amin 2000: 165). They use and maintain the advantages of cultural districts
based on the networks of small enterprises. Major record companies mainly
take over those segments of music production benefiting from concentration,
i.e. reproduction, global distribution, and global brand name. This deal, how-
ever, is inherently unequal. First, while successful artists get their share from
the profits generated by their products, other actors of the cultural milieu pro-
ducing this creativity do not participate. Second, even though individual artists
who are coming from an independent label or, more generally, the subculture,
do gain from a contract with a major record company, the distribution of profit
is heavily one-sided. The bigger part of profits goes to the networks that be-
long to transnational entertainment corporations. These corporations account
for 80-90 percent of the global music market (Binas 2005). The integration of
music scenes into the major labels is based not only on their advantages con-
cerning global distribution, but also on their control of networks. Important
instruments of marketing, such as radio and television stations or international
chains for entertainment products, are not accessible for independents, since
they are controlled by the transnational entertainment corporations.
The rigid, inflexible structure of major record companies has also many
disadvantages. Musical innovation is always a high-risk venture, because the
future of the music market is hard to predict and highly unstable. Labels that
are closely connected to the subculture tend to publish high-risk products.
Their commercial success is precarious or, at best, only profitable on a low
scale. Moreover, independent labels may suit artists better and more continu-
Bader/Scharenberg: The Sound of Berlin 253
ously, because more often than not they belong to the same musical scene as
the artists themselves. Independents can only reach small markets, even if they
cooperate with a major record company. Major labels, on the other hand, tend to
react very slowly (and carefully) to new trends, because their organization and
processes are highly complex. This is not only due to the level of bureaucracy
and complex decision-making structures, but also to the fact that major record
companies organize more extensive marketing campaigns that are directed to
other large media. Of course, this is primarily a cost factor. More than 90 per-
cent of the products a major record company publishes do not make any profit
(Ryan 1998).
In recent years, independent labels have become more attractive to artists,
because today, an international commercial success is possible even for inde-
pendents. This has been shown by, for instance, Tresor Records (with Detroit-
Berlin star DJs such as Jeff Mills and Juan Atkins), or Kitty-yo (with Peaches)
(Obert and Böhl 2003). Labels that have specialized in a particular music, and
which are based in the respective musical scene, can more easily turn into a
brand name than major record companies that cover everything from Country
to Rap to Punk to Pop. Furthermore, due to the large number of musical styles
and artists, labels have become quite important for individual purchase deci-
sions. The major record companies have also realized the advantage of flexible
production and now integrate many of the independents’ advantages. Today,
the latter have actually become part of the global music industry–not so much
their “counter model.” The large corporations of the global music industry try
to use the decentralized structures in various ways as innovation networks.
The “classical” approach assumes that local artists working with small la-
bels will directly be taken over by major labels. A direct take-over, though, is not
something that majors and independents are aspiring to. It generally seems to
make sense only if the band (or artist) can be placed on a large market that can
be reached only through the majors’ marketing. Since a product’s success in
the music economy is hard to predict as well as a high-risk project, many artists
taken over by major record companies fail, i.e. they do not economically survive
the change to the major record company. The risk is not only on the side of the
majors, in particular since the necessary funds for production and video shoot-
ing are usually given out as a credit. Therefore, the change to a major record
company–even if sales rates go more or less unchanged–does not pay off for
many artists.
In their cooperation with subcultural scenes, majors increasingly favor the
integration of networks of small enterprises–the cultural districts–into the
global network of the cultural economy. This is mainly done because of the
advantages of the economics of scale. The cooperation with subcultural actors
may be understood as a form of outsourcing. In addition, the independent la-
bels do not see the music industry as an enemy any more (as many did in the
Berlin Contested
254
past). Generally, they do have artistic independence as well as (more) economic
success. Small labels have their strengths in the networks of creativity; in other
networks, the advantages of the economics of scale, which can be used better by
large corporations, dominate. This mainly affects distribution. Furthermore,
small enterprises of the music industry are financially insecure, because they
usually depend on few artists and the success of a particular style of music.
In contrast, “the smaller company provides its larger partner with preferential
access to artists that it discovers through its own A&R department” (Leyshon
2001: 64), since they are part of music scenes and thus can apprehend and ob-
serve developments taking place in these particular scenes much better than
major labels.
There are different organizational models for the inclusion of creative dis-
tricts. In Berlin, for instance, the labels Mute (an important independent label
well known for Depeche Mode or Einstürzende Neubauten), and Low Spirit
(the label behind the Love Parade which has signed Techno artists who man-
aged to get in the German Top 40) are directly integrated as sub-labels in major
record companies. This is the most far-reaching form of inclusion: The for-
merly independent enterprise is directly built into the operational structure of
a major record company, and it mainly serves as an established brand name and
“development laboratory.”
Distribution contracts are another model which allows the independent
label to maintain a high degree of autonomy. All large independent compa-
nies distribute their products either completely via major labels, or they do so
for those products that cannot adequately be distributed by themselves due to
sheer capacity (Gut and Fehlmann 2005).
The majors’ success is based first on their capacity to use local positive ex-
ternalities and innovative energy; second on their power to place their products
on national and international markets; and third on their ability to overcome
various cultural barriers to market-access in all parts of the world. The process
of distribution is the decisive interface between a local agglomeration and the
global market. It is through this process that the transnational entertainment
corporations secure their control over the commodification of music (Scott
2000).
CONCLUSION
Berlin’s example questions the economic sustainability of the creative city con-
cept. Our analysis has confirmed Hall’s (2000: 646f.) thesis that cultural in-
novation is a phenomenon of cities in crisis. The basis for musical innovation
as well as the development of the “global trademark Berlin”–now being com-
modified by the global music industry as well as by many small and medium-
Bader/Scharenberg: The Sound of Berlin 255
sized enterprises–has its roots in the period of radical change during the early
1990s and to some extend in West Berlin’s subculture of the 1970s and 1980s.
Free space is not given; it must be taken. It is no accident that alternative
visions and creativity reached a high-point during the 1980s in West Berlin,
and during the 1990s in the eastern part of the inner city. Here, subcultural
movements organized themselves, fought for another way of living, took over
free space. And they prevailed, though the results in the long run differ from
the initial visions in many ways. The link to a specific urban situation, as well
as to “underground” and “rebellion,” is still an important factor for the global
marketing of music from Berlin. We have demonstrated that there is a close
interdependence between major corporations and a large, fluid scene still using
this free space.
To Florida, economic success of cities correlates with the ability to attract
members of the creative class. In this context, urban culture and subculture
is not more than a mere soft locational factor. Creative city politics following
Florida’s concept contradict the fact that Berlin’s creative districts are based in
these subcultural scenes. In addition, it is precisely these scenes that attract
members of the creative class–in the case of Berlin not so much the global
elite of the creative industries, but independent creative entrepreneurs. Both
Florida and Krätke do not take into account that cultural innovation processes
are stimulated by an urban subculture which cannot only be understood in
terms of economic activity. Our analysis of the nexus between the city’s style,
the subcultural scene, and the clusters of small enterprises demonstrates that
Berlin has become a global node of the music economy precisely because of its
scene and the attraction of subcultural entrepreneurs.
Moreover, gentrification generally limits the opportunities for creative pi-
oneers. This is illustrated by the club scene’s continuous migration through
various city neighborhoods from Berlin-Mitte to Prenzlauer Berg to Friedrichs-
hain and back to Kreuzberg. While large development projects such as Media
Spree (with MTV and Universal Music) try to profit from the location’s image,
it seems highly unlikely that the much-acclaimed diversity can be obtained in
the long run. Therefore, a politics favoring large-scale development projects
undermines one of the few flourishing branches of the city’s economy.
The relocation of MTV Middle Europe and Universal Music Germany in-
creased the interest of the public in music as an important branch of the city’s
urban economy. However, Berlin’s mostly small-scale music economy is, in
contrast to the national branches of the major companies, genuinely global with
respect to its markets and perception. The city’s electronic music scene, the
independent labels and the city’s club culture are accountable for Berlin’s repu-
tation as a global music city. This creative environment is used as a brand, and
it is also seen as an important economic activity. Furthermore, the independent
labels which were originally founded as a counter-model to the global music in-
Berlin Contested
256
dustry in the 1970s and 1980s in fact revitalized their former rival. The flexible
integration of independent labels into the major music companies–whether
directly as sub-labels (by using their distribution channels) or still formally in-
dependent (as creative laboratories)–promoted the reorganization of the music
economy that fostered Berlin’s rise to a global music city status. In the face of
the music industry’s restructuring, the integration of small businesses related
to the subculture in networks of flexible specialization represents a new orga-
nizational model of the industry. In sum, there is not one creative city, but there
are rather various types: cultural production and branches of the creative in-
dustries in a broader understanding, i.e. design-intensive producer services, re-
spond to different types of creative cities. But the global cultural economy itself
is simultaneously bound to different urban settings. However, it is uncertain
which organizational model of the music industry will succeed. The domina-
tion of large companies will not be challenged, but cities like Berlin will have
the chance to position themselves in those niches within the new geography of
the music economy that are of still growing importance. The fact that Berlin
has achieved a first-ranking status within the global cultural economy precisely
because of its strong subcultural basis underscores this thesis. The lessons to
be drawn for politics are thus evident: It is better to stop promoting large-scale
development projects and to rather act cautiously, in order to protect and nour-
ish this cultural and economic treasure.
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