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Czech firm hits right tune with vinyl records in fashion

By Jana Mlcochova

PRAGUE (Reuters) - When vinyl record sales hit bottom in the late 1980s, managers at Czech record producer GZ Media in a small town near Prague were wondering what to do with their idle record pressing machines.

They decided not to get rid of them and put them in garages at the company's backyard. That was a lucky move.

As vinyl retro-mania started spreading around the world a decade later, the firm dusted off the presses and is now spinning profits on records for the likes of the Rolling Stones, U2, Bob Dylan and David Bowie.

With 7 million records made in 2012 and an expected 10 million this year, GZ Media says it is the world's biggest vinyl record producer, making records for Universal Music Group, Sony Music and now beginning to cooperate with Warner Music.

"Vinyl is an inscrutable animal," Jiri Hasek, the company's commercial director told Reuters. "Everybody is waiting for when the growth will slow, but instead it keeps accelerating."

Vinyl record production accounts for about 30 percent of GZ Media's sales, which reached 1.8 billion crowns ($93 million) last year.

The company also makes sophisticated packaging for expensive consumer goods such as mobile phones, electronics and whisky.

Founded in 1948 as Gramofonove Zavody Lodenice, the central record producer in the then-communist bloc, GZ Media pressed its first record in 1951.

During the 1980s demand for vinyl records began to ebb as CDs and DVDs emerged. Production bottomed out in the early 1990s when GZ Media was producing just some 200,000 pieces a year.

In 1989, the communist regime collapsed and GZ Media was up for grabs as part of a nation-wide privatization program. It ended up in the hands of U.S. fund Winslow Partners, which later sold it to the firm's own management.

Last Christmas, it made a special Beatles recording gift box approved by Paul McCartney and is now working on a special gift packaging of The Who discography.

According to the Official Charts Company, vinyl record sales in the UK, one of GZ Media's main markets, reached 375,000 in 2013 year-to-date, which compares with 393,000 for the whole of 2012 and 227,000 in 2009.

"For uber-fans of a particular band, getting the vinyl edition is a really important souvenir and mark of their commitment to the artist," Steve Redmond, a spokesman for the Entertainment Retailers Association in the UK said.

He said vinyl was "an inevitable reaction" to the rise of digital music which offers little room for art and the kind of tangibility that people were used to.

"It's never going to return to where it was, when it was the lead format for the industry," Redmond said.

"But I think it is a far bigger niche than people anticipated that it was going to be and, at the moment, further continuing to grow at a fairly dramatic pace."

($1 = 19.3547 Czech crowns)

(Reporting by Jana Mlcochova, editing by Paul Casciato)

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