Playback and Payback series; (Part 2) How the record business drowned in its own success (continued)

Ahmet Ertegun, son of a Turkish ambassador, formed Atlantic Records in 1947 with his friend Herb Abramson, funded by a loan from their dentist. “When I first started Atlantic Records,” he said, “I intended to make good blues and jazz music, as well as some pop music. We did it for one main reason. We wanted to make the kind of records we wanted to buy.” Even some of the Beatles’ biggest hits early in their career were not on Capitol in the United States but on the indies Vee-Jay, Tollie, and Swan. James Bracken and Vivian Carter Bracken had started Vee-Jay with a loan of $500 from a pawnbroker; Tollie was an imprint of Vee-Jay; Dick Clark co-owned Swan Records with Si Waronker. Clark was the only one in this crowd with a college degree. Similarly, Ertegun’s Atco got into the act, reaching the Top 20 with an early Beatles’ recording of “Ain’t She Sweet.”

So, to the MBAs and JDs looking in, the record business seemed like it was just this side of gangland. They imagined what the business might look like if considerations like profit and loss statements entered into the equation. What the corporations failed to account for was that the music business had been built on an often entropic foundation that the assorted miscreants who grew up with the business understood and made peace with.

The entropy worked on several levels. The music business of the time (and much of it even now) would not do well in answering the key question of the Rotary: “Is it fair for all concerned?” Instead it operated on more of an everyone-for-themselves level. In many ways, it resembled (and perhaps continues to resemble) high-stakes gambling more than any particular business model. And like high-stakes gambling, the people who were the best at it knew how to stack the deck so that nobody noticed, had mastered the deadpan poker face in negotiations, and never, ever let anyone see them sweat.

Stacking the deck predominantly affected the way that artists were remunerated. Particularly in the early days of rock, as Ripp pointed out, musicians could sell millions of records and not make a penny from it, in fact owing the record company money. This went on until the lawyers began to take an interest in that end of the record business, representing artists to make sure that they got a relatively fair shake (and the lawyer got their percentage).

Independent blues and proto-rock-and-roll label Chess Records was notorious for this sort of behaviour. “I got stranded in Chicago and Leonard Chess found me, picked me up, and put me on his label,” recalled urban blues legend Etta James.

He paid the balance of the money that [her previous record company] wanted. Chess had a check on his desk. He said, “I want you with Chess records. Let me show you what my artists get.” Because I was kind of looking, I could see there was a check there. He lifted this check up to me and it was for 90-some thousand dollars, and it was made out to Chuck Berry and Alan Freed. I was about to faint, there were so many zeros there. And he said, “This is just for six months’ payment for ‘Maybelline.’” I had one hit record, “All I Do Is Cry,” and then I had “Stop the Wedding” and then I had “My Dearest…” – they were going in layers. So , it was about a year later; when it would be time for me to receive some royalties, I went down there. I knew I was going to look down there and see a nice fat figure. I looked and I saw that it was written in red. And I said, “$14,000! All right!” And Leonard said, “Hold it, hold it.” I just looked like, wow, that’s really good for me. But he said, “Don’t get all bent out of shape.” And I was kind of confused, like “What is he saying that for?” And he says, “Look, Etta, don’t worry about what that says. What do you need?” Now, I’m really confused. “Here’s what I need, in big red numbers.”

And that’s when Etta James learned what red ink on a ledger meant. Between her housing expenses, recording expenses, and, most important, the money it took to buy her contract from the previous record company, even a year of hits couldn’t get her into positive numbers the way the contract she signed was stacked up. “Now, Leonard Chess did take care of quite a few things,” she adds, “but those things could never add up to what my royalties were.”

“Everybody that you talk to who came from Chess Records will tell you, almost like a broken record, the same thing,” notes another Chess artist, Elias “Bo Diddley” McDaniels.

We got ripped! It’s bad, man. I appreciate Chess Records giving me the opportunity to become Bo Diddley and do all the great things I’ve done, but I don’t appreciate being ripped off because I had to trust them with the money that comes in and they have to pay me. I ain’t got shit. I’ve been waiting all these years like a good Samaritan, thinking that one day I’ll look in the mailbox and say, “Oh wow! There’s a check in here that will make my pockets look like footballs.” It never happened. You dig what I’m saying? I’m very upset about it. They made a pit bull out of me, with an extra set of teeth. Is that bad enough? They poked at me and poked at me and made me an evil dude.

Beyond this, Ripp, Spector, Sill, Gordy, Chess, et al. all knew that they could, through no fault of their own, lose millions as easily as they could make them, and on occasion they did just that. Few of them got into the music business to get rich; it just happened that they did. Many, many others made a living, and some lost everything. “It was a labor of love,” noted Bob Weinstock, who made a living with Prestige Records, in the process recording immortal sides by Miles Davies, Sonny Rollins, John Coltrane, and dozens of others.

Most of the people involved in the business at the time – Orrin Keepnews [Riverside], Les Koenig [Contemporary], Alfred Lion [Blue Note] – were collectors and fans. We loved the music. For the musicians, too, it was no joke; they were very serious about what they were doing. It was a pleasure to work with them. Our shared goal was to make good music – which we did.

Of course, one of the ways Prestige Records made money was keeping recording costs down. It was notorious as the “junkie’s label,” paying off its addicted artists with a fix. It certainly had its pick of some of the finest: John Coltrane, Thelonious Monk, Miles Davis, Sonny Stitt, and Sonny Rollins were all addicted, all living in New York, and all recording for Prestige.

Another aspect of the record business on which the MBAs could not get a solid handle was the actual profits and losses. The losses, because the businesses were private, were private as well. The gains were visible for anyone to see (and hear). The winners were as obvious as the losers flew below the radar, so it was easy to believe, if you weren’t inside it, that everything that came into a record store flew out to the tune of singing cash registers.

Beyond that, the “record guys” demonstrated, even with their failures, an innate knowledge of what people wanted to hear. It was an era when the perception of music largely selling itself was not as farfetched as it seems now, though the mechanics of how the music “sold itself” would appall the MBAs when they started to make their move to capitalize on the gold on vinyl that they saw in records.