Cowboys and Indies: The Epic History of the Record Industry

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Cowboys and Indies: The Epic History of the Record Industry Page 24

by Gareth Murphy


  Although the three stars jammed and built up an original repertoire, they had a serious contractual problem. David Crosby’s former group, the Byrds, was signed to Columbia. Graham Nash’s group, the Hollies, was signed to Columbia sublabel Epic. Stephen Stills, through the defunct Buffalo Springfield, was still signed to Atlantic.

  Thus, Crosby, Stills & Nash would be the object of one of many duels between the rival kings of the rock world, Clive Davis and Ahmet Ertegun. Although they both disposed of money, Ertegun’s advantage on Davis was a more seductive charm and, crucially, far more perceptive ears. When Ertegun heard a two-track demo Crosby, Stills & Nash had recorded with Paul Rothchild, he pulled out his checkbook. “Fill in the number,” he said to Rothchild. “I don’t care—whatever, it doesn’t matter.” Although Ertegun didn’t yet have a contract to release the material, he sensed this trio could be huge.

  Ertegun was also quick to notice that his artist, Stephen Stills, was the musical force, and as such the dominant personality. When Stills came into Atlantic’s offices and moaned that he didn’t even have the money to go to England to jam with Nash, Ertegun opened his drawer and handed over $2,000. Knowing their contractual tangle needed an experienced manager, Ertegun suggested that Stills visit Robert Stigwood.

  “Nice to meet you, let’s have dinner or something,” said the gruff Stephen Stills to Stigwood in London. Then came the absolute clanger. “I saw a Rolls-Royce in the window of a car shop and I liked it. Can you have it delivered to me tomorrow?”

  “Well, I think we should talk about whether we’re working together first,” suggested Stigwood, barely able to believe his ears.

  “We’ve decided on you,” Stills announced. “Ahmet said it’d be good.”

  Needless to say, Stephen Stills failed the personality test. It wasn’t the only disappointment awaiting him in London. Although he was spending Ahmet Ertegun’s money, he and Graham Nash brought their demo to George Harrison, who turned them down. Getting desperate, Stills contacted David Geffen and Elliot Roberts, the managers of David Crosby’s ex-girlfriend Joni Mitchell.

  The fearless Geffen rang Clive Davis, who refused to release Crosby and Nash but instead offered the new group a deal with CBS. Geffen then went to Atlantic, where his pleas to release Stephen Stills from his contract were met by Jerry Wexler roaring, “Get the fuck outta here!” When Wexler apologized the next day, Ertegun worked his charm on Geffen, who came around to the idea that Atlantic, being smaller and more cutting-edge, was the better vehicle for the new supergroup.

  Geffen relayed various possible compromises between the two moguls until he found the ideal trade-off. Davis wanted to sign a new country rock band called Poco, which included former Buffalo Springfield guitarist Richie Furay. Ertegun, of course, pretended to protest at this outrageous demand but, having sharper ears than Davis, huffed, puffed, and took the swap.

  In the mix, Paul Rothchild was excluded from the CSN story the minute Geffen entered stage right. Looking back in later years, Rothchild felt “that was the beginning of the end of the love groove in American music … When David Geffen enters the California waters as a manager—the sharks have entered the lagoon.”

  Symbolically, Geffen negotiated novel conditions allowing all three musicians unprecedented individual freedoms—which was why they chose no band name. When the two Atlantic bosses entered the cloudy studio where the trio were recording their debut album, Jerry Wexler suggested they call it Songs from the Big Ego. His joke failed to inspire even a wry smile. “Guess they don’t have the distance to appreciate it,” Wexler muttered into his beard.

  Endearingly called Captain Many Hands by his bandmates, Stephen Stills was running around playing every instrument on the album, except drums. He was even dashing in and out of the control room, adjusting the mix to his liking. The album’s producer, Bill Halverson, ended up working as more of a sound engineer.

  In both America and England, a pattern was forming. Aggressive managers were demanding so much money and artistic freedom on behalf of their stoned divas that the few record companies able to compete were becoming mere financiers and sales apparatuses, having little or no say over the record-making process.

  One could also blame Bob Dylan’s former manager Albert Grossman for setting cynical precedents in business practices. Grossman had been managing Janis Joplin, and when he discovered she was injecting heroin, he discreetly took out a $200,000 insurance policy. When she overdosed, the insurers tried to contest the payout, arguing Joplin had committed a type of involuntary suicide. Grossman denied any knowledge of Joplin’s heroin addiction and walked away with the $200,000 check.

  A new breed of heavyweight bagman was on the march. A fine example—in corpulence as well as in briefcase—was Peter Grant, who represented Led Zeppelin. A former wrestler and nightclub bouncer, Grant was a hulk of a man with piercing eyes and a handlebar mustache. In late 1968, Jerry Wexler, who had previously noted the blues virtuosity of Yardbirds guitarist Jimmy Page, outbid CBS, Warner, and Island to sign up Led Zeppelin, then touted inside the industry as the next supergroup. Getting Grant’s and Page’s signatures cost a generous $110,000, but as Wexler acknowledged, “I signed Led Zeppelin and then had nothing to do with them. Absolutely nothing. Ahmet took over their care and cleaning. I don’t think I could have tolerated them. I got along fine with Peter Grant, but I knew he was an animal.”

  Even the record industry’s heftiest tanker, CBS Records, was being pulled by the tide. Compounding the death of Janis Joplin, Simon & Garfunkel split up in 1970. Then Andy Williams’s and Johnny Cash’s TV shows were axed, depriving their records of free publicity. Under Clive Davis, the CBS market share had rocketed from about 13 percent in 1967 to 22 percent by 1970. Knowing he couldn’t continue producing the growth charts he presented to the parent company, CBS Inc., as “inverted lightning bolts,” he began emulating the oil industry; it had now become safer to muscle in on known oil reserves rather than prospect for crude. From here on in, the major companies would be sucked into an age of bidding wars—the stakes constantly rising.

  Of all the symbolic events in 1970, there was nothing as final as the Beatles’ demise. With their financial and personal problems an open secret, the corporate sell-off began. First, Clive Epstein sold his 70 percent stake in NEMS to a financial company called Triumph Investment Trust. Shortly after, Henry James sold Northern Songs to ATV for £1.2 million. Investing EMI’s brimming coffers in television, Sir Joseph Lockwood, for a cool £56.6 million, bought out Associated British Picture Corporation, which included Thames Television and Elstree Studios, making EMI a diverse entertainment empire unequaled in Britain. Meanwhile, in America, EMI’s subsidiary Capitol Records was grossing over $100 million.

  Once Paul McCartney admitted the band had ceased to function as a working unit, John Lennon announced to fans, “And so, dear friends, you’ll just have to carry on. The dream is over.” Weeks later, Sir Joseph Lockwood stepped down as EMI chairman, quitting while he was ahead. His empire entered a new decade with an annual turnover of £225 million. For those at the top of the food chain, the swinging sixties had been serious business.

  In America, as in Britain, a particularly colorful chapter was drawing to a close, as a new audience for home entertainment came in off the street and curled up on the sofa.

  One interesting eyewitness of this whole process was independent producer Alan Douglas, who, apart from producing Jimi Hendrix’s last recordings, had released spoken word records by the Last Poets, Timothy Leary, Malcolm X, and Allen Ginsberg. Having learned the business in the fifties as a jazz producer, Douglas had been around long enough to know that “at the end of 1970, it was all over in a minute. I woke up and closed everything down. Our audience was gone. From 1965 it was happening on the West Coast, in San Francisco mostly. From 1966 and 1967 it moved across the rest of the country. Then we had three or four years, that’s all. It was very short-lived, the whole thing—our audience had gotten off the street and gone back to work
. This whole underground symphony was over.”

  19. KINGS

  It all started with a certain idea of self-entitlement, albeit dressed up in flares, that in time honed its craft and increased its appetite—slowly evolving into fully fledged yuppiedom. If anything, all the clichés synonymous in popular culture with the Reagan era began creeping into the rock scene of the early seventies. It was as if the camera panned back and the starry-eyed idealist sporting bushy sideburns turned out to be an ink impression of George Washington sitting on a dollar bill.

  Opening a pipeline from Laurel Canyon to Wall Street, at the dawn of the new decade, three of America’s hippest independents—Atlantic, Elektra, and Warner—formed a corporate alliance capable of competing head-on with the behemoths. At the top of this financial pyramid was Steve Ross, the debonair operator behind Kinney National Company, a publicly traded conglomerate owning funeral homes, parking lots, limousine services, and talent agencies.

  Correctly foreseeing, in 1969, that home entertainment was destined for bionic growth, Steve Ross, aged just forty-two, convinced his shareholders to buy the Warner–Seven Arts portfolio for $400 million. To transform the acquisition into genuine opportunity, Ross first had to tidy up a whole host of messes left behind by Jack Warner and Eliot Hyman. Not only was one-third of Reprise’s stock still held by Frank Sinatra, over at Atlantic, morale was at an all-time low.

  Fortunately, a lucky accident occurred one day when a twelve-year-old friend of the Ross family happened to say, “Gee, Steve, I think it’s great you’re acquiring Atlantic Records. They’re really fantastic, and it’s run by Ahmet Ertegun, a fantastic fellow. Have you met him?”

  Ross shook his head.

  “Well, you’ve got to meet him,” the boy insisted, “because they’ve just put together a group called Blind Faith. That’s Stevie Winwood on the organ, plus the old Cream, and they haven’t even cut a record yet, but they’ve sold out Madison Square Garden. Isn’t that fantastic?”

  When Ross invited the Atlantic boss to dinner, Ertegun replied cordially, “I’d be glad to, but I want you to know that I’m really not interested in going ahead with the deal.” At a fashionable restaurant just below Kinney’s headquarters, Ross spent hours assuring Ertegun he’d never interfere in Atlantic’s operations. Ertegun reminded Ross that he’d been promised the same things from Elliot Hyman. “Let me show you how you don’t, or never will be able to, understand our business,” said Ertegun gravely. “We have a group called Blind Faith.”

  “You mean Stevie Winwood on organ plus the old Cream,” interrupted Ross, “and you haven’t got a record but you’ve sold out Madison Square Garden?”

  “Yeah, yeah, that’s it,” responded Ertegun, with the twinkle back in his eye.

  “I think that’s fantastic,” Ross said with a smile, knowing he’d just won Ertegun over.

  Hearing of these interesting developments, Jac Holzman donned his best suit and got himself introduced to Steve Ross by Ahmet Ertegun and Mo Ostin. He had already debated common problems with Jerry Wexler and Mo Ostin, and now he laid out his industrial analysis for Ross. Because the march of the supermanagers had driven a costly wedge between label and artist, record companies had become mere financiers and distributors. “But if you don’t control your own distribution,” warned Holzman, “you’re working through thirty-plus independent distributors around the country, which have different ways of doing things.” Apart from the logistical messiness of launching albums, “if any one of those distributors went bankrupt, they could take me for up to a million dollars,” gasped Holzman. Wexler, Ostin, and Holzman had already calculated they needed an annual turnover of about 100 million records to sustain a nationwide distribution system. Warner and Atlantic represented about 83 million; Elektra made up the difference.

  Ross listened and was enthusiastic, but as weeks passed, Holzman visited Jerry Wexler’s home wondering, “What happened? I had this terrific meeting with Ross and I haven’t heard a peep since.” Ahmet Ertegun forced the issue and even accompanied Kinney VP Alan Cohen in the negotiations, in which Holzman was offered $8 million. Justifying his $10 million price tag by multiplying Elektra’s annual profits of $1.2 million by eight years, Holzman held out. Kinney actually paid $7 million in cash, with the $3 million balance in convertible debentures. Despite twenty unforgettable years as an independent, Holzman had no regrets. “It gave me the opportunity to compete with the majors—to become a boutique label with real power and money behind it. I wanted to solidify Elektra’s future. I also knew I wasn’t going to do this forever,” confessed Holzman. “I didn’t want to die a record guy. I wanted other adventures.”

  As this new major came together, inevitably it was the dapper diplomat’s son, Ahmet Ertegun, who stepped into Steve Ross’s court like a custom-made shoe. Imbued with the same penchant for high stakes, Ertegun had his sights on the biggest deal in the business—the Rolling Stones, whose contract with Decca expired in July 1970. Now managed by Prince Rupert Loewenstein, the Stones were returning to their bluesy roots and had recorded the catchy “Brown Sugar” in Jerry Wexler’s favorite studio, Muscle Shoals in Alabama.

  For almost a year, the Turkish sultan behind Atlantic Records shamelessly chased after Mick Jagger, the pouting diva Keith Richards nicknamed “Her Majesty.” Experienced, musically hot, and in dire need of a cash injection, Jagger had also recruited the streetwise heir to Chess Records, Marshall Chess, to run the group’s own production company, Rolling Stones Records. Leaning heavily toward Atlantic but holding out for the biggest dowry possible, Jagger and Loewenstein tried to provoke a bidding war. Although Clive Davis sniffed, he balked at Jagger’s demands for between $5 and $6 million as well as a “staggering” royalty rate.

  In the end, Ertegun set up a meeting at the Beverly Hills Hotel, where Steve Ross got to eyeball Rupert Loewenstein and Marshall Chess. With Ross’s blessing, Ertegun offered Rolling Stones Records a $1 million advance per five albums based on a $1 royalty for every copy sold. With its iconic zipper sleeve designed by Andy Warhol, Sticky Fingers was a transatlantic No. 1, clocking up 3 million in unit sales and comfortably recouping the advance.

  Steve Ross had his eye on the bigger picture. In 1970, Atlantic, Warner, and Elektra collectively accounted for 18 percent of the American albums market, higher than CBS. Wanting to keep the arms independent, yet needing a single brand name to seduce Wall Street, Ross off-loaded Kinney’s funeral parlors and moved the property holdings into a separate branch. A new corporate head controlling the record and film companies was given a dazzling new name: Warner Communications Inc. Then, in late 1971, the three record labels moved over to their own distribution network, WEA. With eight regional branches from coast to coast, each with its own traveling sales force, the synergy created was far greater than the sum of its individual parts. As the corporate CFO, Bert Wasserman, explained, “Steve had this saying, if you had one office with three doors, you wouldn’t have grown as fast as having three offices with doors located in different buildings.”

  Preparing his deals as a type of hypnosis, Ross would regularly test his pitches on his closest financial executives—if they understood, he’d keep convoluting the terms until their eyes glazed into bemused submission. In Jac Holzman’s view, “Steve Ross was a smart guy who never finished college—a bon vivant, hail fellow well met. He had an eye for numbers and nose for bullshit. Until you got to know him a little, nobody knew how sharp and incisive and what a gambler he was. The record companies might make a few hundred million dollars a year; they sent the cash up to corporate and corporate could do whatever they needed to do. Whereas when the movie people sent a couple of hundred million dollars up, they’d be calling it back the next year to make pictures. So he realized the record business was sustainable cash flow—if you did it right. And he got to keep that money to use for other acquisitions, like buying Atari a few years later.”

  Rather than demand reports and projections, Steve Ross convened informal gatherings of the labe
l barons every three months. Arousing the envy of competitors, Ross lent his private jet to any label executive who needed to impress a manager or artist. Before Thanksgiving, he sent fine turkeys to everyone’s wives. Unafflicted by the frustrated-artist syndrome, Ross, crucially, never showed any desire to get invited to show biz soirées. “Steve believed that the management of creative companies was the key,” explained Joe Smith. “The artists will come and go, but Mo and Joe and Ahmet and Jerry will always be there.” Accordingly, he congratulated hits and never chastised flops. Maintaining a spirit of interested laissez-faire, whenever Ahmet Ertegun would telephone talking up some new act, Ross would fib, “Ahmet, I have a long-distance call coming in.” He would quiz his children, then call Ertegun back.

  Although Ahmet Ertegun was cut from the same cloth, thanks to the Californian singer-songwriter wave, Warner was quietly becoming the jewel in the crown. Adding to a juicy catalog that already included Neil Young, the Grateful Dead, Frank Zappa, and Randy Newman, between 1969 and 1970, Ostin and Smith signed Jethro Tull, Van Morrison, James Taylor, Fleetwood Mac, Ry Cooder, Black Sabbath, Deep Purple, Doug Kershaw, Gordon Lightfoot, Alice Cooper, America, and the Small Faces. Of the two presidents, the shy but determined Mo Ostin was cultivating a deserved reputation among artists, managers, and competitors alike as the father figure of the WEA group. Although he wasn’t really a music man himself, Ostin by now understood the finer subtleties of the business. “If all it took was money,” he constantly told his staff, “General Motors would be in the record business.”

  As well as brilliant A&R, the magic ingredient that boosted the Warner beanstalk was what the company called creative services—the brainchild of Stan Cornyn. Realizing Warner’s target audience wasn’t paying much attention to AM radio or mainstream press, Cornyn swiveled his periscope toward the underground press and student FM stations. He worked, on his own admission, “usually at home, lying on my rug on my belly with a pen and yellow tablet—amusing myself.” He turned advertising into a game of wacky sloganeering. Visually inspired by the spacious minimalism of Volkswagen advertisements, Cornyn and art director Ed Thrasher created Warner’s stylish, saucy face. “We just kept thinking of ways to get outrageous attention,” said Cornyn of those years, by tapping into what he termed “State of the Seventies”—a look, a feel, a set of values. “Nobody censored me. We just felt the rhythm and started marching out front with those who wanted out of Vietnam and into acid.”

 

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