The Story of Naxos

by Nicolas Soames

  In those days I listened to everything. For years, DATs [Digital Audio Tapes] of the final edits would be sent to me for approval in Hong Kong and, after supper, Takako and I would listen. Then in 1988, with the business going well, we increased the recording schedule to around sixty. It was in 1988 that Takako started to record all the standard repertoire: the Mozart concertos, Bach concertos, Beethoven, Mendelssohn, Brahms, Bruch. Then, more gradually, came Mozart sonatas, Beethoven sonatas … Looking back, I think there were some very good recordings that have stood the test of time. This is true of The Four Seasons, which has sold more than 1.5 million copies – Takako is a musician who had some interesting things to say about the music, and you can hear that the Capella Istropolitana was a first-class string orchestra. The Mozart concertos, the Tchaikovsky, Mendelssohn and Bruch were very good. The Brahms was not one of her favourite works but she learned it and came to like it more. She had always played the Bach concertos and Mozart’s 3, 4 and 5; but she had to learn Mozart 1 and 2, and the ‘Haffner’ Serenade, which has a mini concerto in the middle. This kind of pressure brought out the best in her. She was always superbly prepared and had tremendous stamina. And these recordings are all still selling!

  Heymann was so committed to classical music that the distinctions between ‘popular’, ‘core’ and even ‘specialist’ repertoire were slightly blurred in his mind. He says today that Naxos started to become a ‘specialist’ label in the 1990s, yet it was just one year after the label began that the first volume of Haydn quartets was recorded. This included popular quartets such as the ‘Emperor’ and the ‘Sunrise’, and it surprised everyone by selling extremely well. It was helped by the chosen musicians, the Kodály Quartet, an outstanding ensemble initially recommended by Hungaroton. This also reaped benefits later on: when Naxos decided to do the Haydn quartet cycle Heymann naturally chose the Kodály Quartet, and it was one of these recordings that brought Naxos an early rave review from a prominent British critic in 1990.

  At the beginning I always thought that this was not going to last. Surely the majors were going to come out with great stuff from their back catalogues. But it was not until the early 1990s that PolyGram produced their first budget CD label, Eloquence – and they got that wrong because the recordings were not digital recordings nor did they feature top names. That meant that ours could compete. They did not put Karajan out at budget price, or other big-name conductors, because they were still trying to make a lot of money from releasing their old recordings at full price, as people reestablished their music collections on the CD platform. And I suppose the artists themselves didn’t want to be seen on a budget label. Things have changed now!

  To be honest, I would probably have done the same, except that I would have watched Naxos and seen that it was becoming a danger. But we were far away in Hong Kong. A friend of mine participated in a board meeting of PolyGram where Naxos was discussed; the consensus was that it was a phantom that would disappear in a few years at worst, and possibly in the very near future. The price was a threat, but they couldn’t believe that there would be a public interested in buying the standard repertoire played by musicians they hadn’t heard of. Hong Kong was also a long way away and they couldn’t conceive of a serious classical music label being run from there. Perhaps if I had started Naxos in Germany or England under their noses it would have been different. An executive of a major classical label was quoted referring to me as ‘that crazy German in Hong Kong with his budget label’.

  In 1989 Heymann decided to restructure his businesses again. Bertelsmann (BMG) wanted a foothold in Asia and offered him a good price for Pacific Music and its subsidiaries in the region, and he accepted. Pacific Music was a powerful force, with distribution companies not only in Hong Kong but also in Singapore, Thailand and Malaysia (‘We had all the top pop artists in Malaysia at one point’).

  Fortunately BMG didn’t want Naxos. They didn’t think it had a future. Probably if they had taken it I would have sold it. But they would have destroyed it. They bought the Chinese catalogue, though, which was a pity because it meant I lost Takako’s first recording of The Butterfly Lovers and a lot of other Chinese classical music. I would like to get them back, actually – not for CD release but to put them online. Sony owns BMG and I hope that I can make a deal with Sony. But what happened with BMG is so typical of the majors. Why do they buy things which they don’t use? They wanted the Chinese classical music, including the Violin Concerto by Du Mingxin, but most of the recordings disappeared not long after BMG bought Pacific. We did license some titles back from BMG once but the licence expired a long time ago.

  But they didn’t buy Naxos because they didn’t recognise its potential, which was very lucky. They didn’t understand the basic concept (nor did PolyGram at the time) that we had built a substantial catalogue of new digital recordings to be sold at a budget price. The key thing none of the major record labels understood was that it was not an ‘exploitation’ label but something completely new. The only way they could respond was to start a similar label of their own, with different people. BMG eventually did try it with Arte Nova: that was the first serious attempt. But it failed to dislodge Naxos and did not become an important factor in the classical CD market.

  From 1987 to the early 1990s I was looking over my shoulder to see where the majors were; when I could not see them, I started to make plans for a comprehensive catalogue of all important classical music, including many complete cycles. Already, in 1989, I decided to do the complete Beethoven symphonies. It was the first ‘complete’ project we did on Naxos. We had some hitches. We recorded seven symphonies with the Zagreb Philharmonic conducted by Richard Edlinger, but we had problems and had to use earlier recordings of Nos. 3 and 6 from Bratislava to complete the set. It was a risk when we started, but we ended up by selling 200,000 sets within three years. We were offering good quality at a good price, and we were also speaking to a different buyer – not only the standard classical buyers. We were attractive to those who had an LP collection and wanted to switch to CD but didn’t care so much who the performers were. We sold to young people, to students who didn’t have much money, and to the LP-to-CD converts. That was the original market – not like today where the connoisseur buys Naxos for the repertoire.

  Throughout the 1980s and the first few years of the 1990s, Naxos and Heymann’s efforts were either ignored by the classical music establishment – the main magazines and the main critics – or vilified. There were quite a few cowboys peddling cheap classical CD product – opportunists who saw the commercial success of Naxos and tried to jump on the bandwagon. To some extent Naxos itself was viewed in this way by the classical stalwarts; but mainly it was just ignored. So Heymann ploughed on. Of course, the success didn’t land in his lap.

  The sales didn’t just happen! I couldn’t produce all those recordings and somehow magically issue them to the world where a willing public simply rushed out and bought them. I had to build a distribution network that could make the CDs available in the major markets and then tell the public about them and persuade them that though they were cheap they were very good! This was the toughest part of the whole business.

  A major part of the Naxos success comes down to Heymann’s establishing worldwide distribution. It does not appear as glamorous as recording Mozart and Beethoven but it was, very simply, crucial. What’s more, Heymann enjoyed the cut and thrust of the commercial business as much as dealing with artists and recordings. He derived satisfaction from the competitive chase, the overcoming of continuous problems – even the occasional failures, because they meant the challenge of restructure and re-evaluation. Distribution has proved the graveyard of many a commercial activity, in classical music as in soap products, and sentimentality or preciousness has no place there. In the beginning, distribution was not a problem because budget CDs were a novelty; but consolidating the distribution network to allow a proper classical, albeit budget, label to flower proved even tougher than getting worldwide distrib
ution for Marco Polo. Mistakes were made. Routes were taken up the wrong alleyways. Companies in every country came and went; some grew and some went bust. Now, however, Naxos has an unrivalled worldwide classical distribution network.

  The established classical distributors understood Marco Polo when we started and were generally ready to take it on. And they knew what to do with it. But Naxos was another thing. It was so different, they didn’t know how to handle it. Many Marco Polo distributors wouldn’t touch it because they were afraid for their reputation. I couldn’t find a distributor in Japan – a huge classical market – until my brother-in-law stepped in. Richard Winter at Gramola in Vienna was an exception: he took it and sold it with all his other classical labels. We went with another distributor in Germany who sold our Naxos CDs at full price because they were pressed by Denon, the Japanese manufacturer which had a very good reputation. He was a parallel importer of high-end audio equipment and thought he could sell the CDs at high-end prices. He did well initially, but this was not the idea of Naxos – it was clearly a budget label – so we had to get rid of him. In England we had a small operator in the very early years who did very little with the label, and then closed down. I was left with a one-man representative. One day I read that Boots, the big pharmacist chain, had taken one of the cheap labels and I asked my representative to contact Woolworths. Woolworths took Naxos. They insisted on exclusivity and I agreed, but eventually they didn’t do such a good job and they agreed to non-exclusivity. So we went to Harmonia Mundi, at the time an important independent classical distributor in the UK, and we were with them for a short time. Sales of Naxos began to affect the sales of the Harmonia Mundi label, and the Harmonia Mundi team of Graham Haysom and Fergus Lawlor were told by head office to drop Naxos. But they saw its potential and suggested we start a distribution company together on a 50/50 basis. I agreed, and, in 1991, this became my first classical distribution company in the West: Select Music, based in Redhill, Surrey.

  If the classical distributors struggled to make sense of Naxos, so did the retailers – both the independents and the classical sections of chain record stores. Where should the CDs be displayed?

  The retailers thought they wouldn’t put these junk CDs in with all the other ‘important’ classical CDs, so they put us in racks in the corners. They didn’t want to mix Naxos with their good recordings, but they couldn’t ignore us because people wanted to buy Naxos. It was out of that prejudice that the famous ‘Naxos White Wall’ grew. There we were in racks in the corner, on our own – clearly distinguishable. Customers would go into the shops and head directly for those Naxos bins, flick through them, choose two or three, and go to the till. Eventually, the retailers realised that sales could be improved by making it simple for the buyer and actually devoting a whole display unit to Naxos, which became easier as the label grew so quickly. This played a key role in turning Naxos into a brand – the leading classical brand. Even now, it is the only label in the world that is racked as a label. And it happened by accident!

  For the next decade and more, a sizeable portion of Heymann’s time and energy went into developing the Naxos distribution network, solving problems, changing personnel, and investing in people and infrastructure. He bailed out companies going bankrupt, bought some of them out, closed others, and struggled in some key territories. There were boom times in Scandinavia, then bumpy years. Every January he could be found in Cannes at MIDEM, making new deals, consolidating others, holding distribution conferences to announce the coming year’s new releases, and reviewing campaigns of the past year and proposals for the next twelve months. He gradually gathered around him a multi-faceted international team – or, more precisely, a group of strong individuals in the various territories, with different abilities and temperaments. Extraordinarily he would maintain regular, almost daily, contact with them.

  In the core Hong Kong team were Keith Anderson, an expatriate music lecturer who became the scholar of Naxos and wrote an unbelievable number of liner notes, blurbs and essays, both short and extensive, for Marco Polo as well as Naxos; and Keith’s son Anthony Anderson who, having graduated in Classics at Durham University, arrived in Hong Kong and started at the bottom, learning every aspect of the business to become, in some ways, Heymann’s right-hand man. There were also many key people around the world. David Denton, a music writer in Sheffield, England took over the public relations work and also established contacts with UK artists and orchestras; he helped Select Music to become a major classical force in Britain. In Sweden, the largest Scandinavian territory, Heymann began with a Christian music distributor; when it went bust he joined forces with Håkan Lagerqvist, a shrewd record marketing executive, and his business partner Mats Byrén. Lagerqvist did not know much about classical music but ran some extraordinary campaigns in Scandinavia, including Swedish Classical Favourites, a TV-promoted boxed set that eventually, it was reported, got into 80 per cent of middle-class homes in Sweden. Naxos Sweden is now the leading classical music distributor in the country, with some 75 per cent of classical sales going through its portals. After some difficult times, Heymann effectively bought out other third-party distributors in Scandinavia and now owns the distribution networks in Finland, Denmark and Norway. The US proved one of the most challenging markets. Various expensive false starts (including one with a heavy-metal distributor) led to Heymann solving the problem by creating his own company with Jim Sturgeon and Jim Selby, a couple of smart Canadians with experience in the pop business. They settled Naxos of America in Nashville, the home of country music, and put the label on a successful path. There were good times and difficult times in Australia; they settled when Heymann established his own distribution company. It was a similar case in Germany, where he eventually set up with Chris Voll, a music salesman who had worked for a previous Naxos distributor. France went through uneven patches depending on the individual on the ground, and it is still the only major record market in which Naxos does not have a subsidiary.

  Heymann maintained personal contact with all these individuals, first by phone and fax, then by phone and email (adopting the new technology immediately), and more latterly by Skype. He simply worked all the time, advising, cajoling, persuading, suggesting. Accessible to all, he seemed never to lose the thread of a campaign proposal or a promotion, or the terms of a deal, whether it was a discount proposal, a licensing offer or the rental of offices. Even into the millennium he still listened to everything, read all the CD notes and checked the covers.

  Behind this was his more directly remunerative consumer and professional audio business, as well as a thriving dance-music label: after the sale of Pacific Music to BMG in 1989 he immediately formed a new company with Steve Beaver to market EuroBeat in Asia.

  BMG didn’t want Steve, which was another mistake. He really is a genius in recognising trends in the music industry and I couldn’t miss the opportunity. So we started Beaver Records and it became the biggest dance-music label in Asia. At one point we had 50 per cent of the Japanese dance-music charts. EuroBeat had been the king of European electronic disco music in the late 1980s and early 1990s but there was also a lot of interest in Asia. Many recordings became so popular that the Japanese licensees wanted them to tour. This was electronic music created by studio musicians. We had had to ring up Italy and say, ‘Hey, can you find a few musicians to do that stuff again and tour Japan?’

  Before I had sold Pacific Music to BMG I had already made a lot of money with disco music. Steve had signed all the most important new labels and we came out with a series of enormously successful compilations because we could draw on all the hits from these specialised labels. We sold more than 50,000 copies of some of these disco compilations in Hong Kong, and then we started selling them in Korea. We had already established sub-licensees there for all the labels we represented. It was a fascinating business. The Koreans were not allowed to pay advances and the only way we could get the money was for me to carry the cash out – otherwise there would have been no bus
iness. We had the same problem in the Philippines and Taiwan as well: $10,000, $15,000, $20,000 in cash in bags on the plane, coming through customs. There were some tense moments.