Democracy of Sound (27 page)

Despite all the laws and lawsuits, the music industry continued to face an enemy that could make a similar product at a lower price, investing next to nothing and possessing an endless variety of hiding places. Jack Grossman of the National Association of Record Merchandisers (NARM) lamented that law enforcement might harass pirates in Manhattan, but they soon moved to Long Island or New Jersey. “There are many basements and garages in which they can hide,” he said.
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Ralph Gleason, the critic and Fantasy records executive who denounced bootleggers in the pages of
Rolling Stone
, conceded that the threat of legal reprisal could prevent the record stores and big chains from selling bootleg product, but “it’s hard to get at all the service stations and places selling tapes along with stoplights and rearview mirrors.”
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Of course, industry representatives went to great lengths to demonstrate to lawmakers that pirate recordings were technically inferior, pointing out the cheapness of the equipment used by pirates, bringing in sound engineers to testify to the difference between legitimate and bootleg products, and even playing tapes in court to show their poor quality. Some copies must have come very close to the quality of the originals, for record companies also complained of having to reimburse retailers for unsold tapes, only to discover later that they were not authentic. Also, if an expert technician was required to explain the difference between a real and pirate recording, then the shortfall was probably less than significant. In any case, youngsters who wanted to listen to “Yummy Yummy Yummy” might not be looking for sonic virtuosity. What they wanted were hits. Pirates could supply the hits by putting all the most desired songs on one tape, even if they were by different artists who recorded for different labels.
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The recording industry knew that this product would be highly desirable, and they strenuously opposed it.
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Allowing consumers to get any song they
wanted in any format would undermine the entire basis of the industry, which involved hyping one song to stoke the public’s interest in other recordings by the same artist on a full-length LP or tape. Representative Richard Fulton, the self-styled Congressman of “Music City, U.S.A.” (i.e., Nashville), argued that the revenue from popular records made it possible for the industry to invest in new artists and money-losing products. Nine out of ten records fail, Fulton said, and the profits from the few big hits subsidize the rest of the industry.
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If pirates were allowed to shave off the benefits of a record that finds public favor, then record companies would be less able to take a chance on other artists, with the result of less diversity in the market. The RIAA’s Stanley Gortikov echoed this point: “The pirate skims the cream of what artists and record companies offer except for one particular ingredient, which he avoids like the plague … our risks.”
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According to Gortikov, recording a typical album cost $55,000. By the time the record landed in the stores, a company had spent $180,000 to $200,000, meaning that manufacturing, distribution, and promotion cost $145,000. Pirates spent money on manufacturing and distribution, so the difference lay in recording and promotion. “The pirate can go into business for as little as $500,” Gortikov said. “Yet, we can’t even take one artist into one studio for one hour for $500.”
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In a written statement to Congress, the RIAA claimed that a Crosby, Stills, and Nash album cost $80,000 to record and another $200,000 to promote.
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This figure was the only specific reference to advertising expenditures during the 1971 hearings, and it reflects the difficulty of making a really big hit, not to mention the extent to which the pursuit of hits cost more than other aspects of production and distribution.

Pirates appeared to jeopardize the entire music business. “Victims of this unconscionable racket are many,” Representative Emanuel Celler (D-NY) declared in 1971. “They include song writers and publishers, record manufacturers, distributors and dealers, recording artists and musicians, manufacturers of phonographs, and, last but not least, the U.S. government.”
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Organized labor was now on board with the record industry’s position on copyright, which it had doubted in the past. “Large incalculable amounts were lost by various trust funds maintained by the AFM,” union president Hal C. Davis testified, “trust funds that are dependent upon royalties from sales of legitimate recordings and that are used to provide employment for musicians and free concerts for the public.”
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For artists who had long been taken advantage of by the industry, backing the record labels in their quest for copyright could not have been easy. Labels said the pirates cheated them out of their royalties, wages, and benefits, yet the record companies had a long record of abusing musicians. Upon signing a contract, recording artists typically received an advance against future royalties,
meaning they did not make any money until a variety of costs—for recording, promotion, and the signing bonus—were recouped by the label. Since only a few hits went on to make big profits, many artists remained in debt even if their records enjoyed moderate success. As one artist complained, “You can have a number one record and still not earn a f—king cent!”
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Yet because debt was only paid down by the artist’s royalties, which were a small percentage of revenue from sales, labels could still earn money on records that “failed.” Labels were also notorious for finding ways to underreport or otherwise dodge royalties; for instance, contract provisions allowed them to pay reduced royalty rates for sales to record clubs, foreign sales, and “cutouts,” unsold records that were returned by record stores and subsequently resold at deep discounts. The process lent itself to creative accounting, and artists often found it impossible to determine if all sales were properly recorded.
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Performers had their own interest in the rights to the recordings they created. Since the 1940s, musicians had argued that they should hold the copyright for a recording, not the label, or that the law at least guarantee royalties for performers when their records were played on the radio. (Composers’ groups such as ASCAP held the right to collect payment for the use of their songs by broadcasters.)
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However, the mounting problem of piracy threatened to destroy the industry upon which the union depended for work and benefits. “In the long run, gentlemen, the consumer will not benefit if pirating activities are not halted,” Grossman warned. “For a while he may get a somewhat inferior product at a lower price, but, in time, the goose that laid the golden egg will be killed and new performers and new talents will not be available to him.”
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But was the golden egg music itself, or just a hit song? In other words, did piracy threaten the existence of the music industry as a whole, or just the prevailing model for making and selling music? Did $200,000 need to be spent to inform the public about a particular recording, and persuade them to like it and buy it?

In fact, hype and promotion had been integral to the music business ever since publishing companies paid vaudevillians to play their songs and Victor invested heavily in creating the mystique of its Red Seal records. Despite routine denials, the industry indulged in “payola” since at least the 1930s, bribing stations to play particular records and retailers to situate them prominently in their stores. “Payola was the greatest thing in the world,” record executive Hy Weiss enthused. “You didn’t have to go out to dinner with someone and kiss their ass. Just pay them, here’s the money, play the record,
fuck you
.” Indeed, labels courted DJs and radio station program directors with money, liquor, gifts, and drugs (“drugola”) and threw lavish parties for musicians and industry insiders. Such tactics were part of the titanic effort of labels to privilege their products by buying up territory in the public sphere—the price of access to the airwaves, the
shop windows, and the ears of listeners. As the German critic Theodor Adorno argued in the 1940s, much of the appeal of popular music lay in a bandwagon effect, where songs became popular because they were ubiquitous and familiar. This notoriety made up no small part of the commercial value of a sound recording, and the labels were determined that their costly efforts not go to waste.
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A song cannot be liked if it is not heard, after all.

Though the industry portrayed itself as the victim of lawless predators, it too bore the taint of criminality. Rumors of mob connections trailed artists such as Frank Sinatra for years, and industry players like Morris Levy, the wealthy and powerful founder of Roulette Records, relied on friends in organized crime to advance their business interests. In the 1970s, labels deepened their entanglement with unsavory figures, as “independent promotion” emerged as a substitute for the direct bribes of payola. Promoters sold their services to labels, guaranteeing that singles ended up in rotation on a given station. These well-connnected middlemen policed access to the stations that they controlled with the help of colorful “characters” from organized crime, as journalist Fredric Dannen revealed in his groundbreaking study
Hit Men
. This system reached its fullest expression after 1971, but promotion was already central to the arguments that labels advanced in Congressional hearings over piracy. What listeners heard and which songs became popular depended on money, drugs, and sometimes even violence, and the value of this “investment” was, in part, what pirates threatened.
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Only the pirates themselves stepped forward to present the case against the industry. They proposed a compulsory license system for sound recordings, patterned after the system set up for songs in the Copyright Act of 1909. “At minimum, the safety valve of a statutory royalty provision must be provided so as to guard against extortionate prices for copyrighted sound recordings,” asserted Thomas Truitt, a lawyer for G&G Sales and several other pirate firms. “Since 1909, the recording companies have had the advantage of such a proviso in their dealings with composers and authors, and in simple justice, their competitors should enjoy similar rights.”
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Charles Schafer, owner of the Custom Recording Company in South Carolina, had been experimenting with the magnetic tape business since the mid-1950s, recording services for funeral homes and outfitting hearses with cartridge players. He warned that providing a copyright to record companies would foster monopoly, diminishing competition and leading to higher prices.
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A few Congressmen did doubt the necessity of handing property rights to the record companies, but the sort of zesty contention found during the Progressive Era debates over copyright was not to be found. Representative Abner Mikva, a Democrat from Chicago, expressed concern that prices would go up if record companies enjoyed exclusive control of their products, and he asked
Gortikov why the RIAA rejected a compulsory license system as an acceptable alternative:

Gortikov: It would provide inadequate income to the record company, for the covering of its costs.

Mikva: I do not follow you.

Gortikov: Well, to the compulsory license, it would yield to the record company inadequate income to recover the cost for the product, and there would be no income from our hit product. We would have no source of income to recover the costs of maintaining our business, since about one out of 10 records only make money.

Mikva: You could not build into a licensing agreement, a figure, that would be sufficient to cope with that?

Gortikov: No; we need the distribution of everything we produce, so that the public has ample opportunity to make a choice, as to which product is to become a hit. If we are denied access to distribution, we have no skill in developing only hits.
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“Only hits” is key. Gortikov believed that record companies needed to monopolize the use of their creations in a way that a songwriter could not, in order to recoup, if at all possible, the investment in producing and hyping hit records. Treating sound differently from written music would have significant consequences in the years to come; musicians could record their own versions of a composition, for instance, without seeking permission, but artists could not use samples of recorded sound to create new works without negotiating licenses at often prohibitive costs.
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Senator Philip Hart (D-MI), known to his admirers as the “Conscience of the Senate,” was the most outspoken opponent of the bill, and he particularly objected to Gortikov’s reasoning. He supported the idea of compulsory licensing as a way to limit the record companies’ power, and questioned whether the label should be treated as an author.
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“Presumably, this committee believes record piracy imperils the investment of risk capital.… Neither the patent grant nor the copyright grant were intended to protect the separate interest of an entrepreneur’s investment of risk capital,” Hart argued. “They are limited to the protection of authors and inventors for the purpose of encouraging the disclosure of inventions and the publication of writings.”
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Hart did not view protection of corporate investment as the same thing as an incentive to create and publish, but the bill’s proponents did. A compulsory license offered sufficient incentive for songwriters to compose and release their music to the world, but record companies demanded greater protection to reap a return on their investments. The industry asked Congress to protect a business
model based on hyping a few major songs, lest pirates imperil the worth of vast sums spent on advertising. They persuaded lawmakers to think of a work like a rock LP as a store of value created by a corporation. Sound was a form of information that could be fixed in vinyl grooves, magnetic particles, or any other technological medium. The new law would protect the authorship not just of the musicians but also of “the record producer responsible for setting up the recording session, capturing and electronically processing the sounds, and compiling and editing them to make the final sound recording,”
Congressional Quarterly
reported.
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Thus, copyright law recognized the label’s role in creating the record as much as, if not more than that of a singer, songwriter, or musician.