Cowboys and Indies: The Epic History of the Record Industry (7 page)

Once all Victor’s artist contracts were renegotiated, in July 1919,
Talking Machine World
announced “the democratization of music.” The price of Victor’s classical and operatic records was being slashed to as low as $1. Even the cost of Victor’s most exclusive limited editions, which had retailed at $7, were being cut in half. In the accompanying visual campaign, operatic icons were photographed in boxing gloves, in kitchens, and on bicycles. Every effort was made to take the haughtiness out of classical music.

What Victor hadn’t anticipated was the loss of its virtual monopoly on laterally cut discs. Perhaps the single biggest upheaval of the postwar years was a legal battle between Victor and Starr Piano Company, owners of a new record label called Gennett. In 1919, Gennett had dared to release a laterally cut disc and was, as expected, promptly sued by Victor. However, Starr’s lawyers were able to convince the court of a number of gray areas surrounding Victor’s patents. In January 1920, the U.S. Circuit Court of Appeals rejected Victor’s injunction and opened the floodgates to mass competition.

Accelerating a process that had started during the First World War, the record business grew dense and vibrant. The industry’s monthly trade magazine,
Talking Machine World,
which contained about a hundred pages in 1916, doubled to over two hundred pages in 1920 with listings for about two hundred manufacturers. Many of these new talking machines were named after their founders: Cheney, Emerson, Heintzman, Wilson, Steger, Crafts, Onken, Weser. Other brands copied the sound of “Victrola” with names like Robinola, Harmonola, Tonkola, and Saxola. In record production, interesting new labels entered the market, including Brunswick, Aeolian-Vocalion, Gennett, Okeh, Paramount, and Black Swan.

It was into this complex, rapidly evolving market that the period’s most progressive record man, Otto Heinemann, launched Okeh, arguably the first example of the alternative record label.

Jehuda Otto Heinemann was born in the north German city of Lüneburg in 1877, the sixth son of sixteen children. At thirty-seven years of age, Heinemann was the managing director of one of Europe’s biggest record empires, Carl Lindström AG. Based in Berlin, it owned a vast record-pressing plant as well as three large labels: Odeon, Parlophon, and Beka. Its factory in Berlin employed thousands and pressed 100,000 records per day. With distribution operations in France, Britain, Austria, and Holland, the company was one of the first majors in continental Europe. It had just opened an office in Argentina, Disco Nacional, which produced the first recordings of tango legend Carlos Gardel.

In the summer of 1914, Heinemann was sailing to New York to investigate industrial conditions in the American record market. War broke out when he was at sea, and as a result, he was briefly interned in the British port of Southampton before eventually arriving in America. As European countries began declaring war on each other through pact arrangements, borders closed, telegraph lines were severed, and shipping became hazardous. Watching events in Europe unravel from New York, Heinemann realized he was stuck in America and had to make money.

Although starting from scratch, he was experienced and adaptable, and he had been studying the American record industry since his first trip in 1909. He registered an import-export business in New York, the Otto Heinemann Phonograph Supply Company, and set up a small factory in Ohio. His business plan was to supply motors to the blooming market of smaller independent phonograph manufacturers. As he hoped, Heinemann quickly found clients among the scores of newcomers sprouting up during the boom of the First World War.

Heinemann wanted to move into record production but patiently observed the rapidly changing music market around him. In 1918, with the war drawing to a close, he bought out a bankrupt record company, the Rex Talking Machine Corporation, and hired its former musical director, Fred Hager. Symbolizing Heinemann’s fascination with America’s indigenous culture, his Okeh logo was an Indian warrior’s head wearing a lone feather.

Heinemann visited Berlin in 1920 and was shocked to find currency turmoil, massive national debt, food shortages, and political instability. After six exciting years setting up his own small business in boom-time America, Heinemann returned to New York eagerly anticipating the final outcome of Starr Piano Company’s landmark case against Victor. With capital investment from his former employer, Carl Lindström, he reorganized his company and opened Okeh dealerships in Chicago, San Francisco, Atlanta, Seattle, and Toronto.

With Lindström’s European catalog at his disposal, Heinemann began importing German, Swedish, Czech, and Yiddish-language records for America’s ethnic minorities. This niche marketing approach led Heinemann and his staff to ask themselves two simple questions: Was the Negro population the most potentially profitable ethnic market in America? If so, why should black music be considered any differently than the other ethnic records Okeh was selling?

The initial question in fact came from a black composer and theater producer Perry Bradford who had made a name for himself on the black vaudeville circuit. In February 1920, he strolled around to Okeh’s studio at 145 West Forty-fifth Street to see Fred Hager. He presented some songs he had written for a thirty-six-year-old singer called Mamie Smith, the star of a recent black vaudeville production,
The Maid of Harlem
. Bradford argued, “There’s fourteen million Negroes in our great country and they will buy records if recorded by one of their own, because we are the only folks that can sing and interpret hot jazz songs just off the griddle.”

On August 10, 1920, Okeh organized a session supervised by a sound engineer named Ralph Peer. The song produced was “Crazy Blues,” in which Mamie Smith bellowed a catchy melody over a 12-bar arrangement in the woozy, stomping style of New Orleans brass bands. Swelling into a smash hit, it sold an estimated 1 million copies—many of which went into white parlors. Realizing they’d struck a gold mine, Hager and Heinemann then invited W. C. Handy to record more brass-band blues for Okeh.

Jealous of Okeh’s knockout success and determined to create the first genuine black record company, Handy’s publisher, a former insurer from Georgia, Harry Pace, established Black Swan. From his home on Striver Row in New York City, he borrowed $30,000 and released a string of disappointing records. Fortunately, his talented musical director, Fletcher Henderson, found a lifesaver in Ethel Waters, a beautiful singer from a sad childhood. Her first record on Black Swan, “Down Home Blues” and “Oh Daddy,” sold 500,000 copies within six months.

Harry Pace’s masterstroke was to send his artists off on a nationwide tour of vaudeville theaters. Between November 1921 and July 1922, the
Black Swan Troubadours
visited twenty-one states and performed in at least fifty-three cities. A black newspaper columnist
,
Lester Walton, took charge of road management and persuaded the
New York Age, The Chicago Defender, Pittsburgh Courier,
and
Baltimore Afro-American
to cover the tour with constant reviews. Some white newspapers even started to take notice.

The lovely Ethel Waters, whose contract with Black Swan restricted her from marrying for a two-year period, performed in elegant feather costumes, the new style in Chicago and New York clubs. A North Carolina newspaper, the
Tribute,
reported, “Ethel Waters and her jazz masters have come and gone but their memory will linger for months … The crowd was left wide eyed and gasping with astonishment … Her act, including shimmies and shivers,… sent the crowd into paroxysms of the wildest delight.” After seven months of sold-out concerts, Black Swan’s mail-order business was employing thirty people and had shipped some $100,000 worth of records to about a thousand dealers.

With growing demand for so-called
race records
, new distribution networks opened up around the black newspaper circuits. Paperboys began selling blues records at newsstands; Pullman porters peddled copies at whistle stops; salesmen went door to door. The editorials in
The Chicago Defender
encouraged “lovers of music everywhere and those who desire to help in the advance of the Race” to buy these new records.

Meanwhile, Okeh was busy signing a roster of black artists and formulating its own ambitious plans. As well as alternative distribution, Otto Heinemann initiated a quiet revolution inside the mainstream industry. From October 1921, Okeh took out advertorials in
Talking Machine World
showing its advertisements in black newspapers—a conscious strategy to reassure white dealers that
race music
was a wide-open, lucrative market.

As demand grew in white parlors for danceable music with modern American identity, jazz and blues moved toward the mainstream. Blacks may not have been treated equally in real life, but in the otherworldliness of music, the potent mix of streetwise slang and Southern imagery seemed to express an American dream. A new wave was breaking—as an even bigger one rolled in behind.

5. THE INVISIBLE WAVE

There was one other shadow on the horizon. It was happening out at sea—but only teenaged boys could see it coming.

A tidal wave was about to crash over the record industry and wash away much of what the founding fathers had built. Compounding the cultural changes like a perfect storm, in 1922 radio suddenly hit and sent the record industry into its first serious prolonged recession, in total some twenty years of contraction and soul searching.

Way back in the 1880s, there was a third Menlo Park project going on as Edison’s phonograph and lightbulb were being developed. Edison demonstrated, as a few others had before him, that it was possible to transmit electrical pulses through the air.
Wireless telegraphy
, as it was first called, had been one of the great dreams of the Victorian age, but compared to telephones, electric lighting, and talking machines, the science required huge investment. Even Edison, with all his money and stubbornness, gave up and sold his patents.

Eldridge Johnson, by far the most powerful man in the record industry, was one of several observers reading articles about this fledgling sector with disinterested bemusement. Radio had yielded more investment scams and fantastical predictions than any other field of research. It was probably unimaginable that a system based on transmitting Morse code messages between ships might be so spectacularly improved that entire sonic pictures could be transmitted across great distances with arguably better sound quality than talking machines.

The tragic hero of the saga was the Italian inventor Guglielmo Marconi, who in 1895 had acquired Edison’s patents. Once articles reported Marconi’s long-range tests, popular interest grew, and in May 1899,
The New York Times
ran an eye-catching feature predicting that “all the nations of the earth would be put upon terms of intimacy and men would be stunned by the tremendous volume of news and information that would ceaselessly pour in upon them.” In 1905, a comprehensive report published in the
World’s Work
magazine speculated that one day “a lone ranch-man in Arizona might set up a pocket-receiver and learn the latest news.”

With the public’s imagination aroused, unscrupulous entrepreneurs began taking out advertisements to attract small investors, describing their companies as “the nest eggs of fortune” or saying that “for every $100 invested it will return thousands.” In 1907, however, an investigative journalist, Frank Fayant, writing a stock-fraud series entitled “Fools and Their Money” for
Success Magazine,
included a damning report on “the wireless telegraph bubble.”

Following his revelations, a string of companies was prosecuted for fraud, clearing the field for the most legitimate players. Apart from Marconi, the other genuine contender was Nikola Tesla, a genius Serbian mathematician and physicist who in the 1880s had worked at Edison’s Menlo Park laboratory.

Since his falling-out with Edison over money, Tesla had been working on X-rays, radiation, remote controlling, and radar. Unquestionably one of the most respected minds in the research community, Tesla predicted in 1908 that “it will be possible for a business man in New York to dictate instructions, and have them instantly appear in type at his office in London or elsewhere … An inexpensive instrument, not bigger than a watch, will enable its bearer to hear anywhere, on sea or land, music or song, the speech of a political leader, the address of an eminent man of science, or the sermon of an eloquent clergyman, delivered in some other place, however distant. In the same manner any picture, character, drawing, or print can be transferred from one to another place.”

Nikola Tesla may have been the most brilliant mind in the domain, but he was also showing signs of obsessive-compulsive disorder. In the luxurious hotels where he lived, for instance, he always demanded everyday objects, such as towels and bars of soap, in multiples of three. Another problem was that financially, his research relied too heavily on European funding. Recklessly accumulating bills in the Waldorf Astoria, he was forced to hand over his half-built radio towers to the hotel’s owner once the war cut off his sources.

Marconi, in contrast, was a pragmatic businessman. With stations built in Newfoundland and Galway, he wisely chose to focus all his commercial development on the shipping industry, which immediately understood the lifesaving importance of radio. His other core market for early radio equipment was teenagers, colloquially referred to as
amateurs
or
boys
. Radio operators on ships were the first to complain about these young pirates of the airwaves disrupting maritime communication with foul language and pranks.

In 1909, teenaged radio amateurs on Rhode Island sent out false reports of a shipwreck, resulting in a U.S. Navy ship spending all night sailing around in circles. Later that year, after a real accident when a steamboat collided with the SS
Florida,
the navy vessel on scene was given four different false positions by eavesdropping pranksters, the rescue was delayed by twelve nailbiting hours. The Radio Act of 1912 officially restricted amateurs to certain defined wavelengths, as newspaper articles raised the question of teenagers’ addiction to radio.