CHAPTER ONE

HISTORIC CYCLES AND DEVELOPMENTS IN THE MUSIC INDUSTRY

From the time of the invention of the phonograph in the nineteenth century through the 1950's, the years preceding the formation of Cuca Records, cyclical trends of business concentration followed by bursts of competition from small independent companies characterized the recording industry. Responsible for these tendencies were technological advancements and general economic conditions. Also key to the successes and failures of independents during this period was the relationships they had with major companies and the degree to which the large firms responded to popular tastes in musical forms.

Although Thomas Edison invented the phonograph in 1877, it was not until the 1890's that the commercial recording of music actually commenced. Edison originally conceived of his invention as an office dictation device and established the North American Phonograph Company in 1888 to market it.^[1*] However, his early metal cylinders engraved with patterns of sound vibration did not reproduce voices clearly, making them impractical for office use. Edison initially resisted using his machine for entertainment so the subsidiaries of his company, the Columbia Phonograph Company in particular, took the initiative to increase sales. It placed coin-operated phonographs in public places and produced recorded musical pieces on wax cylinders. Public response was so favorable, especially to those pieces made under exclusive contract with the United States Marine Band conducted by the hugely popular John Philip Sousa, that by 1891 Columbia established a small mail-order catalog of cylinder recordings.^[2*]

The infant industry and market for phonographs and recorded music remained small during the 1890's. One reason was the high price. An Edison phonograph in 1893 cost 190 dollars,^[3*] beyond the means of most Americans, and this caused his firm to fail financially. Since Edison's subsidiaries demonstrated potential success, he finally began to actively promote his invention for entertainment in 1894 and designed a cheaper machine for the average family. However, Edison could not sell phonographs for two years as he had to liquidate the North American Phonograph Company. Only one subsidiary, Columbia, survived the bankruptcy case. It was also during this two-year period that a new company, American Graphophone, exploited the lack of competition by marketing its own player cheaply: for 75 dollars.^[4*]

Concurrent with this development was the appearance of Emile Berliner's new record design. He experimented with duplicating sound on a flat disc record, using the original master recording to make a negative matrix to stamp positive records. In this way he could reproduce an unlimited supply of recorded product from one musical recording session and thereby reduce reproduction costs. Meanwhile, in 1896, Edison formed the National Phonograph Company and began working on a similar method to duplicate his cylinders. Although cylinders had superior sound quality at this time, the disc quickly dominated the phonograph market because of its ease of storage, durability, and convenience. Columbia and Edison's National Phonograph Company received serious competition from the National Gramophone Company (renamed Victor Talking Machine Company in 1901) when it began to market Berliner's discs. When Columbia purchased a patent to produce the flat records as well, it established a joint patent on the product with Victor and the two firms monopolized the market for almost fifteen years.

At the turn-of-the-century as competition and experimentation drove prices down, phonograph players, either for cylinders or discs, became more accessible to the public. For example, Edison's Home Phonograph appeared on the market in 1896 for 40 dollars and in 1897 his Standard Phonograph marketed for 20 dollars.^[5*] However, much of the music recorded during this period was considered "corn" and was handicapped in form because of the poor reproduction quality (only a portion of the aural spectrum was actually etched onto the cylinders or discs). Playing time of a recorded musical piece was also limited to about two minutes. The producers of the recorded material were not concerned about public taste and demands for musical selections, believing consumers to be content with the sheer amusement of the new technology.^[6*] Dissemination of that recording technology, the rapidly changing societal conditions, and the increase in public spending power engendered by World War I would change this trend of limited musical selections and cause a period of intense industrial expansion and the proliferation of new companies, each looking for its own niche within the musical market.

During World War I, the two laws which had protected recording technology changed, expanding the phonograph industry with the entrance of independent competitors. The first legal shift came in 1914 when the joint patent held by Columbia and Victor on lateral-cut phonograph players expired, allowing other companies to manufacture the product. Other entrepreneurs recognized the potential goldmine of the superior technology: In 1914 six new producers established operations; 1915 saw eighteen more; and by 1916 forty-six companies vied for a chance to get rich in the burgeoning phonograph field.^[7*]

These new companies, however, still faced another legal challenge. Although they could produce the lateral-cut phonograph players, patent law still prevented the manufacture of lateral-cut discs. Firms were forced to market the vertically-cut (or hill-and-dale) records which were inferior in sound reproduction as the phonograph needle moved vertically over the sound grooves stamped in the record. Starr Piano Company, which later became the Gennett record label, established its operations in 1915 and began producing vertically-cut discs. Because these low quality phonograph records sold poorly, the company decided to market the superior laterally-cut discs. Victor, which held the patent on this technology along with Columbia, brought suit against Starr for patent infringement. In 1918 the Supreme Court ruled against the giant company, allowing Starr, along with its co-litigators Aeolian-Vocalion, Okeh, and Compo, to compete with equal technology. This lawsuit opened the music market to other small phonograph records producers.

Various social and economic changes accelerated by World War I aided the industry's expansion and the proliferation of small recording companies. A new dance craze sweeping the increasingly urbanized nation just prior to the war created more demand for musical entertainment. However, many entertainers enlisted in the military during the conflict, forcing cabarets and music halls to cease operations. Dancers and music fans, many of whom had benefitted economically from the war boom, turned to recorded music played on phonographs in their homes for amusement, applying further pressure on the phonograph industry. In 1914 about 540,000 Americans owned phonograph players and by World War I's end this number had expanded to 2,225,000.^[8*] Increased supply of and demand for recorded music also influenced the likelihood of a song becoming a hit. Before the war, music often became widely popular by exposure through such venues as traveling minstrel shows. By 1919, however, a song could be a commercial success without ever having been performed on stage. For example, George E. Stoddard's "Mary," issued by Victor on record, sold 300,000 copies.^[9*]

By the early 1920's, small record companies, attempting to capitalize on the new demand for recorded music, began to set up operations. Many of the firms initially utilized the recording and manufacturing facilities of the industry giants and purchased or leased recording master records to release their catalogs of music.^[10*]

The majority of these new companies, however, faced a marketing problem. Even though they now had competitive technology, they lacked name recognition and capital to attract top-name artists to record with them and thus often had difficulty establishing a network of distributors or retailers to handle their product. Also, the large quantity of new entrants had saturated the market, a market that concentrated on guaranteed categories such as opera, brass bands, and pop dance bands. Successful sales, mainly by the industry leaders, had inhibited musical experimentation. By necessity, the infant labels were forced to find their own musical niches.

During the 1920's, new genres of recorded music emerged and prospered, led by innovative talent scouting, mobile recording units, and marketing techniques of independent labels. For example, Paramount Records of Port Washington, Wisconsin and Gennett Records of Richmond, Indiana were leaders in the blues genre, a style with an African-American consumer base that was "discovered" in 1920. Labels also released many ethnic or old-time records, targeted at the exploding European immigrant market. In order to sell the niche genres, these new businesses often made contracts directly with distributors and music stores to carry their products or they leaned heavily on mail-order customers, whom they attracted with advertisements in ethnic or African-American newspapers.

The 1920's was a decade of prosperity for and innovation by both the traditional industry leaders like Columbia and Victor as well as the expanding pool of independent labels. This period also saw a technological revolution, one, which combined with the imminent Great Depression, brought the entire record industry to the brink of collapse and nearly obliterated all of the indies from the musical landscape.

The military developed electrical recording during World War I for wireless radio transmissions and the phonograph industry began its own experimentation with electrical recording and reproduction in 1919. In 1925 Victor and Columbia issued the first commercial electrical recordings.^[11*] Electrical recording proved to be a marked improvement over the old acoustical method which had relied on a diaphragm to vibrate the cutting needle. With the new technology, electric impulses turned imprisoned sound vibrations into current, driving the recording needle deeper into the master wax disc, and thus producing a louder, clearer reproduction of sound and an increased frequency response.^[12*] However, this new technology meant larger capital investment for record companies, and those with limited budgets often found themselves cheating the consumer to stay afloat. For example, Paramount Records began printing the words "Electrically Recorded" on its record labels in 1927 although it is quite likely its issues did not all use the process until the firm built its own electrically outfitted studio in 1929. The increased costs associated with electrical recording favored the larger companies.^[13*]

The other major technological breakthrough which greatly affected record companies during the 1920's was radio. Improved during World War I, radio became a form of mass entertainment in 1920 and companies like Victor and Columbia entered radio manufacturing, installing sets in phonograph players. Smaller companies could not afford to expand their manufacturing capabilities, although one of the more successful new companies, Brunswick, struck a deal with the Radio Corporation of America (RCA) to place their radios in Brunswick cabinets. Live musicians performed over the early radio stations' broadcasts as the live sound was vastly preferable to the improved electrically recorded discs. Radio's popularity increased dramatically during the 1920's and just at the advent of the Depression, its sales began to surpass those of recorded music.

In 1929, on the eve of America's economic disaster, phonograph machine and record sales totaled $75 million. One year later, this sales figure plummeted dramatically to $46 million and fell even further in 1931 to $16.9 million.^[14*] Companies across the nation failed quickly. The Depression ushered in the first great transformation and cycle of consolidation in the music industry. Earliest to fall were labels specializing in niche markets, like blues, old-time, and hillbilly, whose customers were most devastated by the contracting U.S. economy. Larger interests purchased many of these firms. RCA bought Victor and in 1929 converted the majority of its record plants to radio production, seriously curtailing the company's recording functions. The same year saw the fall of the once mighty Edison company, which ceased all manufacture of both its phonographs and records.^[15*] Herbert Yates, owner of Consolidated Film Laboratories, acquired the American Record Company and a multitude of independent labels like Banner, Cameo, Pathe, Perfect, Vocalion, and Okeh. He even gained control of Columbia. Yates' American Record Company and the Decca label became the leaders in the weakened music industry. They successfully weathered the economic storm of the 1930's by strategically lowering prices and severing all attempts at musical or technological innovations.^[16*]

Despite all these changes, the recorded music business did not die during the Depression. One salvation of the few remaining firms was the increased popularity of jukeboxes, especially after the repeal of Prohibition in 1933. The coin machines installed in saloons kept the record manufacturers busy, as operators changed the musical selections every two to three weeks. By 1936, with the help of the jukebox market and a slowly reviving national economy, the consolidated record industry began to recover.^[17*]

Like the First World War, World War II also had a dramatic effect upon the record industry, by the government's rationing policies and the alterations in popular culture caused by wartime mobility. During the war, the War Production Board began to ration imported shellac, a primary component of phonograph records. The handful of independent record companies that had survived the Depression declined even further.^[18*] Also, many record manufacturing plants converted to the production of war materials. This meant that small companies which had relied upon the major companies to provide pressing facilities for releases were unlikely to be granted a supply of precious shellac, even if they could find a plant in operation for entertainment production. The almost two-year long American Federation of Musicians' strike which began in 1942 cut record production even further.

Despite these setbacks, the public still made heavy demands on the recording industry, especially as many musicians entering the armed forces eliminated the live radio performances to which Americans had become accustomed. As a result, radio stations were forced to drop their previous opposition to the broadcast of recorded music and replaced their studio musicians with records. These broadcasts of swing and big band music, the most popular form of music at the time, were important to the morale of Americans both on the European and Pacific fronts as well as to the home population.^[19*]

The war's social effects also began to diversify the industry's musical offerings by popularizing heretofore local and regional genres. Troops stationed overseas and in training camps throughout the United States were often from a myriad of ethnic and class backgrounds. Exposure to new musical forms, from one another and from the peoples with whom they had contact, began to create interest in other genres beyond the swing, classical, and patriotic tunes being produced by the major companies. The minority and specialized markets for music had been all but abandoned with the disappearance of independent companies, the war-time shellac shortage, and the conversion of factories to war-time production. With war mobilization, minority groups began to flock to urban centers in search of industrial jobs --- just as they did during World War I --- clustering into neighborhoods and searching for their own traditions of music. The jobs they found in these areas also gave them more discretionary income.^[20*] By the war's end, the general population's disposable income for entertainment had risen and, with the resumption of record manufacturing and the lifting of shellac rationing, sales skyrocketed to 275,000,000 discs in 1946 and to 4 million in 1947.^[21*]

While the demand for recorded music grew, the consolidated structure of the record company business simply was not responding effectively. Also, technological innovation, to gain a competitive edge over each other and over other forms of entertainment, was a bigger interest to the surviving firms at this time. This concentration on technology would directly influence a resurgence of independent companies in the years following the war's end.

The most important technological breakthrough in sound reproduction was the discovery of magnetic tape as a result of the Allies' capture of a German Magnetophon recorder in 1945. Its fourteen-inch tape reels reproduced sound with a quality almost indistinguishable from a live performance.^[22*] By 1949 the recording industry eagerly grabbed this device and within one year the old recording method of imprinting sound grooves into wax or on to an acetate blank master disc was obsolete. All saw the immediate advantages of tape recording technology. It had superior recording quality and an ease of reproduction. Tape could also record a musical selection or selections continuously for over thirty minutes; it could be edited - allowing for musicians' mistakes or the erasing of interfering noise; and, most importantly, the tape recorder was small, portable, and cheap. A high quality tape recorder was modest in cost, requiring an investment of just a couple thousand dollars.^[23*]

Because of this new tape technology, technicians and engineers at the larger companies quickly concentrated on two other important developments: long-playing vinyl and 45 rpm records. The long-playing record (LP) was actually first developed in the 1920's by members of the film industry. In the early 1930's RCA-Victor introduced an LP on a new, flexible material it called Victrolac but the machine on which it played was too expensive for the ailing American consumer and continued development of the LP was cut.^[24*] Interest in developing superior recording quality revived in the late 1930's with the introduction of FM radio. Industry leaders realized the old shellac 78 rpm record could not effectively compete with the superior fidelity of the radio stations.^[25*] However, the first commercially viable LP was not released until 1948 when the industry and the nation were safely on their way toward economic recovery. Columbia Records successfully assembled a record which could accurately reproduce the superior sound of the tape recording technology. It utilized vinyl, an ingredient harder and finer than shellac. An innovative thermal engraving process, which reduced unwanted noise, could press more sound grooves into the new vinyl record. Also, vinyl was virtually unbreakable and contained no abrasives, vastly improving the occurrence of surface hiss associated with the shellac 78.^[26*]

Another advantage was that the new LP had a longer playing capacity. It revolved on a playing platter which reproduced the microgrooved sounds at 33 revolutions per minute. The new playing speed meant lengthy musical pieces no longer had to be divided on multiple disc sides as they did with the shorter 78 format. To compete with Columbia's new format, RCA-Victor released its own seven-inch 45 rpm vinyl record. The two companies held a "battle of record speeds" for one year, releasing new phonographs which played the new speeds and employed improved amplifiers and "converters," enabling a player to spin both old and new speeds. The competitors continually reduced prices to attract consumers until a settlement was agreed upon: Both record formats would be available without need for two separate players. Once the situation was resolved, both LP's and 45's became instant hits, enjoying a 30 percent share of the market during 1949, the year of their release.^[27*] Besides the improvement in quality, the quick acceptance of the new records by both the public and the industry was again due to economics. For example, recording a 45 only cost between two and three hundred dollars.^[28*] As a result, by 1950 sales of 78 rpm records were on a serious decline.

Yet another technological development reverberated within the entertainment industry in the post-war period, enlarging music reproduction. In the late 1940's, people turned to television for dramatic entertainment, forcing many radio stations to abandon radio drama and shift to all-music formats. Also, network owners began to concentrate their energies on the new medium, giving more control to radio's local programming level - people more in touch with their audiences' tastes. The smaller, non-network radio stations also could not afford the recorded transcriptions of dramas and performances supplied by the network owners so they began to look to records, especially the 45 rpm single, as an alternative to attract audiences.^[29*] Disc jockeys (deejay's) were largely responsible for seeking out new forms of music, often aimed at specialized and minority markets, and discovered that the companies which dominated music production - RCA-Victor, Columbia, Decca, and Capitol - simply did not have the variety that the radio audience was demanding.

By the early 1950's, then, a serious challenge had arisen to the hegemony of the consolidated music industry. Several factors converged to flood the market with another wave of new entrants. Cheaper and better quality technological innovations made the recording process more accessible to entrepreneurs with limited capital. Wartime urbanization and military service had produced mass population shifts and increased social contact which in turn caused an expansion of musical forms and tastes. The public's increased income produced rising demands for entertainment. Finally, both radio and television helped, rather than hurt, the music business. Media use of recorded music aided the explosion of independent record companies as all-music formatted radio provided free advertisement for the small, undercapitalized independent company. Also, the decentralization of music programming made popular taste and demands more difficult for the major music companies to control.^[30*]

The four major companies which dominated the market in the late 1940's and early 1950's did so with vertical integration; they reduced competition by controlling the recording artists, and the merchandising and the distribution systems. These large firms had corporate connections with network radio and the film industry, thus insuring an outlet for their recorded product. For example, RCA-Victor was linked with RKO Film, Columbia with CBS, Decca with MCA/Universal, and Capitol with Paramount Pictures.^[31*] They tended to focus on music which catered to the white middle-class American:^[32*] show tunes, big band instrumentals, and ballads. A new and independent record company wishing to enter the market, taking advantage of the cheap recording technology, needed to find an artistic niche market and methods of distributing its product in order to compete effectively.

Logically, many of the new start-up businesses looked to musical forms that the majors had ignored during the Depression and World War II. One of the most important markets nurtured by the indies at this time was African-American music. During the war years, the majors had released records by blues artists but had not signed any new talent.^[33*] They had therefore kept the market alive but did not respond to the growing development of rhythm and blues - a new musical form that evolved from classic urban blues. With the growth of African-American communities in large urban centers and the emergence of the decentralized radio programming format which allowed for the broadcast of black music over some airways, a few new companies started recording and releasing r&b artists, beginning a revolution in both the industry and music as a whole.

One such company was Chess Records of Chicago, originally Aristocrat, formed by the Chess brothers in 1947. Chess initially concentrated on the local blues bar scene but after 1954 started expanding into vocal groups and r&b. Another firm was Atlantic Records, founded in 1947 by Herb Abrahamson and Ahmet Ertegun who wanted to record blues and gospel music not found on the major labels. Johnny Vincent, who would later form Ace Records of New Orleans, started a blues label, Champion, in 1950 after learning that blues and r&b records sold well even though they were being ignored by the major labels.^[34*] On the West Coast where Los Angeles was becoming the musical entertainment rival of the traditional center of New York, a host of labels releasing its new southern migrant populations' rhythm and blues recordings formed: Aladdin, Modern, and Specialty, all in 1945.^[35*]

Major companies viewed other specialized ethnic music as unprofitable. Discerning that this was, in fact, untrue, businesses like Imperial Records and Tico Records both got their start recording Latin American music in 1947 and 1948 for the growing Latin American audiences in the Southwest United States and urban centers like New York. In the Midwest, reflecting its central and southern European background, tiny polka or old-time labels emerged including Phau Records of Milwaukee and Jay Jay Records of Chicago. Of course, the Midwest was not the only place where such music had a demand; almost 150 labels such as Continental and Balkan cropped up in New York during the 1940's.^[36*] Major labels also shunned country and western music and labels specializing in recording hillbilly musicians multiplied, most notably in Nashville, Tennessee. Chapter 3 will discuss all of the above mentioned musical genres.

The creators of many independent firms entering the market in the late 1940's and early- to mid-1950's were people who owned record stores or a chain of jukeboxes. It was this business background which sensitized them to the unsatiated demand for minority-market music. These entrepreneurs were usually not trained musicians and rarely had any experience in the recording business. For example, after leaving military service in 1945 and before founding Ace Records, Johnny Vincent supplied jukeboxes. To increase his income for his new family, he secured a music sales job in New Orleans where he learned the rudiments of distribution and talent scouting. He then bought a record store in Jackson, Mississippi, selling r&b records to local jukebox operators and regular customers. Those records sold quite well, but the selection was limited. To cash in on this market, Vincent started his own blues labels - first Champion and then Ace - to record local artists. Like many other upstart labels, he recorded his early releases in a rented studio in New Orleans - a city quite far from the traditional industrial centers of New York, Los Angeles, or Chicago.^[37*] Geographic dispersal of recording companies became the trend in the 1950's, with labels springing up in tiny burgs across the nation in such places as Alabama, Tennessee, and Wisconsin.

Perhaps the most famous independent record company, Sun Records, was founded by Sam Phillips in Memphis, Tennessee. Phillips, too, did not have formal training in either music or the recording industry. He began his career as a deejay on WLAC in Nashville in 1945 and then moved to WREC in Memphis from 1946 to 1949. During this time, he also promoted concerts and with the extra income opened his own recording studio in 1949. Having noticed the gap in the black music market, he began recording southern r&b masters, which he leased to other independent record labels until he founded his own label in 1952.^[38*]

Independent owners survived these early years by keeping their overhead low. They rented recording studios or purchased second-hand equipment and avoided the strict industry policies required by larger and more formal organizations. Musicians did not expect the high technical standards of the majors - nor did they get them - and the tiny operators could usually ignore the musicians' union pay scales and work rules.^[39*] The recorded sessions would often be sent to a record pressing facility, usually owned by one of the majors, and it could make a 45 for just a couple hundred dollars. An indie only had to sell a few thousand copies of a release to cover its costs, unlike the tens of thousands required by a larger organization.^[40*]

Though the market at this time was still generally small for the indies' music, many made deals with jukebox operators who guaranteed a minimum purchase quantity, thus increasing the chances of covering recording and pressing costs.^[41*] The decentralized structure of the radio business discussed above also helped an independent release. For a gift or small payment of money, many local deejays would broadcast a record on their radio shows, giving the music exposure and boosting local sales. Of course not all releases were broken this way, but as will be shown later, the problem of "payola" in the music industry has been historically endemic. Some independent companies employed less-than-honest business practices to keep themselves afloat in the early years. As one unnamed owner stated, "The way an indie survives, you don't pay anybody."^[42*] Independents tended to rely completely on their owners for talent discovery, production, distribution, business administration, promotion, and marketing^[43*] as most could rarely afford to hire staff - such as the artist and repertoire (A&R) man or a salesperson - to handle such tasks.

The underground and localized nature of the independent company structure was not to remain long. Because of the advent of rock-and-roll, a hybridization of black rhythm and blues and white hillbilly music, and the phenomenally successful releases by such artists as Elvis Presley and Jerry Lee Lewis on Sun Records, Fats Domino on Imperial, and Chuck Berry and Bo Diddley on Chess, both the majors and other independents leaped on the rock-and-roll bandwagon and the industry surged. Suddenly "specialty markets" were the markets in which to be involved. As early as 1951 Columbia recognized the shift and reactivated its Okeh label for r&b releases and RCA followed suit three years later with a subsidiary label, Groove Records.^[44*] Even Warner Brothers, the movie industry conglomerate, made the decision in 1958 to re-enter the recording market. (It had tried and failed just before the Depression when it purchased Brunswick and sold it twenty months later.) As a vertically integrated company, it already owned branch offices in 45 countries and had a built-in distribution system,^[45*] guaranteeing its future success in the recording industry.

Proof of the awareness in market possibilities for an independent label's releases was the sheer quantity of companies competing during the mid- to late-1950's. Between 1955 and 1959 the number firms producing successful records tripled and industry sales rose 261 percent.^[46*] The majors' share of this market dropped from 74 percent to 34 percent during this period. In 1958, 76 percent of the of the 283 hit singles listed on the Billboard charts came from independent labels.^[47*] The majors remained profitable because the entire market had expanded, but they now had less control over which records would be best-sellers. Again, radio had the biggest influence on this trend. The same span of years also saw a 30 percent increase in the number of radios owned by Americans, mainly because of the introduction of the cheap transistor radio, and a 27 percent increase in the number of AM radio stations.^[48*] Although the trend did not last long, many stations programmed their own selections of specialized recorded music aimed at local audiences. The results were diversification of musical styles receiving exposure over the airwaves, greater demand by customers, and, in turn, increased orders from distributors and merchants for the music.

The widening of the market had some negative effects on the industry. As is usually the case, the first to suffer were the small companies. Their mad dash to release the next hit record generated a market glut. In the late 1950's, approximately one hundred new singles were issued each week and by 1958 only 10 percent of these sold over 50,000 copies.^[49*] Fearful of this overproduction and in order to undercut the independent competition, the major companies cashed in their capital and technological advantages and instituted several strategies that would eventually turn the tide in back in their direction. With a larger pool of talent and more diversified music catalogs, the majors increased the attractiveness of the LP at the expense of the 45 rpm single, the cheaper format favored by the indies. (In 1958 the cost of LP production started its steady climb. For example, the cost increased by 60 percent for the extensive artwork required for the large-sleeved LP.^[50*] ) At the end of 1957, the majors increased the price of a 45 from 89 cents to 95, and by 1959 this price had increased to 98 cents. An LP cost $3.98 in 1959, however it offered much more music, an average of twelve songs and forty minutes. By contrast, a 45 held just two selections and a mere six minutes of recorded material. As a result, sales of singles slipped 32 percent in 1959, the bite felt mostly by the independent labels.^[51*]

Another factor in the decline of the independent's market share at the end of the decade was the introduction and expansion of Top 40 radio. By this time, the majority of the 4,500 disk jockeys on commercial radio were adhering to a policy of playing only established hits, a problem for breakthrough artists recording at a small, unknown recording studio with no budget for promotion or marketing. The odds of having a hit single dropped to a one-in-ten chance, with record dealers concentrating on the hits played by the Top 40 stations and generally ignoring the 125-per-week single releases. Distributors of indies' 45 releases became more conservative in their handling of the merchandise, too, as a result of the decline in single sales and the smaller chance of hit-making radio exposure. By 1959, the independents' share of the Billboard Hot 100 singles chart had slipped to 33 percent.^[52*]

Although by 1960 there were approximately 3,000 record labels in the United States (2,500 of which were "one-shots" - the work of an independent producer recording a potential hit in a rented studio or on a small tape recorder, the whole venture costing less than $1,000^[53*] ), the major players in the industry once again started a cycle of re-consolidation. The majors began stealing successful artists away from the independents, promising extensive recording contracts and increased royalty benefits. As early as 1955 RCA-Victor had bought Elvis Presley from Sun for $35,000.^[54*] Other recording stars fled their indie backgrounds, searching for stability and profit, causing many labels like Sun, Aladdin, and Specialty to cease operations. As will be discussed in later chapters, the larger companies also began to purchase their independent competitors, absorbing the musicians and music catalogs into their own conglomerate recording, marketing, and distribution systems.

It was into this rapidly shifting, volatile market that a small, independent recording company in the tiny town of Sauk City, Wisconsin established itself in 1959.