CHAPTER FOUR

THE INDEPENDENT CATCH-22: PROMOTION AND DISTRIBUTION

Once a group records its single or album, its record label must sell the product to recoup its investment and make money for the artists. Promoting the record and making it attractive to consumers is a process in which all companies strive to excel and their success often depends upon how much their budgets allow. Intimately related to promotion is distribution; labels must get the product into stores for consumers to buy. A record can be eye-catching and ear-pleasing but unless it is available to the public, it will not sell a single copy. Therefore, record companies promote records to not just individual buyers but to distributors and the most important middlemen promoters of all: radio. Throughout the recording industry's history, large companies have used their corporate strength and budgets to harness successful promotion techniques and distribution deals, often at the expense of smaller companies and the unknown artists who recorded with them. Although many of the indies, including Cuca, attempted to bypass the majors' influence over promotion and distribution, they found these efforts foiled time and again by declarations of bankruptcy, fraud, and shady back room deals. A vicious cycle existed for indies; they required good promotion to snare distributing deals but with their limited budgets, they could rarely afford to invest in slick marketing packages and deejay pay-offs. Without attention from radio, they received few distribution deals which, in turn, resulted in low revenues, further exacerbating their budgetary woes. This obstacle often meant the kiss of death for a struggling indie in the 1960's.

The first step to promote a record is to manufacture its packaging. In the early twentieth century when 78 rpm records still dominated the market, packaging was simple. The brown grocery-bag sleeves which protected the records usually listed record companies' other available selections, giving little indication as to the style of music the records contained. The sleeves were marketing tools for the label, not the artists. With the advent of the 45 single after World War II, record companies began to alter their packing techniques. A single's sleeve either generically identified the record company, with the song's title and artist peeking through from the actual record label, or displayed a full color photo of the artist or artwork which revealed the style and title of the selection. On the other hand, companies always inserted full length albums into cardboard covers with extensive artwork and text. LP's larger size and sealed packaging making it both feasible and necessary to create eye-catching artwork and indicated the style of music contained within.

Throughout the 1960's, the LP became increasingly important. Bands like the phenomenally successful Beatles led the entire industry away from the 45 single and towards the LP, altering marketing patterns. The Beatles' concept albums, as well as other groups' LP's, were so popular that sometimes their labels released up to ten of twelve selections as singles. Economically, it made sense for both the producers and the public, especially teenagers, to concentrate on the LP because an album cost the same as four 45's.

Demonstrative of the shift to the LP concentration was the emphasis on more sophisticated album covers. The Beatles' 1967 "Sergeant Pepper's Lonely Hearts Club Band" solidified the new stress on eye-catching artwork and established a new guideline for album art,^[1*] increasing the costs for LP jackets. Comparing the size and paper quality of the 45 sleeve to the LP sleeve, it is easy to deduce the printing cost difference between the two formats. Singles' sleeves (approximately seven by seven inches) ranged from wafer thin paper to glossy, near-cardboard strength jackets while LP sleeves, which contained significantly more vinyl weight, were almost always thick, nearly unbendable, twelve by twelve cardboard sheets.

As LP covers became more intricate, media conglomerates hired world-famous artists to design artists' albums. For example, Warner Brothers secured the artistic services of Andy Warhol for the Rolling Stones' album "Sticky Fingers." Warhol designed the interactive LP cover to include a pair of jeans with a real zipper which actually unzipped. Indies like Cuca, by contrast, contented themselves with local artists hired at rock bottom prices to design their sleeves. Jim Kirchstein hired Circus City Printers of Baraboo to design and manufacture the sleeves of the first forty Cuca albums. He later employed local, freelance artists to develop the concepts for LP's including Jane Aurlich, a retired artist from Baraboo and high school student John Schmelter, who drew the cartoons for a large number of the old-time album covers. Because Kirchstein put up his own money for the album artwork, he paid his artists just 25 dollars per LP.^[2*]

Kirchstein concentrated his artwork promotion on LP's but he also invested in the production of several picture sleeves for singles. Most 45's had a generic Cuca sleeve, which cost an extra half cent per record, but a few had more extensive designs.^[3*] Releases of true picture sleeves were rare on the indie label because production costs were high for extensive and glossy sleeves and commercial success was never guaranteed.

While the artistic quality of the Cuca LP's and 45's is a matter of personal taste, the vibrancy of the designs and colors did not compare with the major companies' releases and Kirchstein certainly could not compete with such marketing ploys as unzip-able jeans on the covers of his albums. Also, while majors employed professional music critics, journalists, or other musicians to write the liner notes on the back covers of LP's, Kirchstein wrote the majority of the text himself, giving the history of the bands, descriptions of the music, and thumbnail biographies of the musicians.^[4*]

The circular labels glued to the records also played a role in marketing and promotion. An attractive logo could imprint a company's name into the public mind, making them remember the firm and possibly attracting future purchases based not only on an artist but on the reputation of the label. For example, most people recognize the RCA-Victor dog with its ear cocked at a phonograph player and the company's slogan, "His Master's Voice." Kirchstein wanted similar recognition to attract buyers so he experimented with several different label designs. The first labels, after the Swastika fiasco, were plain black with the name "Cuca" proudly embossed across the top of the round paper marker. These were pressed at RCA's plant in Chicago. Soon Kirchstein wanted his own mascot, like the RCA dog, and he hired artist Beau Payton to design a tiny Mexican figure to sit alongside the Cuca name, its "C" closely resembling that of Coca-Cola's. Once Kirchstein started to press his own records, he applied silver labels to the 45 rpm records until he was able to purchase the 800,000 leftover Mexican figurine labels from RCA. A local printing firm, Geigrich Brothers of Prairie du Sac, affixed the artists' names and song titles to the pre-printed labels, making them useable at the new manufacturing plant. Many other colors of labels appeared throughout the Cuca single catalog, including orange and red, which were also pressed at the Cuca facilities. Kirchstein explained that he was trying out different things that looked "flashy" because "you put a lot of emphasis in those days on things that looked different, what catches the eye. You try to get a loud record and a label that looked good."^[5*]

Not all records recorded and pressed in Sauk City carried the Cuca name. Kirchstein created numerous subsidiary labels for his releases and this practice was, and still is today, quite common in the industry. Early in recording history, firms developed subsidiary labels which were often discount lines of music. Companies released a selection already issued on the main label onto a subsidiary. Owners often pressed the disks with lower quality material and thus charged less for the issues. For example, Paramount Records of Port Washington, Wisconsin re-released many of its blues records on its subsidiary lines, Broadway, National, and Famous, and charged three-for-a-dollar as opposed to the 75 cents per record commanded by the Paramount name.^[6*]

Other labels developed subsidiaries to target specific markets or audiences. Columbia established Okeh and Decca created Brunswick and Coral to target mainly African-American buyers and released much of their r&b material on these subsidiary labels, each having its own promotion and distribution systems.^[7*] Another motivation for parent companies to incorporate subsidiaries was to create the illusion of a completely different company, thus tricking radio stations and distributors into believing they were buying and spinning music from many different companies, rather than just a select few majors. Radio stations were particularly sensitive to this because of the fear of being accused by the FCC for favoritism and possible bribery.^[8*]

Independents followed the lead of the majors and they too developed subsidiary labels. For example, Chess Records owned Checker and Ace Records had Vin as its subsidiary. Kirchstein established subsidiaries to both target specific audiences and fool his distributors. He felt by diversifying the names of the labels, he could release material to different distributors and increase his chance at commercial success without violating any exclusive contracts with distributors which handled the Cuca name.^[9*]

Kirchstein registered "Cuca" on 18 October 1960 with the U.S. Department of Commerce and the bulk of all Kirchstein's recorded material appeared under that trademark. The Sara name and trademark became a Cuca subsidiary in 1961 and this label carried mainly rock selections which Kirchstein wanted to release with different distributors. In 1963 he registered the Night Owl label and this subsidiary carried black groups, mainly those from Chicago. The Polka Dot label came about in 1964 and featured polka or old-time single releases. Other labels which appeared occasionally included Top Gun for country, Psalms for religious songs, Lucky Leprechaun for Irish music, Jolly Dutchmen for old-time selections, and Sounds of Wisconsin for historic music, like train sounds or circus music. Other labels appeared in the Cuca catalog, like Age of Aquarius, Banana, Butternut, and Dee Jay, and these were custom jobs; the artists wanted to choose their own name for their records. Toward the end of Cuca's history, Kirchstein began releasing most material on the American label, hoping to give it a more universal appeal rather than the ethnic sound of Cuca.^[10*]

Record companies have always engaged in other promotion techniques which extended beyond artwork and label names. As far back as the 1920's, labels developed marketing gimmicks such as contests and giveaways to promote the sales of records. For example, Paramount Records held a contest in 1929 to "name that artist" on one of its releases, promising a free record to any customer who could correctly identify "The Masked Marvel," who was, in fact, blues star Charley Patton. Also in the 1920's, to broaden records' appeal to a mass market, labels like Victor placed ads in streetcars to promote their 78 releases and the company.^[11*] Print, however, was the primary promotional vehicle for records until World War II. RCA-Victor and other firms provided copies of their releases to publications, free of charge, for review and thus received "free" publicity from magazines and newspapers.^[12*]

After World War II, record companies, feeling the pressure of increased competition, began to broaden their promotional efforts beyond the printed word. For example, in the 1940's and 1950's, Frankie Yankovic's record company attempted to push the sale of polka dot dresses with department stores to raise public awareness of the appeal of polka and, hopefully, boost Yankovic's record sales.^[13*] Other typical promotional techniques employed have been print ads, television ads and appearances on such shows as Dick Clark's "American Bandstand," and promotional T-shirts and bumper stickers. Labels also sent free copies of featured releases to record stores for them to play over the stores' speakers. In this way, record companies hoped to capture the impulse purchase, which, according to Serge Denisoff, consisted of 13 percent of all record sales.^[14*]

Sampler LP's became a popular promotional technique in the late 1950's and they continue to be used today. In 1957 RCA-Victor, in cooperation with Kellogg, Proctor and Gamble, and H.J. Heinz, launched a massive PR campaign which offered coupons for 25 cent sampler records in 5 million packages of Crest toothpaste. The 10 percent public response to this marketing scheme encouraged other companies to try similar stunts and to promote the sampler album as a vehicle for further label sales.^[15*] Samplers were additionally attractive to companies because they not only motivated buyers to purchase a featured artist's entire repertoire, but they were cheap. The songs were already recorded and mixed for single release and the promotional nature of the sampler meant artist royalties did not have to be paid. Also, promotional activities were tax deductible.^[16*]

Cuca engaged in similar promotional activities but its lack of funds and its regional focus severely limited its efforts. Kirchstein issued several sampler LP's, including "Wanna Hear A Polka?" (K2001), "Great Old Time Waltzes" (KTV2), and "Country Collector's Album" (KSTV4), which featured the best of his polka and country musicians in an attempt to attract customers to the Cuca name and the recording artists' other issues. To hawk his wares in the print medium, Kirchstein placed advertisements in flyers distributed at large polka showcases where several bands would perform, knowing that the readership would be receptive to the label's polka catalog. Kirchstein stated this kind of advertisement never brought much business, but he continued the practice because of the "prestige" gained by being mentioned in such a flyer.^[17*] He refrained from placing ads in national trade magazines like Billboard, where all the large companies and some of the smaller labels with bigger budgets promoted their artists, because national publications charged thousands of dollars for a tiny piece of ad space. Besides, Kirchstein acknowledged that Cuca's regional appeal for its local rock, country, and old-time musicians would have made any exposure in such a national magazine negligible and therefore it was not worth the investment.^[18*] He did, however, receive some "free" promotion from Billboard by sending Cuca singles to the magazine and having them reviewed by Billboard's critics.^[19*]

Kirchstein also developed some collaborative promotional efforts which utilized the television medium. In 1967 he and representatives from WLUK-TV in Green Bay, Wisconsin signed an agreement whereby Cuca would record, at its own expense, an LP by John Check and the Wisconsin Dutchmen. WLUK promised to pay the musicians a 10 percent royalty on all sales (after the first 300) and advertise the LP at no charge to the label or the artists. The TV station also agreed to furnish a list of all the purchasers to whom Cuca shipped the albums, the shipping cost paid by WLUK. The two parties split the cost of all sales taxes.^[20*] Kirchstein repeated this kind of promotion with WKOW-TV in Madison and WAOW-TV in Wausau, Wisconsin in 1968 and 1969 for samplers of old-time dances recorded at Cuca. Again, the stations agreed to furnish promotional air time, take the orders, and give the list of customers to Cuca. However, in these later agreements Cuca paid the shipping costs. The documents also set forth a sliding scale of profit payments to Cuca based upon the number of records sold. No mention of artist royalties was made in either agreement. Therefore, the profits, which ranged from $1.21 to $1.50, were Cuca's to retain for itself, making the sampler collaboration an attractive sale and promotion venture.^[21*]

Cuca engaged in radio promotion, the most important and potentially profitable medium of them all. Throughout the music industry's history, there has existed an ambivalent relationship between record companies and radio. Radio exposed music to a national public and broadened the market for records. If a song went into the Top 10, a company could sell a million records. Therefore, record companies depended on radio format and the selections by radio programmers. According to Fredric Dannen, the art of getting songs on the radio drove the record business --- not sales because record stores only reacted to demand --- and even the best marketing ploys, promotional devices, or artwork could not help a record make a profit if radio programmers refused to air the release.^[22*]

Despite its obvious appeal, radio did not immediately become a promotional outlet for record companies. Guglielmo Marconi invented the radio in 1901 but because the Navy Department controlled its development and patents, commercial radio did not commence until after 1921 when the Department of Commerce granted thirty-one stations broadcast licenses.^[23*] Through the 1930's, the recording industry viewed radio with suspicion, believing its broadcasts of live musicians and electric transcriptions a threat to record sales. However, small and non-network radio stations beginning business during the Depression could not afford union scale musician payments, nor could they afford the 40 to 150 dollar per week transcription services. Therefore, some broadcasters began to purchase records from stores to augment their music programming and stations soon began receiving free "For Promotional Use Only" records from major labels.^[24*]

After almost a decade of protest and litigation against this new practice by the National Association of Broadcasters and musicians claiming property and performance rights over their music, the Supreme Court ruled in 1940 that property rights ended with the sale of a record. Now broadcasters could air any recorded selection without violating performance right law.^[25*] By 1942 about 75 percent of all radio broadcasts consisted of music programming, 50 percent of which was "canned" music. Music broadcasts grew in popularity because stations noticed music attracted listeners, which increased the sale of advertising time by local businesses - the way commercial radio made its profits.^[26*]

From World War II to the present, the industry's main concern has been the exposure of its music on radio stations and this drive has consumed its marketing efforts. A 1966 poll discovered that the recording business aimed 51 percent of its budget at radio promotion.^[27*] The increase of music recorded and released during this period increased the promotion expenditure. Another cause for the high percent of promotional budget aimed at radio was the explosion in the number of stations. In 1945, the airways held 884 AM and 46 FM stations, rising to 2,2269 AM and 552 FM by 1955, and increasing even more to 4,012 AM and 1,270 in 1965.^[28*]

The premium put on radio exposure drove record labels, major and independent alike, to spend their precious marketing budgets in manners which would best guarantee a selection's airplay and thus its sale to the public. Beginning in the 1940's and continuing to the scandal of 1959, record companies aimed their promotional activities at the men and women actually spinning the singles. With the rise of Top 40 radio in the mid-1950's, this emphasis shifted to the people responsible for developing the record rotation format.

The majors led the way in conceiving of methods to convince deejays to play their releases. Capitol, which formed during World War II, was the first company to service deejays directly by regularly sending them free copies of the newest releases.^[29*] Distributing companies, those not owned by major record firms, also sought to gain the attention of deejays, giving them free boxes of records.^[30*]

It was not guaranteed, however, that deejays would broadcast these records during their shows. Therefore, record companies began to rely more heavily upon a practice which existed even before the invention of the phonograph in order to insure the promotion of their product. "Payola" is "a secret or indirect payment or bribe to a person to use his position, influence, etc. to promote a commercial product, service, etc., specifically such a payment to a disc-jockey for 'plugging' a record or song."^[31*]

Although the term itself was not coined until the 1950's, payola can be traced back to the 1880's when sheet music publishers employed song pluggers to convince artists to perform the songs, hoping for increased sheet music sales. Vaudeville, minstrel show, and cinema piano performers received the exclusive right to perform a composition, sheet music with their likenesses adorning the front, or cash payments to promote a song. Top performers received from 5 to 500 dollars a week for their efforts.^[32*] Pluggers would even sit in the audience and demand to hear a certain song, creating the illusion of mass popularity. The costs of such promotion quickly raised the stakes of marketing and payola and by the mid-1890's it cost an estimated $1,300 to launch a hit song.^[33*]

With the popularity of the phonograph, the payola practice moved from publishers and the sale of sheet music to the manufacturers of records. And, almost from its commercial inception, radio became the recipient. As early as 1925, radio bands received 25 dollars from publishers and record companies to plug songs over the airways.^[34*] Payola costs rose as radio stations' numbers multiplied. Publishers soon found themselves burdened with large promotion costs--one publishing house spent $100,000 in 1930 alone on radio payola--and decreasing sheet music sales as the phonograph replaced sheet music as the target of primary popular music consumption. Therefore, in the 1930's ASCAP attempted to curb the practice by imposing fines on its members for payola activities. The FTC also got involved, conducting investigations in both 1934 and 1936, and promised rewards to informants. These endeavors did not eliminate the practice, however. The actions simply pushed payola underground and pay-for-play deals continued to be made by record companies and radio personalities verbally, as many bands would not perform a song unless they were paid the bribes.^[35*]

The deejay began to overshadow the bandleader as the recipient of payola just prior to World War II. The position evolved from the boring announcer into one of personality and, at the same time, the record replaced live radio performances. In 1937 bandleader Benny Goodman allegedly paid the popular deejay Al Jarvis of Los Angeles' KFWB a 500 dollar bribe to promote the latest Goodman release.^[36*] The success of record sales, like Goodman's, from radio exposure over subsequent years encouraged the practice and further solidified the deejay's strength; in 1946 over 242 million records sold and this was attributed in large part to the broadcast of prerecorded music by radio. Realizing the power, labels began to provide free records to deejays and in 1948 deejay's began receiving payments in the form of record royalty shares. The same year the FCC began receiving complaints from independents that the only way they could get a record played on the air was through payola because they did not have the clout to cut deejays in on royalty deals.^[37*]

Despite the protests, little was done to curb payola in the early- to mid-1950's and the majors and indies alike continued to hold an ambivalent position on the practice, especially with the innovation of Top 40 radio, which WTIX in New Orleans introduced in 1955. Top 40 stations repetitively broadcasted only the best-selling records of each week, further institutionalizing payola and expanding the practice from deejays to programmers and record stores. Top 40 programmers read Billboard magazine to determine the week's top hits and the magazine compiled its listings from both radio broadcasts and surveys from record stores as to number of records sold.^[38*] The importance of receiving a listing in the Top 40 and airplay on Top 40 radio was crucial; close to 70 percent of all records purchased related directly to the process by which the Top 40 hits were determined.^[39*] Top 40 radio also served to homogenize popular taste in music and reinforced an artist's popularity, gaining him or her appearances on television shows like Dick Clark's "American Bandstand" (Dick Clark also received payola in return for spots on his show^[40*] ) which also increased sales for both the artist and his or her record company.

Top 40 radio was a problem for unknown artists recording on small, under-financed record labels. Top 40 radio could make a hit record, yet radio stations specializing in the format only played records that were already hits.^[41*] Therefore, a company needed a well-known personality recording its singles or an influential deejay, programmer, or TV personality pushing its releases to gain the attention of Top 40 stations, record stores, and consumers. It was one of the ultimate paradoxes and one which was virtually inescapable as competition in the 1950's escalated.

Evidence indicates that during the 1950's, record distributors increased payola payments to deejays, radio programmers, and record stores, the bribes subsidized by distributors' parent record companies.^[42*] The cost of payola deterred many indies from participating and although many did, it was the indies and BMI, with their emphasis on rhythm and blues, country, and rock-and-roll, that received the sting of scandal in the late 1950's.^[43*]

In 1956 the Internal Revenue Service began an investigation into possible tax law violations connected to payola and during 1957 and 1958, the Senate held hearings on the issue. Their targets were BMI and small, independent labels like Chess, Specialty, and Aladdin which dealt mainly in r&b releases.^[44*] The scandal went public and received the investigative attention of the FTC in 1959 after the House of Representatives' query into fixed television quiz shows like "The $64,000 Question" raised awareness of shady media dealings. The FTC regarded payola as potentially illegal and accused three labels and six distributors of bribing radio and television deejays. The FTC claimed the businesses' pay-for-play tactics tricked the buying public because bribed deejays exposed music they may not have played and this convinced customers to purchase records they otherwise would not have bought.^[45*]

The scandal grew and in August 1960 the FTC charged 106 music labels and distributors with payola, most of them independents. Deejays like Alan Freed, who helped break many new rock-and-roll records by exposing the records on Cleveland and New York radio stations, were also accused of disgracing the music business. Freed's extensive dealings with labels like Chess Records cast undue suspicion on indie labels. According to Donald Mabry, it was the intent of ASCAP and the majors that the FTC investigation cripple the independent companies by removing some of the outlets for music exposure previously available through deejay payola. He wrote, "The new law against payola helped kill many of the companies that had fostered rock."^[46*] This new law, the result of the scandal, was the 1960 Communications Act Amendment. The law did not make payola illegal. Rather, it stated deejays could not accept any gifts, money, or other incentives to push records on the air unless he or she reported the payola payment, something most were hesitant to do. Deejays and radio stations could, however, receive small numbers of free records for promotional purposes only.^[47*]

Despite the new law, which threatened criminal penalties of up to one year in jail and fines up to $10,000, payola did not disappear.^[48*] Instead, it crept further underground. The payola law chipped away at the power of the deejays stung by the scandal as well as those whose power was being reduced by the proliferation of the Top 40 format. Majors with both financial and geographic access to programmers at the most important Top 40 stations in large metropolitan areas^[49*] gained a significant edge over indies who could usually only influence specific deejays at regional stations.

The payola scandal also served to make a record company's promotional representative, whose task it was to gain exposure for artistic acts at radio stations and record stores, increasingly important. This also placed majors at a competitive advantage. Few indies had the budgets to hire representatives to push their wares at a national or even regional level.^[50*] According to Paul Hirsch, the small ratio of promoters to established record companies also explained why it was difficult for a new and unknown company to obtain the services of a promoter for its records and artists for promotion and distribution.^[51*] Faced with an oversupply of product, radio programmers and record stores looked to their cohorts in the larger metropolitan markets of New York and Los Angeles to determine which records constituted the next hits. And it was the majors who had the access to these markets.

Despite the increasing costs of payola over time, record companies, even indies, remained indecisive on the practice. On the one hand, the practice negated the traditional American laissez-faire, capitalist ideals by which hard work, merit, and honest competition supposedly led to commercial success. At the same time, the free enterprise system justified payola as a right; firms could promote and sell a product by any means they saw fit.^[52*] Payola also bred payola. If a firm saw it working to another's advantage at the expense of its own releases, it either had to play the game or fail in the market. Indies had a definite incentive to participate in the practice and they did before the development of Top 40 radio, the increased costs of more sophisticated payola techniques, and the taint of scandal effectively shut them out of payola options.

Cover records had provided one impetus for some indies to get involved in payola. When a small company released a tune by an unknown singer and a major company's popular artist covered the song, indies felt pressure to get their version exposure by any means necessary and as quickly as possible because a more popular artist could, and did, kill the indie's sales.^[53*] Chess Records of Chicago had many of its black artists' songs covered by major companies during the 1950's, but it succeeded in garnering hits by some of its artists like Chuck Berry and Bo Diddley with the company's connections to deejay Alan Freed, who soon became tarnished with the stain of payola.^[54*]

Other indies were willing participants in the payola game and adopted tactics other than cash payments to deejays. For example, label owner and distributor Amos Heilicher used his financial and industry clout to gain the Fendermen access to Dick Clark's "American Bandstand" with a monetary payment to the show. Johnny Vincent of Ace Records also engaged in payola by giving gifts to deejays and paying for their dinners and bar tabs. Vincent also presented part of the copyright for "Don't You Just Know It" to Kincord Corporation, a publishing company owned by Dick Clark, which received 2,000 dollars in royalty payments for the copyright deal. Ace Records was one of the independents to be investigated and accused of payola practices during the 1959-1960 scandal.^[55*]

Entering the market just as the investigation into payola was coming to its climax, Jim Kirchstein viewed the practice warily. Like other company owners, he held an ambivalent opinion about payola. However, he never engaged in the practice, choosing instead to sample hundreds of singles to radio stations and magazines. Kirchstein hoped to break into the market legitimately. The moral ambiguity and the legal fuzziness of the practice were not what dissuaded Kirchstein from trying payola. He stated, "I can't honestly say that I wouldn't have paid [payola]. We went on the merit of the recordings. If I'd had the capital to do payola and the people who knew how to do it, we'd have probably done ten times what we did [in business]."^[56*] The shift in payola practices during the 1960's which favored companies with large promotional budgets and access to radio stations in large metropolitan markets therefore prevented Cuca from receiving any significant national attention or musical hits. "Mule Skinner Blues" was its only true hit but the song received exposure from Soma, through its extensive distribution system and payola to "American Bandstand." Unable to compete with the majors in payola, indies like Cuca had to content themselves with regional markets and exposure, hoping for a possible stroke of luck which rarely happened.

Even before the advent of rigidly formatted Top 40 radio, some daring entrepreneurs took matters into their own hands and attempted to usurp the control of network radio and the power the major labels had with them by establishing their own local radio stations targeted at specific audiences. In 1949 WDIA of Memphis became the first radio station designed exclusively for black audiences. It first focused primarily upon gospel music, helping expose small labels' music like that of Peacock and King Records. It also broadcasted live performances of local church gospel groups by running telephone wires from the churches to the radio studios.^[57*] In 1952 David James, the program director for WDIA, established Duke Records, in collaboration with Don Robey of Peacock. Their goal was to capture the black talent playing live at the radio's studio. Soon, they began releasing r&b records, promoting them on the Memphis station.^[58*] The station and label flourished until the advent of Top 40 radio and the move toward white rock-and-roll. The station became franchised in 1957, its programming determined by a national program director.^[59*]

Despite the domination of format radio in the late 1950's and 1960's, some businessmen were able to continue the tradition of free-program radio aimed at local audiences like that of WDIA. Because of introductions like the car and transistor radio and their rapid proliferation during the 1950's, more listeners tuned into radio stations at different times. Many entrepreneurs chose to keep their new stations small rather than establishing 50,000 watt stations which had previously dominated the airwaves. They discovered that local advertisers were more willing to spend their dollars at the local, low-powered stations rather than with the large, network affiliated stations.^[60*] The development and expansion of FM radio also opened the market to new stations, the first FM station going on the air in 1939.^[61*] FM broadcasts grew from 46 in 1945 to 678 in 1960 and then doubled to 1,270 just five years later.^[62*]

Jim Kirchstein, in an effort to both promote his record label and further propagate his musical and entertainment philosophy, decided to create his own radio station, flip-flopping the order of business development by indie station WDIA and its offspring label, Duke Records. Just as he had with the development of his recording studio, Kirchstein employed his engineer training to construct much of the broadcasting equipment, which included not only a tower located on Black Hawk's Lookout just outside of Prairie du Sac, but mobile units and the electronic radio broadcast console in the Cuca studio building. He named the station WVLR, which stood for Wisconsin's Very Live Radio, and utilized the concept of live radio and local programming which harkened back to the days before Top 40 and standardized programming took over the airwaves.

Kirchstein, his father, and seven other local businessmen incorporated the 3,000 watt FM station in 1964. They chose FM because not only were there less FM stations than AM at this time, but Kirchstein realized FM was the superior radio technology; it was static free, had stereo sound capability, and was less susceptible to interference. Perhaps the biggest motivator was that the FM signal was compatible with electric milking machine equipment, allowing local farmers to tune into the station on transistor radios or the locally manufactured "barn radio," a single-station receiver marketed towards the Sauk City and Prairie du Sac dairy farmers.^[63*]

Kirchstein was responsible for much of the station's programming during his involvement with WVLR. Recalling his younger days when he listened to WIBU out of Poinette, Wisconsin, Kirchstein concentrated his efforts at creating a live feeling for his broadcasts which would appeal to the local audience. WVLR featured such programs as "Penny's Patter," which briefed the community on the day's church and club activities; Bob Weeks' "Farm Hour," which interviewed local farmers; live interviews with trick-or-treaters at Halloween; and mobile reports on the community's Christmas decorations. Kirchstein also exploited the Cuca recording studio. When old-time bands came into the studio to record an album, Kirchstein often sent one of his radio announcers to the studio floor to conduct a live, on-air interview with the band members and then would have them perform over WVLR's signal.^[64*]

Not only did he have Cuca recording artists perform over the air, which promoted his concept of the superiority of the excitement and sound of the live performance, but Kirchstein, in a manner of speaking, paid himself payola. With such shows as the German hit-parade program or polka hour shows, Kirchstein promoted Cuca old-time singles and albums. He also let local teenagers conduct their own after-school rock-and-roll record show, where they played hits by such bands as the Beatles and the Beach Boys as well as Cuca rock records. The station also received samples from other labels, just as Kirchstein promoted Cuca with other stations around the country. Major labels like RCA and Columbia sent many sample singles to WVLR but, according to Kirchstein, many of them simply did not fit the station's programming. To rid itself of excess records, WVLR held promotional contests or call-in contests and gave away these promotional items, as well as Cuca records.^[65*] Kirchstein therefore could promote both his station and his label at the same time.

Despite his efforts to expand the scope of Cuca's promotion through WVLR, the radio station did little to boost local sales. The concentration on a live format, which appealed more to older residents, rather than a rock-and-roll format popular with the teenage market made the increase of record sales unlikely in the south-central Wisconsin area. Exacerbating this problem was that neither Kirchstein nor any of his co-stockholders performed any kind of demographic study to discover just who listened to what programs at what time, making the promotion of certain types of Cuca music difficult.^[66*] This lack of promotional boost, unawareness of demographics, and a small local advertising client base contributed to the station's financial woes.

After barely breaking even for a couple of years and after some differences between Kirchstein and the other stockholders over programming decisions, Kirchstein sold both his and his father's shares in the station in 1967. Within less than one year, the station began to lose money and the stockholders liquidated their assets, selling WVLR to another interest. Because the FCC had deregulated the airwaves in 1966, the station's location could move to up to 35 miles away from its licensing point. The metropolitan area of Madison was within this range and when the station was again resold 1.6 million dollars, first becoming WMIL and later switching to the Madison-based easy listening station, WSEY 93.7.^[67*]

Though Kirchstein's attempt at self-promotion through his own radio station failed, he still demonstrated that competitive options were available to indies with the creativity and technical knowledge. Unfortunately, the small broadcasting area limited any substantial sale increase. The failure to effectively target the biggest spenders upon music, teenagers and young adults, hastened the demise of the station as a promotional tool for Cuca.

After a record has been recorded, sampled to radio stations, and promoted, a firm must next find a way to get the product into the hands of customers. In the music industry, distributors have fulfilled the majority of this task. This final stage of the record production process has been the most challenging for independent companies. Ironically, it is the lack of extensive corporate ties to and ownership of distributing networks which defines a true indie. This absence is also what has caused the demise of many indies. According to Serge Denisoff, companies with their own distribution systems have a "tactical advantage" over indies; they have the ability to effectively service radio stations and retail outlets.^[68*] Indies simply could not compete.

Before World War II and before the explosion in the number of recording firms, distribution remained on a small scale. However, even then independent companies were at a disadvantage. Leaders like Columbia and Victor had the staff available to develop their own distribution networks and open their own retail outlets. Companies like Paramount Records were forced to rely on creative distribution methods which included direct contact with retail stores, personal sales by performers like blues singer Ma Rainey at live appearances, and even the hiring of Pullman porters to sell records along railroad routes.^[69*] The reliance on such methods kept the proliferation of its recordings small so Paramount eventually hired the services of a distributing company, the Artophone Corporation. When Artophone, Paramount's primary distributor to dealers located in Memphis, Dallas, and New Orleans, decided to suspend its record distribution activities in 1929, Paramount lost much of its business and was forced to rely on a smaller distribution tactic, mail-order sales.^[70*] Along with the firm's internal problems and the Depression, the loss of their primary distributor helped hasten the company's demise and Paramount died in 1932.

After World War II when the music industry experienced its phenomenal growth, methods of distribution also expanded. Again the majors profited at the expense of the indies, especially with the development of Top 40 radio. In the early 1950's, record companies began using a new distribution system handled by "rack jobbers" to replace their retail outlets lost during the Depression. The rack jobber took his cue from the music publishing industry. During the 1940's, publishers established an agreement with the Hearst Corporation which allowed the placement of metal display racks for sheet music in about 500 newspaper shops and magazine stands across the country. By 1944 the system expanded to 13,000 racks in locations as diverse as barbershops, stationery stores, and department stores, each rack promoting the top 15 or 20 songs.^[71*]

The record industry quickly latched onto this system of distribution. In 1952 Elliot Wexler formed Music Merchants, the first rack jobber firm for records. He supplied record display racks and 45's for supermarkets, drug stores, and variety shops near check-out counters to attract the impulse buy. RCA-Victor was the first record firm to realize the profit potential of such a service and began offering rack job firms a 100 percent guarantee policy on unsold records as an incentive to carry its releases. The other top firms, Decca and Columbia, quickly followed RCA-Victor's lead.^[72*]

Although some independents attempted to form their own distribution chains, the production volume and larger budgets enabled the majors to crowd out any indie competition in the rack jobber system.^[73*] By the early 1960's, rack sales had almost completely overrun the traditional mom-and-pop record store and racks controlled about one-third of all record sales. In the late 1960's, the percentage had increased to 80. Rack jobbers now serviced department stores, supermarkets, record store chains, jukebox suppliers, and other outlets which previously had purchased their records directly from the record firms.^[74*]

Rack jobbers hurt independents because they, like Top 40 radio stations, carried the top hits as reported by such trade magazines as Billboard, which calculated their chart numbers based upon radio play and sales.^[75*] Therefore, the music supplied to the public generally concentrated on releases by the major companies because it was they who could afford the promotion and payola to receive exposure on the radio. The majors also had the budgets to guarantee the distributor a 100 percent return policy on unsold merchandise. The cycle was self-reinforcing. If customers who purchased records off the racks in their local supermarket or variety store only had the top hits available, these were what they bought. Rarely were releases by local, regional, or new artists who recorded with an independent firm available in any significant amount.

Concurrent to the development of the rack jobber was the consolidation by majors of their own international distribution networks, which further served to remove independent competition. In 1955 Electrical and Music Industries (EMI) of England acquired Capitol and in 1961 it also enveloped Mercury.^[76*] Capitol and Mercury, both large record firms, therefore now had access to even more extensive distribution networks, including those overseas. With the lightening speed advances in communication and travel technology, no longer were firms impeded by geography and time constraints. Markets and tastes became truly international. Other media conglomerates extended themselves overseas and into other media, gaining access to increasingly larger consumer bases, usually at the expense of the local competing firms.

Many of the majors also began to look at the economics of paying a separate distribution firm in the late 1960's. In 1969 RCA was the first major to develop its own merchandising chain and over the next several years, the other majors followed suit.^[77*] With the ever-increasing volume of output, returns by retailers and distributors grew. They returned almost 40 percent of all recorded product, at a cost of 45 cents per five singles to the manufacturer. Therefore, many of the conglomerates began to open their own branch retail stores to promote their products and avoid the profit lost on returns, just as they had in the infant years of the industry.^[78*] Only the largest firms could afford such extensive branches; a company had to conduct about 50 million dollars in business to maintain a branch operation.^[79*] By the mid-1980's, all of the remaining medium-sized recording labels utilized the distribution systems of the international conglomerates with extensive distribution systems.^[80*]

The surviving local record dealers also began to look, by default, to the major firms for their record supply. With the vast volume of releases every week, the ratio of record companies to distribution companies, and the standard billing policies by record firms (which required payment or return of merchandise every 60 to 90 days), many stores were overwhelmed. Store owners looked instead to the one-stop supplier who could handle all of their supply needs, rather than dealing with several different record companies. The one-stop, usually located in the musical meccas of Nashville, Detroit, or New York City,^[81*] was a place that stocked records and distributed them for many different record companies. However, it too primarily supplied the top hits recorded by the major firms. Although it cost slightly more for the retailer because of the one-stop firm's mark up, the advantages were simplification in bookkeeping, bill paying, and ordering. Stores needed to keep abreast of the expanding number of musical selections to remain profitable^[82*] and to compete with rack jobbers.

During the 1960's, independents usually either joined the majors' game or got out of the business entirely, many after attempting their own creative and often failing efforts at distribution. Atlantic, which was a growing indie in 1960, began its own distribution network when Stax Records of Memphis committed its distribution and promotion activities to the larger company. After the success of the arrangement (albeit short-lived as Warner Brothers bought out Atlantic in 1967), other large indies and majors copied the cooperation which, by the late 1960's, resulted in a complete restructuring of the distribution industry. For example, ABC-Paramount distributed for independent Chancellor Records of Philadelphia and Mercury took over the distribution requirements of many small labels including Clock Records.^[83*] The advantage of these arrangements to the tiny indies was that they protected the indie from the long payment delays experienced with the smaller distribution companies. These delays not only suspended royalty payments to artists but sometimes resulted in bankruptcy for the indie which owed pressing plant bills, cover art payments, and sleeve manufacturing costs.^[84*]

The majors and the large independents able to offer their distribution services to the smaller companies were the real winners in these arrangements. Not only did they receive a share of the sale profits, but they were able to control the amount of product and thus competition. Also, distributors often took releases on consignment from indies after receiving the first 300 of 1,000 records "free." Therefore, distributors could rid themselves of these "free" indie releases at bargain prices, the profit going directly to the distributor, not the indie.^[85*] Further complicating independents' payment problems was that major companies often did not give the indies' releases proper attention, nor did they issue accurate and timely financial statements, putting the indie in the same situation experienced with a small, independent distributor.^[86*]

Deals with any size of distribution company, as well as with pressing plants and studios, rested on the a record company's ability to establish credit. A small indie with a hit record was more likely to receive credit. For example, Ace Records, after experiencing a hit, received credit with its recording studio, Matassa, in New Orleans and with distributors now more willing to stock Ace's product. With a hit and with credit, Ace grew and eventually established its own record stores and distributorships.^[87*] However, the small and regional nature of its expansion drove the label to enter into a distribution deal with the larger, Chicago-based indie label, VeeJay Records, in 1962. Eventually VeeJay handled all of Ace's sales, promotion, and distribution. However, VeeJay declared bankruptcy in 1965 and therefore Ace lost all of its royalty payments due from the distributor. New distributors, aware of the lack of liquidity Ace was experiencing, refused to give the label credit and distribute its releases. This halted all of Ace's production because without distributors, Ace could not sell records. And without the ability to produce and release records, the company was dead.^[88*]

Sometimes even a hit record was not enough for an indie to enter into a long-term distribution arrangement because larger companies took advantage of its situation. When an indie had a hit, or potential hit, it ordered many more records than normal from its pressing plant and owed the manufacturer thousands of dollars for the pressing bill. If the record received exposure and sold well, and the indie went to its distributor asking for payment, the distribution company often lied about the number of records sold. Most indies had neither the funds nor the courage to pursue legal action to recoup their payments and, lacking credit or money to cover future pressing plant bills, indies often went into liquidation.^[89*] It was the distributor who kept count of how many records sold and even if it was an accurate tally, the indie often had to wait 90 days to determine the total sale on a release and then another 90 days to receive payment from the distributor.^[90*] This lag time made the production of other releases difficult, especially if the indie owed a large sum of money to its pressing plant.

Cuca narrowly escaped the distribution catch-22 on its first hit, "Mule Skinner Blues." The label did not owe RCA a significant sum for the single's first pressing and Kirchstein had the fortitude to pursue legal action against Soma, the firm responsible for distribution. Kirchstein also avoided the credit pitfalls so many indies experienced with their pressing plants by manufacturing later Cuca records himself. However, he still faced the problem that all independents, by their definition, experienced: distributing the records.

Kirchstein began distributing Cuca records by establishing his own rack route. Besides displaying and selling his singles and albums in his brother's and parents' stores, he owned about twenty racks which he placed in other Sauk City stores as well as the neighboring towns' drug, hardware, and grocery stores. However, the small populations of these local villages kept sales and demand small.^[91*] Also, as the successes of both rock music and Top 40 radio expanded into the state, many grocery stores with record racks would only handle the Top 10 singles each week and Cuca was never in the Top 10.^[92*] Therefore, Kirchstein had to turn to other distribution outlets in order to keep his label alive.

The first distribution deal Kirchstein struck was with the Madison-based business Rapid Sales and Tell Music, owned by Ralph Foldman. Foldman, a Swiss immigrant, came to Madison originally to collect money owed by Rudy Berkolder, the yodeler and music school owner, for purchases from Foldman's family accordion business. Foldman decided to stay in Wisconsin, opening his own music store and distribution business, and dealt not only Cuca records but other small labels like Coral. After the success of this collaboration, Kirchstein decided to let Foldman take over his rack route from which Foldman built his own large rack operation in south-eastern Wisconsin.^[93*]

To harness old-time sales in metropolitan areas with large ethnic populations, Kirchstein located local distributors in Cleveland and Minneapolis, as well as cities in Michigan and Illinois. These deals provided Cuca with consistent business. However, the market always remained small for the ethnic line of music and Kirchstein needed a broader base of distribution for his other musical selections, primarily rhythm and blues and rock music.^[94*]

It was the necessary expansion of distribution that brought Kirchstein severe difficulties. He knew he needed national distribution because that was a "real important part of the business. You can have all the talent in the world and the best sound in the world but unless you can sell the stuff..." those things simply did not matter.^[95*] Kirchstein eventually established deals with eighteen different distributors around the country. He had to guarantee all the records; if the records did not sell, the distributor returned them. This caused problems for the indie label because "the distributor would always drag a month or two behind. He wanted to make sure that the returns are being covered. Now that's dangerous. Because with rock music, you can have a winner one day and plain plastic the next. You made a lot of money or you lost a lot of money."^[96*]

Besides the lag time in payment for records sold, Cuca also suffered the same fate as Ace: an independent distributor going bankrupt. Kirchstein's Cleveland connection, Midwest Distributors, sold many of Cuca's records, especially those in the old-time catalog. In the late 1960's, Midwest Distributors went bankrupt, owing Cuca 15,000 dollars, which was about half of Cuca's total income for six months. This damaged the indie label and hurt its artists like Verne Meisner and Roger Bright whose sales of Slovenian music had been supported by the Midwest Distributors deal.^[97*] At about this same time, another of Kirchstein's distributors also failed. GRT out of Sunnydale, California declared bankruptcy and reorganized, owing Cuca money which it never recovered.^[98*]

The failures of these distributors hit Cuca hard. However, Kirchstein had never relied solely on distribution deals with separate companies to provide sale outlets for Cuca records. He established relationships, beyond his early rack route, with record stores around Wisconsin like Radio Doctors in Milwaukee.^[99*] In this way he was able to avoid the lag time in payments from a middle-man distributor. He also gained greater profit from each record sold, not having to cut a distributor in on the sales.

Other means of controlling distribution and removing the wholesaler were mail order and record clubs. While mail order certainly was not new to the record industry (labels like Columbia had this service before the turn-of-the-century and both Paramount and Okeh relied on this sales tactic during the 1920's), the majors increased its attractiveness during the 1950's. In 1955, RCA-Victor and Columbia realized that small record clubs gleaned sales of 20 million dollars a year, operating on much smaller budgets with their direct business. In response, both RCA and Columbia launched their own record clubs. RCA attained part of its customer base by adding stores like appliance retailers to its distribution network, supplying stores with coupons to pass along to customers and then shipping records to these new clients. Columbia gave retailers a share in the profits for each member they recruited and expanded their club further by joining forces with the Book of the Month Club in 1956. From its efforts, Columbia's club had 1.3 million members by 1959.^[100*] Profit was so large for Columbia (in 1959 it was top in the business, controlling 21 percent of all industry sales^[101*] ) that it received the attention of the FCC for monopolistic practices. The FCC accused Columbia of being a monopoly through its catalog sales by offering only Columbia artists to its members. It was not until 1971 that the major was forced to include other artists in its catalog roster.^[102*]

For an indie like Cuca having difficulties in securing solid distribution agreements, a mail order business was both practical and profitable. Kirchstein inaugurated his catalog sale client base through a joint marketing scheme. Madison television station WKOW advertised a multi-band polka LP for free and in return received one dollar per record sold. The station sent all orders to Kirchstein and, along with selling 90,000 records, the promotion gave Cuca a "beautiful mailing list" for future old-time customers.^[103*] Kirchstein frequently mailed updated catalog listings to these customers and sales brought in about $100,000 a year.^[104*] The profit from these sales stretched further than sales at retail stores because the income went directly to Cuca and its artists, not shared with a supplier or store owner.

Another sales outlet for Cuca records was the artists themselves. Many audiences, particular old-time music fans, expected artists to provide LP's and singles at live performances. As Dick Weissman asserted, "Since a good performance is probably the single most effective way to create an immediate demand for a record, this can be a highly successful move."^[105*] Cuca artists frequently bought several hundred copies of their releases from Kirchstein, as established in their artist contracts. While likely keeping some copies for their own music libraries, artists brought the majority of these records to their performances, selling them before and after the show to audience members. Carlo "Spike" Micale, the Slovenian-style bandleader, said that this sales outlet was actually the impetus for his decision to record in the first place. He stated, "When you play on stage, people always want a record or tape. So everyone was asking for a record. In those days, it probably cost about two dollars a piece for a record and you could sell them for four....So if you sell eight or ten albums...you'd take in another thirty or forty bucks." Micale sold most of his records right from the stage. In fact, the bulk of his record sales went to live performance audiences.^[106*] Micale also contacted record stores personally, in areas with a big old-time demand like Cleveland and Minneapolis.^[107*] Other artists followed these practices and many continue the tactics today, especially those recording on indie labels without large promotion budgets and distribution deals. Although sales are generally small, both the labels and the artists receive additional income through direct sales, avoiding the pitfalls of the distribution system and undercutting the control of the majors.

Despite the efforts of indies like Cuca to promote and distribute their wares, many found themselves failing quickly during the 1960's. Problems with distributors declaring bankruptcy and the rise of Top 40 directly affected the downfall of many independents. The majors, which helped institute and reinforce such trends, reaped the rewards of the indies' failures. By the early 1970's, majors had almost completely obliterated their indie competition through consolidation measures, mirroring those of the Depression years. Although Cuca did not experience the fate of many indies which were gobbled up by their larger competitors, it did cease its operations in the early 1970's as a result of the majors' business practices, the changing nature of technology and the national economy, and its reliance on its single-owner structure, which, ironically, had provided its initial creativity and success.