This week’s review is of a highly detailed book that reaches into the enigmatic history of today’s music industry.  Most people today have come to the understanding that the modern record industry is run by an oligopoly consisting of the “4 majors,” Sony Music Entertainment, EMI Group, Warner Music Group, and Universal Music Group.  Another label pegged to the music industry is its history of flagrant corruption. In Hit Men, Author Fredric Dannen, covers a variety of these corrupt affairs that have plagued (and built) the music industry to what it is today, most notably – the “payola” scandal of 1978.

Billboard aptly describes Dannen’s portrayal as “a sobering, blunt, and unusually well-observed depiction of the sometimes sordid inner workings of the music business.”

Historically, there were two methods of gaining notoriety in the music industry: radio and distribution.

On the radio front, payola has been occurring since as early as the 1920s but beginning in the 1960s there were payola scandals consisting of record labels paying off disc jockeys in more substantial ways in order to play their records over the radio.

Alan Freed, a radio deejay, became the benchmark case for payola in the 1960s with his conviction of accepting $2,500 in cash in exchange for plays of particular records.  Dick Clark, another deejay tied to the payola scandal avoided charges while Freed’s conviction led to the “payola statute” calling for a $10,000 fine and up to one year in prison.

CBS Records, the company Dannen gives focus, was the pioneer in setting up its own distribution channels as opposed to relying on independent outlets, which labels had done for years.  CBS Records quickly became the most powerful record label in the 1970s under leadership of such reputed legends as Bill Paley, Goddard Lieberson, Clive Davis, Dick Asher and Walter Yetnikoff.  Dannen brilliantly illustrates the ever-changing dynamics between these very divergent personalities all within the same company.  With such large personalities within one company, each man created a signature style and reputation in order to be different.

Under a very public scandal involving misuse of company funds, Clive Davis (known as the A&R man with ‘ears’ for hit songs) was forced to leave CBS.  In the aftermath of Clive’s departure, Irwin Segelstein briefly led CBS Records due to his resume of being a TV man brought in to save-face as the scandal involved so many CBS employees.              Walter Yetnikoff, by then a long time employee at CBS Records, took over.  With Walter’s quest for creating a name for himself, he set out to become a “deal” man.  CBS soon was in fierce bidding wars with Warner’s record label over each label’s star talents, including acts such as James Taylor, Paul Simon, etc.

With the rivalry, reputation and “talent” at stake between Warner and CBS, each furiously began buying up independent distribution channels and labels in order to maximize market share.  Warner and CBS soon became companies that were trapped by their own colossal infrastructure of manufacturing and distribution channels all over the country.

The increasing pressure to maintain and gain market share led CBS and Warner to use a group of independent (radio) promoters known as “The Network.”  The Network, being masters at payola, soon became an extremely important and pricey method of not only gaining market share, but also preventing a rival company’s songs from being played on particular radio stations.

With an estimated 30% of Warner and CBS’ pretax profits going to “The Network,” Joe Isgro, one of its key members made roughly $10 million in a single year.

Joe Isgro and others were eventually taken down with an extremely strong and public case against those involved.

Dannen does an excellent job of bringing to light the long line of scandals and mob ties within the music industry.  Unfortunately, Dannen does not take much effort to differentiate between the corrupt and innocent indie promoters, often causing some to feel unjustifiably branded.  Although this era of extreme corruption is long over, Mick Jagger may have said it best: “I’m sure there’s other industries in America that are far dirtier than the record industry.”

I highly recommend this book to anyone with the slightest interest in the music business because it is an incredible depiction of how the modern day record industry came to be.

As always, looking forward to comments and suggestions.

- David B

david@rabbitholeconsulting.com