Entertaining Business: The Development of the First Big Three Record Companies
Although sentimental ballads sold millions of copies of sheet music during the 1890s for play on a home piano, consumers for over a century since have had access to pop songs through musical recordings. While the technology has changed dramatically regarding a consumer’s access to commercial song, including radio, talking movies, television, and media like vinyl record, cassette, CD and mp3 files, what has not changed is the business of selling these various formats to consumers. This commercial venture of selling music technology bridges the business of selling both technology and music; consumers experience the latter so they will purchase the former. In the twenty-first century, Apple is in the business of selling songs via its iTunes Store, and also its lucrative playback methods on many of its devices like its iPod or iPhone. In the nineteenth century, when the talking machine became the first format of reproducing music on a mass scale, it was the manufacturers of the machines and the materials on which music was recorded that had control of the business of recorded pop music.
The development of the record company during this time takes a basic understanding of the evolving technology, who controlled the patents for its recording and playback, and the ruthless business tactics common during of Gilded Age America. Initially, the business of talking machines had nothing to do with selling music; talking machines companies had little interest in selling recorded music at all believing that their machines would be used in business. Music eventually did become the greatest marketing tool for selling machines, after which numerous manufacturers became the record labels on which music was recorded. But throughout second half of the 1890s, patent lawsuits on components and company consolidation eventually simplified the market for record companies, leaving behind a landscape of the first big three music companies in America dealing in music: Columbia, Edison and Victor Gramophone. It was not the music business that created commercialized recordings at all, but rather control over patents and technology that companies could sell. The evolution of the first big three record companies had a profound effect on the history of pop song in America, and it began a model which dominates the music market in the twenty-first century, in 2014, three big record companies still control a substantially large portion of the pop market: Universal Music Group, Warner Music Group and Sony Music Group.
In order for modern pop songs to have playability, there must exist a machine to play them, and in the late nineteenth century, it was the talking machine. While the idea of a machine reproducing sound was not new when Thomas Edison invented his Phonograph in 1877, Frenchman Charles Cros thought of a machine before he did, Edison would be the first to patent it. The Phonograph used a needle whose vertical movements were dictated by the vibrations of a person’s voice through a mouthpiece, resulting in stamped out indentations on a tinfoil film over a cylinder of cardboard as the cylinder spun, with the sound emitting from a horn. It worked much like a typewriter for sound and it worked the very first time Edison experimented with it. Edison himself was “never so taken aback in all my life…I was always afraid of anything that worked for the first time.” Although he formed the Edison Speaking Phonograph Company in 1878 and started a vigorous campaign of promotional scientific articles for the “wonderful invention,” Edison had never perfected the medium. He eventually set the Phonograph project aside to work on another invention, indoor lighting, to alleviate the problem of gas burners and kerosene lamps setting increasingly paper-packed offices ablaze. The Phonograph had created substantial buzz in America, some of which was created by Edison himself, but the project got no further than the machine and resulted in some small sales based on curiosity for it.
To make an actual sound recording, there must be a reliable medium onto which sounds could be produced. This achievement was not perfected at Edison’s Labs, but rather the laboratory of rival Alexander Graham Bell. Edison failed to find a material or a playback mechanism which did not destroy the recording when removing it from the machine and in Bell’s laboratory, there was great interest in reproducing sound. After approaching Edison for possible collaboration in 1886, and after Edison’s outright refusal, Bell’s Volta Labs began their own successful experiments. The resulting mechanism, the Bell-Tainter floating stylus, etched grooves onto a cylinder whose surface was coated with a layer of wax, a medium which reproduced sound better than Edison’s tinfoil cylinder. Volta Labs filed patents for both the wax cylinder and the Bell-Tainter repeater and consequently formed the North American Graphophone Company in 1886. Bell owned the patents the method for which its playback and recording were possible, and eventually Edison issued his own wax-based “Improved Phonographs” in 1888. This situation created a business environment of two companies in immediate competition with each other in the relatively new market of the talking machine.
For Edison and North American Graphophone, initially their talking machines had nothing to do with an entertainment marketing for music, but rather with practical purposes of an appliance for the office. Office work was becoming more mechanized throughout the latter quarter of the nineteenth century, and if a new invention like the typewriter or the telephone could have functional and efficient business applications, then there were firms interested in purchasing them. For Edison, the motivation to invent the Phonograph came about when Western Union wanted fresh technology to record messages for its telegram lines which did not involve Bell’s telephone patents. After a hiatus from the Phonograph, and after its improvement in 1888, Edison Phonograph was then marketed as a solution to sloppy secretarial penmanship which reduced productivity. In the case of American Graphophone, their company’s proximity to Capital Hill enticed congressional reporters with the potential use of the machine for journalism; two legal reporters subsequently invested heavily in the company. Not all business ventures were as serious as communication or journalism; for example, Edison Phonograph spun off a subsidiary toy company which manufactured delicate speech functions for dolls. In the late 1880s, talking machine companies were not in the business of selling their machines for musical purposes; instead, they marketed them for business.
Even though there was some interest in a new expensive invention, talking machine sales lagged and companies eventually entered the entertainment market. By recording and selling music on their own cylinders, companies like Edison or Graphophone believed that the customer would purchase one of their talking machines to play recorded music. The first company to market in this manner was Columbia Phonograph recording exclusively for Graphophone around 1889, when Columbia hired the US Marine Band led by composer John Philip Sousa to record some of their popular military marches like “Semper Fidelis” and “The Washington Post.” Although Sousa himself found recorded music “an impending harm to American musical art”, the Marine Band’s recordings resulted in immediate success for both Graphophone and Columbia’s record sales. The band returned to Columbia’s studios several times a week to keep ahead of record demand, sometimes selling one thousand record in a week in 1890. Sousa’s Band would become one of the best-selling recording artists of the nineteenth century, including their famous 1897 recordings of “The Stars and Stripes Forever” also recorded on Columbia. Columbia also hired popular Italian tenor Enrico Caruso with great success. However, Edison Phonograph still intended to market machines for business purposes and did not initially enter the music market until later in the 1890s and Phonograph sales slumped partly as a result of this decision. The decision by Columbia to begin marketing recorded music had profound effects on pop song history by not only promoting celebrity musicians, but by also changing the business model by using Graphophone’s format to help sell talking machines.
Talking machine companies were not the only kinds of businesses to use music and Americans’ increasing thirst for popular songs to boost income. Saloons, hotels, brothels, theatres, train stations all found that they could supplement their income by adding talking machines to the environs, fitting them with coin operating systems and selling music to consumers for a nickel per play. The trick worked tremendously well for such businesses, one drug store owner in New Orleans reported that he earned $500 in a month in 1891, enough to earn back the initial investment on the Phonograph. Whole arcades exclusively for the purpose of listening to recorded music on machine had entered the business as well; the Palais Royal Saloon in San Francisco had fifteen machines fitted for coin operation and listening stethoscope-like ear tubes in 1890. Salesmen claiming titles of “professor” or “doctor” travelled around with machines and earphones selling music plays to rural customers. The appetite and market for music was so large in the early 1890s that pirated music became problematic. Dealers in black market music fashioned together pantograph mechanisms which would copy cylinders of pop songs for sale; although they did not have the sound quality of big name labels, pirated music was cause for alarm for record companies. Not only did music change the nature of the talking machine business, it was also changing the culture of businesses that could capitalize on Americans’ enthusiasm for recorded music.
With the success that the Graphophone was having with recording and the famous and valuable name embossing each of Edison’s Phonograph machines, another competitor, German-born Emile Berliner, would change the nature of the medium on which music was recorded. The difficulty of recording on cylinders was that each one had to be individually recorded and there was no easy way for a company to duplicate an original recording with the same sound standards. If a company had an order for 200 copies of a song, then the recording artist, even while recording on four machines simultaneously, would have to perform the song the same way fifty times in a row in the early years of acoustic recording. Instead of writing on a cylinder, Berliner created a system that produced music on a flat disk, and copies of recordings could be pressed into a mould and mass produced quicker than cylinder recordings. In 1895, Berliner gained a patent for his machine, the Gramophone. Not only were records cheaper, but so were his machines, some as inexpensive as $15 in 1895. Columbia also began to manufacture its own disk player, the Zonophone, in 1900. By the turn of the twentieth century, Berliner’s Gramophone was gaining popularity as an alternative to cylinder machines, creating a new format from which consumers could get access to recorded music. Subsequently, the disk format in its various forms would remain popular for most of the twentieth century.
With a new invention selling well by the mid-1890s, scores of new talking machine companies like Talkophone, Vitaphone, Metaphone, and Echophone went into business, but many eventually became victims of the business culture around the turn of the century. Business were constantly consolidating either through acquisition or through organizational efforts, and larger companies frequently bought or merged with smaller ones. Berliner Gramophone and US Gramophone, for example, merged to form the Consolidated Gramophone Company in 1900. If companies were not victims of the reorganizational efforts, then they were likely sued over the patents in their machines, no matter how minute the details of a mechanism and these patent lawsuits ultimately gave way to the first three big record companies. Considering that after the transformation in invention that had taken place during the nineteenth century, the original 1790 American Patent Law had not been amended allowing for a substantial number of such lawsuits. Large companies not only sued each other over inventions, but also sued smaller ones out of existence. American Graphophone had aggressively been trying to litigate Edison out of business beginning in 1895 over the Bell-Tainter patent. The Chicago Talking Machine Company had been sued out of existence in 1897 by Columbia for adding a third spring in its motors. The remnants of the company were purchased by Columbia after which, Columbia began producing machines fitted with a third spring in its motor design. The Consolidated Gramophone Company was even involved in a patent lawsuit with Columbia in 1901 and when company president Eldridge Johnson was confident that he would win his case, he named his company Victor Talking Machine Company in 1901. By the end of these so-called talking machine wars, three big companies survived.
The cathartic changes in the talking machine business had been resolved in 1903 with three companies controlling the majority of the markets for both talking machines and recorded music. There was Edison Phonograph, which dealt with cylinders exclusively; Victor Gramophone, which used flat disks; and Columbia, which used both formats. For nearly two decades afterwards, these three companies controlled the market for pop sings in America and, with century-old copyright laws which did not include sound recordings, record companies could record any music they wished until such laws were amended in 1909. This trend in big business controlling major markets in music still exists today with the likes of Sony, Universal and Warner Music Group owning much of the pop song content audiences hear. For pop song history, what started as talking machine companies trying to sell machines by using songs, became the first three major record companies releasing music by the end of the talking machine wars of 1903.
Baldwin, Neil. Edison: Inventing the Century. New York: Hyperion. 1995.
Beatty, Jack. Colossus: How the Corporation Changed America. New York: Broadway Books, 2001. 128.
Bruce, Robert V. Bell: Alexander Graham Bell and the Conquest of Solitude. Boston, MA: Little Brown and Co. 1973.
Fabrizio, Timothy C. and George F. Paul. The Talking Machine: An Illustrated Compendium, 1877-1929. Atglen, PA: Schiffer Publishing. 1997.
Mackay, James. Alexander Graham Bell: A Life. New York: John Wiley & Sons, Inc. 1997.
Morton, David. Sound Recording: The Life and Story of a Technology. Baltimore, MD: The Johns Hopkins University Press. 2004.
Schlereth, Thomas J. Victorian America: Transformations in Everyday Life. New York: HarperColins Publishers. 1991.
Sousa, John Philip. “The Menace of Mechanical Music.” 1906. Explore PA History. http://explorepahistory.com/odocument.php?docId=1-4-1A1.
“The Stenographer’s Friend, or What was Accomplished by an Edison Business Phonograph.” Historic Films, 7:54. http://www.historicfilms.com/tapes/17641.
Tancs, Linda A. Understanding Copyright Law: A Beginner’s Guide. New York: Oxford University Press. 2009.
——-. Understanding Patent Law: A Beginner’s Guide. New York: Oxford University Press. 2010.
Whitburn, Joel. Pop Memories: 1890-1954. Menomonee Falls, WI: Record Research Inc. 1986.
Zunz, Olivier. Making America Corporate: 1870-1920. Chicago, IL: The University of Chicago Press. 1990.
 For a general term for machines that acoustically recorded sound, regardless of the brand stated like Phonograph or Gramophone, the term talking machine will be used throughout the remainder of this essay.
 Timothy C. Fabrizio and George F. Paul, The Talking Machine: An Illustrated Compendium, 1877-1929, (Atglen, PA: Schiffer Publishing, 1997), 9.
 Thomas A Edison, qtd in Neil Baldwin, Edison: Inventing the Century, (New York: Hyperion, 1995), 83.
 Neil Baldwin, Edison: Inventing the Century, (New York: Hyperion, 1995), 81.
 Olivier Zunz, Making America Corporate: 1870-1920, (Chicago, IL: The University of Chicago Press, 1990), 108.
 Fabrizio and Paul, 10.
 Robert V. Bruce, Bell: Alexander Graham Bell and the conquest of Solitude, (Boston, MA: Little Brown and Co, 1973), 354.
 Baldwin, 191-192
 Thomas J Schlereth, Victorian America: Transformations in Everyday Life, (New York: HarperColins Publishers, 1991), 190.
 Fabrizio and Paul, 9.
 James Mackay, Alexander Graham Bell: A Life, (New York: John Wiley & Sons, Inc, 1997), 216.
 John Philip Sousa, “The Menace of Mechanical Music,” 1906, Explore PA History, http://explorepahistory.com/odocument.php?docId=1-4-1A1.
 Fabrizio and Paul, 17.
 Joel Whitburn, Pop Memories: 1890-1954, (Menomonee Falls, WI: Record Research Inc, 1986), 625.
 Schlereth, 192.
 Fabirizo and Paul, 24.
 ibid, 31.
 David Morton, Sound Recording: The Life and Story of a Technology, (Baltimore, MD: The Johns Hopkins University Press, 2004), 176.
 Fabrizio and Paul, 37.
 ibid, 75.
 ibid, 36-39.
 Jack Beatty, Colossus: How the Corporation Changed America, (New York: Broadway Books, 2001), 128.
 Fabrizio and Paul, 76.
 Fabrizio and Paul, 35.
 Fabrizio and Paul, 40.
 ibid, 78.
 See Copyright Act of 1790, contained in Linda A. Tancs, Understanding Copyright Law: A Beginner’s Guide, (New York: Oxford University Press, 2009), 63-65.
 The Copyright Act of 1909, Sect. 1(e) (1906), contained in Tancs, Understanding Copyright Law, 67-89.