The merger of Atlantic and Warner in 1968 serves as a symbolic tipping point between the free-wheeling 1960s and the mature and highly-profitable record industry that emerges in the 1970s. In 1967, the American record industry first earned over $1 billion, a revenue milestone indicative of the phenomenal success (and excess) of the 1970s.
Culturally, the 1960s ended quite abruptly with the Charles Manson murders in August of 1969 in Los Angeles and the violent rock festival fiasco at Altamont, California in December. The mythical showcase of hippie nonviolence at Woodstock in August of 1969 quickly gave way to the reality that the dreams of a cultural revolution fueled by rock and LSD had peaked in 1967. But for the record industry, the collapse of the counterculture’s utopian dream only provided an opportunity to reach a demographic of young people who were now entirely engaged with popular music as a reflection of their personal identities. The collectivist dream of the ‘60s gave way to the individualist narcissism of the “me decade,” and music genres suddenly came to life that would cater to every conceivable taste across the social spectrum: singer-songwriters, funk, heavy metal, soft rock, progressive rock, southern rock, blues rock, space rock, glam rock, jazz rock, disco, punk, country rock, etc. The industry was primed to cater to all tastes and it seemed any band could get a record deal if they offered a new flavor of music to a potential niche audience. The loss leaders were given free rein because the industry was selling so many records that the risks of signing acts that didn’t sell were easily absorbed. (A “loss leader” is a an artist who doesn’t sell enough records to break even, but who nonetheless has a loyal following of fans and critics that make the financial losses worth sustaining.)
The profusion of genres in the early 1970s can also be tied to another defining aspect of 1960s popular musical culture — the increase of artistic freedom and control given to artists to define their own sound rather than requiring them to conform to a musical template. In the early 1960s, producers such as Phil Spector and Motown’s Berry Gordy demanded total control over the musical product and the way the artists presented themselves on stage. By the late 1960s, such levels of control were largely overtaken by an attitude that creative freedom was the ruling aesthetic, with few artistic choices off the table. The 1970s saw the full flowering of this aesthetic of creative freedom, from George Clinton’s Funkadelic to the fantastical excesses of progressive rock exemplified by Yes, there were seemingly no limits to how far the musical boundaries could be pushed.
The development of FM radio (short for “frequency modulation”) in the late 1960s injected an additional catalyst into this process. AM radio (short for “amplitude modulation”) became the source for “Top-40” programming, playing only the top pop hits in a restricted playlist. FM became the source for a new form of programming, album-oriented rock (AOR). With AOR, the album, rather than the pop single, became the object of musical delivery. The 3-minute pop single, previously the aesthetic objective for all pop artists, instead became a sign of “commercial sellout” and the 5-minute rock song, nearly always including a guitar solo or other instrumental bonus became the AOR norm. At the extremes, bands such as Yes recorded albums on which an entire album side (40 minutes) was devoted to a single song (such as their 1972 album Close to the Edge). This new emphasis on the album as the unit of sale rather than the single helps explain the surge in record industry profits, as albums were sold at a premium cost and lower manufacturing cost per song.
In addition to the major record labels from the 1960s (primarily Columbia, EMI/Capitol, and Decca), it was the combination of three independents (Atlantic, Elektra, and Warner) coming together under the Warner name that stands out as a potent new force in the 1970s. By 1970, these three labels exceeded Columbia’s revenue figures by earning over $18 million annually under the Warner Communications corporate umbrella, which also included the famous film studio. Three of the legendary names of the industry were in charge of the labels making up this new juggernaut: Mo Ostin who continued to run the Warner/Reprise label, Ahmet Ertegun and Jerry Wexler of Atlantic, and Lac Holzman of Elektra.
In particular, Ertegun’s success with the Atlantic label continued as it expanded beyond its soul music origins. In 1968, he signed one of the biggest-selling bands of the ‘70s, Led Zeppelin, and in 1968 wrestled the Rolling Stones away from Decca for their hugely successful 1971 Sticky Fingers album. Warner’s success continued to be driven by its policy of letting its labels and artists have wide artistic latitude, while also contributing an equally creative approach to marketing, such that each artist’s promotional materials reflected their own idiosyncratic image and the mindset of their young fans rather than conforming to a corporate-wide culture. The Rolling Stones’ Sticky Fingers album cover provides an iconic example with its raunchy image of a man’s denim-clad crotch complete with actual functioning zipper (designed by infamous pop artist, Andy Warhol).
Warner also added a new label to their roster, Asylum, led by newcomer David Geffen. Geffen had begun his career in artist management in the 1960s with the famous William Morris talent agency in Los Angeles. Seeing opportunity in the emerging singer-songwriter and country rock genres emerging in Los Angeles in the early 1970s, Geffen started his own company, Asylum Records. Asylum quickly signed several artists that would come to define the sound of the early 1970s: Jackson Browne, Joni Mitchell, Linda Ronstadt, Tom Waits, and The Eagles. Coming from the artist management side, Geffen’s approach, like the other Warner labels, was artist-centered, an approach that was particularly effective with the Laurel Canyon singer-songwriter crowd who best represented the continuation of the hippie aesthetic from the ‘60s.
The 1970s also saw the emergence of three new genres challenging the sound and look of mainstream rock and the industry that supported it: glam, disco and punk. Intriguingly, each of these genres also provided a geographical counterbalance to Los Angeles as the seat of power in the industry by refocusing attention on both New York City and London. And, as had been true throughout the history of the record industry, the major labels were too risk-averse and disconnected from events on the ground to be an initial part of these new trends.
Disco emerged primarily from an unlikely source, an Italian-born German electronic music producer, Georgio Moroder, who combined his pulsing electronic dance music with the jazzy soul vocals of a black American singer then living in Germany, Donna Summers. Los Angeles-based independent Casablanca Records recognized the commercial potential in Moroder’s dance-oriented experiment, confirmed by the success of Donna Summers’ disco hit “Love to Love You Baby” in 1975. The 17-minute length of this song provides testimony to the purpose of disco — endless dance music rather than 3-minute radio-friendly pop hits. Ironically, Casablanca’s risky disco venture was bankrolled by the phenomenon of their other unlikely success — American glam-rock band Kiss, who gave Casablanca their first platinum album (1,000,000 copies sold). Casablanca followed up their Donna Summers experiment with one of the biggest selling disco singles of the era, “YMCA” by the Village People in 1976. Like Summers, the Village People were the brainchild of a European dance music producer, in this case France’s Jacques Morali, who saw commercial potential in the gay subculture fueling New York’s dance scene.
The punk phenomenon seemed to arise almost simultaneously in both New York City and London, primarily through the New York group The Ramones, and their even more flamboyantly rebellious proteges in London, the Sex Pistols. The Ramones released their debut album on Sire Records in 1976, a label founded by Seymour Stein in the early 1970s. Sire then signed the Talking Heads in 1977, another band then stirring up interest with the Ramones and other punk acts at the notorious CBGB club in New York. Both bands garnered critical acclaim for their early releases, but only the Talking Heads managed to translate that into mainstream success. These early punk signings got Sire the attention it needed to be purchased by Warner Bros. in 1977, providing the small company with the distribution and capital to expand their offerings as punk morphed into “new wave” in the late 1970s with greater commercial success.
In London, the Sex Pistols and their manager, Malcolm McLaren, were combining McLaren’s line of sexual fetish clothing (sold at his London boutique named simply “Sex”) with a rudely brash and politically provocative brand of punk. McLaren managed to get the band signed to EMI for the release of their first single “Anarchy in the U.K.” in 1976, which did well enough to interest Los Angeles-based A&M Records in their debut album. The opening existed because EMI had released the Sex Pistols due to their relentlessly rude public behavior.
A&M Records had been founded in 1962 by Herb Albert and Jerry Moss (the first letters of their last names providing the company’s name), which became known as an artist-friendly label specializing in instrumental music, jazz, and soft rock. A&M’s early legacy was anchored largely by the success of trumpet-player Herb Albert’s enormously successful “Tijuana Brass” recordings in the early 1960s. A&M’s unlikely interest in the Sex Pistols, given their history with middle-of-the-road instrumental pop, gave rise to one of the more bizarre and entertaining episodes in record-industry lore. Just as A&M were about to sign the Sex Pistols, the A&M executives in London for the festivities were assailed by the band’s predictably rude and outrageously vulgar antics. Realizing they didn’t have the corporate stomach to stand behind the Sex Pistols, A&M quickly backed out of the deal they had just signed, offering the band $75,000 (half of their initial advance) just to tear up the contract. The band had just earned $75,000 for doing absolutely nothing (other than embarrassing both EMI and A&M record executives).
The Sex Pistols quickly signed to a small label with little to lose, Richard Branson’s Virgin Records, demonstrating Branson’s brash risk-taking style that continues to fuel his corporate ambitions to this day with Virgin Air and his latest efforts at commercial space travel. Meanwhile, A&M recovered from its initial whiff at getting involved in British pop by quickly signing three highly successful British new wave artists — Squeeze, Joe Jackson and The Police. With these and other successes, A&M became one of the most successful labels in the late 1970s and early ‘80s, making them ripe for being bought up by Dutch record company PolyGram in 1989, which in turn was later folded into what is now the largest record company in the world, Universal Music Group.