Rick Kennedy and Randy McNutt’s Little Labels, Big Sound: Small Record Labels and the Rise of American Music is a beguiling book whose almost fan-like approach to the history of independent music labels veils an important set of academically useful studies in the history of American business. Kennedy and McNutt, acknowledging that they could not possibly cover all record labels, or even all independent labels in a single volume have opted to consider ten of the most critical in the development of American music – rhythm and blues, hillbilly/country, jazz, rockabilly, and rock-n-roll. These crucial companies include the Gennett, Paramount, Dial, King, Duke-Peacock, Sun, Riverside, Ace, Monument, and Delmark labels.
At its core, this book is about entrepreneurs in the Schumpeterian sense of an innovator who brings new ideas to an industry that shake up strategy, marketing, and business practices and products. The entrepreneurs in this set of ten stories about early independent record labels include Fred Gennett of Gennett Records; J. Mayo Williams of Paramount; Ross Russell of Dial; Syd Nathan of King Records; Don Robey, founder of the Duke-Peacock label; the legendary Sam Phillips, creator of Sun Records; Orrin Keepnews of the Riverside label; John Vincent, founder of Ace; Fred Foster of Monument Records, and Bob Koester of the Delmark label. These are unknown names outside of collectors’ circles today, but their vision, ability to operate studios on a shoestring budget, skills at finding niche markets, and at recruiting and selling artists from those markets back to the people from whence they came, along with their ability to develop ties with distributors and retailers that provided them with accurate information on the next big thing made them able to beat the big labels in the record game, and ultimately led to the creation of American music as the amalgam of local and cultural styles from across the nation that it is.
Business strategy has always been important in the record industry. Before 1914, the technology of recording was dominated by three major American record companies: Columbia, Victor Talking Machine Co., and Edison, the three of which also controlled the top artists in the American music scene. The dominance of the “big three” in the mainstream record markets forced the independent label entrepreneurs (by 1920 there were more than 150 new independent labels) to search out niche markets in which they could sell their records. Successful labels like Gennett and Paramount, and most of the other labels discussed in the book searched out artists from underserved communities who could record music that would be purchased by others from the same communities. This led to the creation of ‘race records’ – recordings by black Americans for black Americans – and of ‘hilbilly’ music – recordings of songs from Appalachia to be sold to people in, and from, Appalachia, as well as, eventually, rhythm and blues/Delta blues, and rockabilly. The entrepreneurial spirit was found in the makeshift nature of the labels themselves. Gennett was created by a furniture factory owner who could appreciate the existence of record markets, even if he could not appreciate the ‘hillbilly’ and ‘race’ music that sold in them. Paramount used its distributors as talent scouts. Dial’s founder Russell created the label to satisfy the hunger of his Los Angeles area record store customers for the new bebop jazz style invented by Dizzie Gillespie and Charlie Parker. King Records found, and gave artistic license to artists such as James Brown. Same Phillips at Sun spent time, money, and talent to develop stars like Elvis Presley from the rough into regional sensations whose creativity was clear for the world to see.
The ability of entrepreneurs to enter any market depends upon the power of those firms already in that market to control it. The market status of the record industry in the United States has been cyclical since the invention of the phonograph by Edison in 1877.The market for records was closed. Between 1914 and 1917, the patents on much recording technology expired, and the way was open for entrepreneurs to get into the record game at relatively low prices. In 1929, the great depression, and the 1920’s advent of radio as a cheap alternative to the phonograph ended the first cycle of easy market entry for independent record labels. As sales of records dropped by half after 1930, even the well-established independents like Gennett and Paramount, which had large catalogs of famous artists to draw on, found it hard to survive the drying up of purchasing power in their economically borderline niche market communities.
The next open market phase began to arrive during the period of the Second World War, but really took off after the war ended, and materials, money, and artists flowed more freely in the United States. Music collectors became entrepreneurs, as in the case of Ross Russel of Dial Records, and entrepreneurs became collectors, as did Sydney Nathan, founder of King Records. In this period, electronic recording and playback technology made studios somewhat more expensive, and less makeshift, than they had been during the 1920’s, but the entry fee was still low. Russell started Dial with only sixteen hundred dollars – admittedly quite a price for the time, but still within the reach of middle class investors. Nathan began King Records, according to his own story, with eighteen dollars he made selling records he’d purchased at a discount from his friends. Following the end of the King and Dial labels in the mid 1950’s, another extraordinarily open period in the record market began with the 1956 opening of Sun Records, and the combining there of white hillbilly (by now ‘country’) music with the popular rhythm and blues of the black community in Memphis, Tennessee. This new rockabilly sound, a direct precursor to rock-n-roll, came from artists on Sun such as Jerry Lee Lewis, and the ever popular Elvis Presley. The frequent changes in recording technology, and the variety of music available in America provided niche market after niche market – ways to keep the market open by going under the radar of the dominant companies in the business.
These three factors – that independent labels have been the creatures of extraordinary, and not always successful, entrepreneurs; that those entrepreneurs used a business strategy of direct connection with retail outlets to gain information that kept them ahead of the game and allowed them to sign artists that were not yet famous, but were likely to become stars, and that the owners of these labels were not afraid to sign over artistic control to the artists themselves, give huge amounts of studio time, and provide means of talent development – meant that independent labels not only found ways to stay in the game, but that they found the music that consumers wanted to hear, and played it back for them.