Elektra Entertainment Group - Early 1950s Expansion

Early 1950s Expansion

In 1952 and 1953, Holzman recorded nine more folk albums, then in 1954 released his first blues album. No longer a pipe dream or a hobby, Elektra now required all of Holzman's attention, and in 1954 he closed the Record Loft and moved Elektra's offices from the shop's backroom to new accommodations at 361 Bleecker Street. A year later, he bought out Rickolt's interest for $1000, but the business remained very much a shoestring affair, the sales of one record barely able to finance the production of the next. Holzman turned to a St. John's classmate, Leonard Ripley, who came from wealth, and over the course of the next two years Ripley invested some $10,000 in the business. Although Ripley was now a partner in Elektra, the accounting, such as it was, and other business matters remained the sole responsibility of Holzman, who at this stage was paying himself about $11 a week. In spite of Ripley's financial help, Elektra continued to operate on a tight budget, a money-losing proposition that lacked the resources to achieve any level of significant growth.

In 1956, Holzman refined a concept that proved to be instrumental in turning Elektra into a profitable business: the sampler. For some time, record companies had been providing radio stations with compilations of their artists, and in 1954 Elektra itself produced a ten-inch sampler for radio play. Holzman's new idea was to create sampler albums for the retail market, selling at the bargain price of $2. Because the sampler helped to spur sales of their individual albums, Elektra artists now agreed to waive royalty payments on the use of a limited number of songs in samplers. Record dealers also agreed to a short discount for similar reasons: the cheap price led to greater sampler sales, which in turn led to increased sales for fully discounted individual albums. As a result, a sampler could make a profit for Elektra ranging from $10,000 to $20,000, while at the same time effectively promoting the label's other titles. In 1956, Elektra moved into the black ink for the first time.

In 1958, Holzman was able to buy back a 100 percent interest in Elektra and moved to larger offices on West 14th Street, on the northern border of Greenwich Village. It was here that Holzman built his first studio. As the company moved into the 1960s, its catalog was still very much dominated by folk music. Holzman also eased away from production responsibilities, now devoting most of his time to the signing and management of new artists. Although he generally had a strong sense of the world of popular music, Holzman made a significant mistake in 1962 when he decided that the New York folk scene had played itself out and moved to Los Angeles to establish a West Coast office for Elektra. In the early sixties, Bob Dylan suddenly burst onto the New York folk scene, debuting with a highly acclaimed first album. Dylan was a natural fit for Elektra, but Holzman on the West Coast had missed out on the singer-songwriter's emergence in Greenwich Village. He promptly shuttered the Los Angeles office and returned to New York.

Company Perspectives:

The ruby is a stone of telepathy. Prized as talisman and divinatory tool it dispels nightmares when placed under a pillow and guards against storms if touched to the four outside corners of a house. The Alumina of its blood line projects rather than receives energy; a double refraction that according to arcane lore harmonically vibrates to the note E. An E for Elektra: She of the seven Pleiades daughter of the Oceanus mother of the Harpies. The bright and brilliant one: A muse transformed four decades ago to celebrate music that most mind-reading of the arts. A record's label is hardly as important as the artisans who give it reason for being: yet with few exceptions, it helps to bridge the chasm between creative impulse and realization offering continuity with an oversoul and family tree all its own. An emotional geography spread over time, place and sheer chance it stands like a great center of trade at the crossroads of inspiration and commerce merging in a marketplace of ideas. Our Town: Folks move in, folks move out, humming and hymning life's soundtracks.

In 1963, after moving Elektra's offices uptown to the Rockefeller Center neighborhood, Holzman proved that he had not lost his touch for innovation when he started up a classical music label, Nonesuch. One night, while he waited with his wife for friends to join them at a restaurant located across the street from Carnegie Hall, Holzman thought back to his college days when he faced the difficult choice of picking one of two classical albums to purchase because he lacked the money to buy both. Classical albums in the United States cost in the $5 range in 1963, leading Holzman to daydream about bringing out a line of specialty records priced as cheaply as paperback books. He wrote out the basic business plan on a paper tablecloth and the next day took a jet to Europe. In London and Paris, he met with various record companies, offering a $500 advance plus royalties for each album that the European labels had no intention of attempting to market themselves in the United States. He quickly signed several properties and targeted more sources for future material. Holzman was so convinced that his idea would work, and fearful that larger rivals would emulate his idea and bring their financial muscle to bear before he could secure more material to build a larger catalog, that he grew secretive, giving his new venture the name of Nonesuch because, as he stated, "if we were ever asked we could truthfully say there was no such project." Indeed, the idea proved popular, and Nonesuch quickly became a cash cow for Elektra.