Setting up a new record company #7 Sell your product!

This week we aimed to tell the story of how Emile Berliner and Fred Gaisberg set up their record company in America in the late 19th Century. Seven blog entries on seven days. This is day #7. The final day; we made it! Its 1896. The new Philadelphian investors have decided that the United States Gramophone Company needs a permanent recording studio and a retail shop for gramophone players and discs and that it should be based in Philadelphia itself. Fred was selected to set up the recording studio which was above a shoe shop in Twelfth Street, Philadelphia. A new colleague Alfred Clark, then 22, was chosen to establish the gramophone shop. Clark and Gaisberg had similar backgrounds, both had also previously worked for Edison. Clark however was a much snappier dresser as Gaisberg later recalled.

“He was..a youth big and well proportioned, perfectly dressed in a tailor made suit which struck a note of distinction. Further his dark eyes and curly brown hair set off by a boyish blush whenever he spoke made him irresistible, quite apart from his wisdom and the fact that he had emerged from shadow of the great Edison.”

Gaisberg and Clark headed to the City of Brotherly Love to start this new record business, Gaisberg with his recording and Clark with his retail. A&R and distribution. Both would go on to play vital roles in the development of The Gramophone Company; Fred would make many of its recordings and Clark would eventually become Managing Director of the Gramophone Company and then the first Chairman of successor company EMI.

But back in 1896 all of this was ahead of them. Gaisberg fondly remembered the early days in Philadelphia.”Clark and I had living rooms adjoining the studio and so were frequently in each other’s company and exchanged views on the artist’s life, the gramophone industry and it’s future. That it had a future neither of us doubted. We were both in on the ground floor and had all the enthusiasm of youth.

There were evenings when we stopped at home and enjoyed the leather perfumed atmosphere of the studio over the shoe-shop. There was a piano, as usual mounted on a two foot high platform, and the recording machine invited exciting experiments in sound recording. Clark had a violin he was very fond of and occassionally tucked under his chin….

We..often found ourselves as guests in the homes of our (investor) directors..and in the more modest homes of Eldridge R Johnson and B.G. Royal then the small mechanics who ran the small tool shop across the river in Camden. At that time they were making the first two hundred spring-motor gramophones for the company. Their little shop was destined to expand into the great Victor Talking Machine before the decade was over.”

So as we look back on the 7 blog entries of this week that tell the story of how Fred Gaisberg and Emile Berliner set up the United States Gramophone Company we can see the years 1893-1896 were key to the development of the gramophone business. Berliner had, with the help of Eldridge Johnson, perfected his disruptive gramophone technology and the discs that it played. He had raised money to develop the business and had brought on board three key members of staff – Gaisberg as a PAID employee, Clark and Sinkler Darby. Technology + Capital + People = Business. Oh, and they found an artist or two.

What next? Well…1897 would see the push to internationalise the business. Next stop: World domination.

Setting up a record company #3: Raising finance

This week we plan to tell the story of how Emile Berliner and Fred Gaisberg set up their record company in America. Seven blog entries on seven days. This is day #3. Its 1894. Berliner has developed the gramophone to a degree that it’s ready for market. Fred is on board to make demo recordings to show investors the potential of the new medium.

Money...it's a drag.

Berliner was not finding it easy to raise the money he needed to grow his gramophone business. Fred Gaisberg recalled that “a stream of punters and speculators, rich and poor, visited Berliner’s small laboratory. They were all amused and interested but sceptical. They would not part with their money and Berliner’s funds and courage were getting lower and lower…He often confided to me that something would have to be done or he would be forced to close down. I had been weeks without my modest salary, but as I was earning money with my piano playing in the evenings this was no great hardship for me.”

Fred decided to try to help and persuaded an establishment figure friend of his, one B.F. Karns, to help him try to raise money for Berliner. Karns proved less substantial than he appeared and in the first instance Fred ended up lending him money….

Karns did however get them in front of some movers and shakers including the Directors of newly established and prospering Bell Telephone Company “oozing opulence and exhaling fragrant Havana cigars” but despite being tickled by the gramophone they showed no interest in backing the fledgeling record business.

Alexander Graham Bell of the Bell Telephone Company and some of his directors but with no cigars

Karns also got them to meet “Mr (FAO) Schwarz, the greatest toy maker in America, who ….asked for a talking doll.”

FAO Schwarz. He wanted talking dolls.

Gaisberg and Karns spent much of the winter of 1894 and 1895 on the road trying to raise money. Karns talked money, Fred demo’d the gramophone. But by March all the money was gone. They found themselves stranded in New York by a blizzard “snowed up in a dollar a day hotel for one whole week and without funds and with all communications cut off. For food, we patronised the free-lunch counters when the bartender’s face was turned away. Altogether we spent a week of great discomfort.”

On the return to Washington they stopped off in the City of Brotherly Love and made one last pitch to a couple of Philadelphians. They were non-committal and Gaisberg and Karns proceeded back to Washington fed up and fundless.

As 1895 turned from spring to summer, the future of the Berliner gramophone looked bleak. Fred continued making what recordings he could and Berliner concentrated upon perfecting the technology. But as far as money was concerned, the cupboard was decidedly bare.

This last diversion to Philadelphia proved ulimately to have been worthwhile. By the end of the summer the Philadelphians had formed a syndicate of 5 (two steel jobbers, a clothing manufacturer and two building contractors) to pump $25,000 into a new company which was named The United States Gramophone Company.

Gaisberg and Berliner were out of the starting blocks.