|This article needs additional citations for verification. (September 2011)|
|Fate||Sold to Seagram and merged with Universal Music Group|
|Successor(s)||Universal Music Group|
PolyGram was the name of the major label recording company started by Philips as a holding company for its music interests in 1945. In 1999 it was sold to Seagram and merged with Universal Music Group.
In 1929, Decca Records (London) licensed record shop owner H.W. van Zoelen as a distributor in the Netherlands. By 1931, his company Hollandsche Decca Distributie (HDD) had become exclusive Decca distributor for all of the Netherlands and its colonies. Over the course of the 1930s, HDD put together its own facilities for A&R, recording and manufacture.
HDD was commercially successful during World War II because of the absence of American and British competition. Van Zoelen wanted to sell to Philips so that HDD would have sufficient financial backing when their major competitors returned after the war. This led Philips to buy HDD in 1942.
In the mid-twentieth century, the majority of large recording companies manufactured both gramophones and records; Philips CEO Anton Philips noted the risk in creating gramophones without an interest in music recording and record manufacture, and that Radio Corporation of America (RCA) had merged with the Victor Talking Machine Company in 1929 for this reason. Philips' labs were developing magnetic tape and LPs, and that record companies could support eventual new formats, although other record companies were notably unenthusiastic about experimenting with new formats.
In the 1940s, the record business was spread out within Philips: research in the Eindhoven labs, development elsewhere in Eindhoven, recording in Hilversum, manufacturing in Doetinchem, distribution from Amsterdam and exports from Eindhoven. During the late 1940s, Philips combined its various music businesses into Philips Phonografische Industrie (PPI), a wholly owned subsidiary.
PPI's early growth was based on alliances. A merger was first proposed with Decca of London in late 1945, but was rejected by Edward Lewis, Decca's owner. (PolyGram finally acquired Decca in 1979.)
In the early 1950s, Philips set itself the goal of making PPI the largest record company in Europe.
PPI's second attempt at a merger was with Deutsche Grammophon Gesellschaft (DGG). DGG, owned by Siemens AG and well known for its classical repertoire, had been the German licensee for Decca from 1935. DGG also owned Polydor Records. Shortly after PPI was founded it had made a formal alliance with DGG to manufacture each other's records, coordinate releases and not to poach each other's artists or bid against each other for new talent. PPI and DGG finally merged in 1962.
The alliance with DGG still left PPI without repertoire in Britain or the US. But in 1951, after Columbia had failed to renew its international distribution agreement with EMI, PPI agreed to distribute Columbia recordings outside the US and have Columbia distribute its recordings inside the US. This agreement ran until 1961, when Columbia set up its own European network, PPI signed a worldwide distribution deal with Mercury Records in 1961. Interestingly, PPI's parent company Philips, through its U.S. affiliate Consolidated Electronics Industries Corp (a.k.a. Conelco), acquired Mercury in 1962.
PPI built or bought factories in smaller countries. In 1962, PPI had a large factory in Baarn and factories in France, Britain, Denmark, Norway, Spain, Italy, Egypt, Nigeria and Brazil.
PPI played an important role in the introduction of the long-playing vinyl record to Europe. Columbia introduced their LP record in 1948 and Philips presented its first LP at a record retailers' convention in 1949. Philips' commitment to LP technology was an important factor in its 1951-1961 deal with Columbia.
In 1962, PPI and DGG formed the Grammophon-Philips Group (GPG), with Philips taking a 50% share in DGG and Siemens a 50% share in PPI. In 1972 the companies formally merged to form PolyGram (in some countries, like Argentina, its name was Phonogram), of which Philips and Siemens each owned 50%. In 1977 both organizations merged operationally, integrating the recording, manufacturing, distribution and marketing into a single organization.
The various record labels within PolyGram continued to operate separately. PolyGram gave its labels, as A&R organizations, great autonomy.
GPG needed to move into the US and UK markets, and did so by a process of both formation and acquisition: Polydor Records established its American operations in 1969, Mercury Record Productions (US) was acquired in 1972 from sister company North American Philips Corp., RSO (UK) in 1967, MGM Records and Verve (US) in 1972, Casablanca (US) in 1977, Pickwick in 1978, and Decca (UK) in 1980 (the latter acquisition basically brought PolyGram full circle, see the HDD section above). PolyGram acquired United Distribution Corporation (UDC) in 1973 and signed distribution deals with MCA and 20th Century Records in 1976.
In the late 1950s and early 1960s, Philips had been at work on a new consumer magnetic tape format for music. The Philips Compact Cassette came out in 1963. It was small, played longer than an LP and was robust. In 1965 the cassette accounted for 3% of revenues, growing in 1968 to 8% and in 1970 to 10.6%.
In the late 1960s and through the 1970s, GPG/PolyGram diversified into film and television production and home video. RSO's successes included Saturday Night Fever and Grease. PolyGram's highly successful marketing during the disco craze included the Casablanca film Thank God It's Friday and its associated soundtrack. During the boom in disco, PolyGram's US market share had gone from 5% to 20%. This can also be attributed to multi-million selling LPs and 45s by Abba, the Bee Gees, Donna Summer, the Village People, Andy Gibb, Kool and the Gang and rock act Kiss. For a short while in the late 1970s, it was the world's largest record company.
Before 1978, with the acquisition of UDC, the distribution organization was too large and PolyGram was losing money. When US operations were running at full capacity, PolyGram expanded aggressively, and would press large quantities of records without knowing the demand. In late 1979, PolyGram was caught offguard by the sudden end of the popularity of disco music, leaving it with an underutilized distribution network, profligate labels, and overoptimistic product orders. PolyGram's Casablanca label was infamous for management spending on luxury cars and cocaine. After 1980, PolyGram's losses had spiraled upwards of US$220 million.
Another contributing factor to PolyGram's financial woes was the massive failure of the big budget 1978 musical Sgt. Pepper's Lonely Heart's Club Band. The film starred the Bee Gees and Peter Frampton at the height of popularity, and featured Beatle covers by them as well as Aerosmith, Billy Preston, and Earth, Wind, and Fire. The film was highly anticipated to surpass the box office success of both the Saturday Night Fever and Grease, mostly due to the film's popular music stars. The soundtrack LP, based on only advance orders, was released triple platinum. However, the movie was released to poor reviews and died a quick death at the box office. Despite its triple platinum start, the soundtrack LP's sales bombed after the film's release. In turn, record dealers flooded PolyGram with returned LPs. The resulting losses nearly wiped out the profits the company had made on both the Saturday Night Fever and Grease soundtracks. When the disco craze ended in 1979 and record sales for both The Bee Gees and Casablanca's Village People plummeted, the company's fate was sealed. PolyGram also experienced losses with the defection of Casablanca's Donna Summer to newly formed Geffen as well as the dropping of Andy Gibb (from RSO), whose personal problems with cocaine and alcohol began to affect his recording career. Summer and The Bee Gees also had legal disputes with their labels, which further complicated matters.
In 1983, Philips manager Jan Timmer was appointed CEO. He cut the workforce from 13,000 to 7,000, reduced PolyGram's LP and cassette plants from eighteen to five and decreased the company's dependence on superstars by spreading the repertoire across different genres and nurturing national and regional talent. By 1985, PolyGram was profitable once more. Its roster of labels by this time included: Polydor, Mercury, London, London/FFRR, Casablanca (until 1986, later to be reincarnated in 1994), RSO, De-Lite, Riva, Threshold (owned by The Moody Blues), Tin Pan Alley (under Polydor), and Atlanta Artists (founded by Cameo lead singer Larry Blackmon) all consolidated into PolyGram Records, Inc.
Total Experience Records (founded by Lonnie Simmons) was taken to RCA for distribution in 1984. Wing Records was reincarnated in 1987 and became a very popular label over the following years, spawning the careers of Tony! Toni! Tone! and former Miss America, Vanessa Williams; the label was discontinued in the mid-1990s. Fontana was revived in the U.S. in 1989, but only for a short while. Today, Fontana Distribution is an independent label distribution unit of Universal Music Group. Vertigo Records still remained a rare U.S. PolyGram label, as most of the music on Vertigo Records were from Europe.
In 1982, PolyGram purchased 20th Century Fox Records from 20th Century Fox, which was just recently brought out by oil magnate Marvin Davis, who was not interested in keeping the record company. The assets of the former 20th Century Fox Records were consolidated with the company's Casablanca label.
After an attempted 1983 merger with Warner Music failed, Philips bought 40% of PolyGram from Siemens, acquiring the remaining 10% in 1987.
The compact disc, invented by Philips and Sony, helped greatly in boosting the company's sales and market share. PolyGram's strength in classical music helped greatly, as many of the CD's early adopters were classical music lovers. Total US sales of CDs were 1 million in 1983, 334 million in 1990 and 943 million in 2000. Total UK sales were 300,000 in 1983, 51 million in 1990 and 202 million in 2000. The CD increased PolyGram's profit margin from 4-6% in the mid-1980s to 7-9% by the early 1990s. As well, videos were distributed by PolyGram Video.
In 1989, Philips floated 16% of PolyGram on the Amsterdam stock exchange, valuing the whole company at $5.6 billion. PolyGram embarked on a new program of acquisitions, including A&M and Island Records in 1989, Swedish company Polar Music which held the rights to the ABBA catalogue, Motown in 1993, Def Jam in 1994, Interscope in 1995 and Rodven (Venezuela) in 1995.
In 1995, PolyGram purchased ITC Entertainment for $156 million. In early January 1999, Carlton Communications bought ITC television and film library from PolyGram/Seagram for £91 million ITV plc continues to release ITC's original output through television repeats, books and DVD releases.
Around the same time, PolyGram was merged by Seagram into Universal Music Group. The name survives via reissue of music under the Polydor Records label as well as a publishing arm of Universal Music Publishing Group. The Japanese branches of the PolyGram labels that were absorbed to form Universal Music Japan were merged into one label named Universal Sigma. In 2013, Universal Music companies in China and Hong Kong revived the PolyGram label.
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