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Polygram, Decca and DG

Overview

This profile considers Polygram, Philips, Siemens, Telefunken and Decca.


It covers -

  • PPI and Polygram
  • DG and Telefunken
  • Decca
  • Studies

AEG, Philips and Siemens are profiled on the following page.

PPI and Polygram

Netherlands electronics group Philips, discussed on the following page of this profile, expanded into the record business during 1924 when it established a recording studio after acquiring radio manufacturer Nederlandsche Seintoestellen Fabriek. It began record manufacturing in 1933 and in 1942 acquired Hollandsche Decca Distributie (HDD), the Decca licensee, gramphone manufacturer and independent record label. HDD had been founded in 1931 and expanded within Europe and the Dutch empire (eg Java).

In 1950, following Columbia's introduction of the long playing record, Philips consolidated its international recording interests as Philips Phonografische Industrie (PPI). A year later it entered an alliance with Columbia: PPI became Columbia's distributor outside the US, Columbia became PPI's distributor within the US.

In 1960 PPI acquired Mercury Records in the US, amid growing tension with Columbia. Mercury had been founded 1945 by Irving Green (1916-2006), Berle Adams and Arthur Talmadge. In 1961 Columbia ended the alliance, establishing its own European distribution network. Philips acquired Italy's Melodica labels and established the GPG joint venture with Siemens in 1962, selling 50% of PPI to Siemens. It introduced the compact cassette in 1963.

PPI, in search of economies of scale, acquired Chappell Music Publishin in 1968. GPI was replaced by Polygram (which absorbed the record interests of Philips and Siemens) in 1972. Polygram acquired the Verve label from MGM, United Distribution Corporation, the Robert Stigwood Organization and stakes in Casablanca and Barclay records. In 1979 it acquired Decca and London Records. A merger between Polygram and Warner Music was forbidden by both the US Federal Trade Commission and Germany's cartel office in 1983. Philips thereupon acquired 40% of Polygram from Siemens, buying the remaining shares in 1987. In that year it rationalised its film operations, with closure of Polygram Pictures, and sold Chappell Music to Warner.

Two years later, it sold 16% of Polygram in a deal that valued the record group at US$5 billion. A further 9% was sold in 1993. Polygram had meanwhile been aggressively acquiring major and minor labels in Europe and North America - notably A&M Records - and music publishing and film interests. Purchases for example included Interscope, Abbey Home Entertainment, Gramercy Pictures and Kitty Music.

In 1998, as part of large-scale restructuring at Philips amid speculation that the group would collapse, Polygram was sold to Seagram for US$10 billion. Seagram bundled Polygram with Motown and other record interests as Universal Music Group. Two years later Seagram was acquired by Vivendi for US$34 billion, becoming Vivendi Universal.

DG and Telefunken

The Deutsche Grammophon Gesellschaft (DG) was founded in 1898 by Emile Berliner, a German-born United States citizen, as the German branch of his Berliner Gramophone Company (later The Gramophone Company). DG was initially based in Hannover but later moved to Berlin, cross-licencing with UK predecessors of HMV and with the Victor Talking Machine Company (later part of RCA). Like most competitors it produced both records and phonographs.

Its links with the Gramophone Company were loosened by expropriation in 1917 as part of the 1914-18 War. DG emerged as an independent organisation, facing increased competition from local labels such as Odeon and from Anglo-American imports and subsidiaries. The Gramophone Company's German factory, for example, opened in 1929 and manufactured some 2 million records by the end of 1930. In 1935 DG aligned itself with Decca, becoming that group's licensee in Germany and much of Central Europe.

DG was acquired by the Siemens & Halske electrical group (discussed on the following page of this profile) in 1941. Siemens sold its stake in Telefunken at that time. Revival after the war saw an emphasis on classical music but difficulty with distribution outside Europe. Siemens accordingly formed the Gramophon-Philips Group (GPG) joint venture with Netherlands based Philips in 1962, following the end of the alliance between PPI and Columbia. Philips took a 50% stake in DG. Siemens acquired 50% of DG.

In 1972 GPG was replaced by Polygram, 50% owned by Siemens and holding that group's former stake in DG.

Telefunken was established as a joint venture of Siemens and AEG in 1903, initially for radio transmitter and receiver production. In 1929 it licensed (and in 1932 acquired) the Ultraphon label; during the following decade it partnered with IG Farben in development of magnetic tape recording (building on expertise from the turn of the century in wire-based recording).

In 1941 Siemens sold off its stake in Telefunken, with AEG taking control and establishing Telefunken-Schalplatte as the vehicle for its record operations. (Parent Telefunken continued to produce consumer hi-fi equipment, microphones and other electronics gear.) In 1969 the ailing AEG merged with Telefunken as AEG-Telefunken, being acquired by the Daimler-Benz auto group - then on an acquisition spree that culminated in purchase of Deutsche Aerospace and Chrysler in 1998. Rationalisation of Daimler's AEG arm saw closure, sale or spin-off of most of its consumer operations. Telefunken's recording operations were acquired by Decca and now centre on the Teldec label.

Decca

The Decca records group was founded in the UK by Edward Lewis during 1929, initially expanding overseas through licensees. The 'Decca' trade name appears to have been first used in 1914 for a portable gramophone manufactured by Barnett Samuel & Sons Ltd, acquired by Lewis in 1934.

H.W. van Zoelen for example became the Decca distributor in The Netherlands in 1929 and formed Hollandsche Decca Distributie (HDD) in 1931 as the exclusive Decca distributor for Netherlands and its colonies, while Deutsche Gramophon became Decca's German licensee in 1935.

In 1952 Decca acquired the Universal International film group. It sold Universal to MCA in 1962. It was acquired by Polygram in 1969.

Studies

Studies of Philips, Siemens and AEG are highlighted on the following page. This site features a more detailed bibliographic essay on the music industry.

Context is provided by The Global Jukebox: The International Music Industry (London: Routledge 1996) by Robert Burnett, An International History of the Recording Industry (London: Cassell 1998) by Pekka Gronow & Ilpo Saunio, Timothy Day's A Century of Recorded Music: Listening to Musical History (New Haven: Yale Uni Press 2000) and James Nott's Music for the People (Oxford: Oxford Uni Press 2002).

For Polygram see in particular Gerben Bakker's 2003 The Making of a Music Multinational: The International Strategy of Polygram, 1945-1998 (PDF) and the paper by Marc Huygens, Charles Baden-Fuller, Frans Volberda & Henk Van Den Bosch on Co-evolution of firm capabilities and industry competition: Investigating the music industry, 1877-1997. Geoffrey Jones 1985 Business History Review article on 'The Gramophone Company: An Anglo-American Multinational, 1898-1931' is also of interest.