Motown Records Company L.P. Business Information, Profile, and History

Company Perspectives:

"Like most of you, I have joyously lived my life watching Motown Records transcend from a small record company housed in a two-story building in Detroit, Michigan, to an institution that has set musical standards for Pop and R&B music as they exist today.

I have always been inspired by the entrepreneurial brilliance of Berry Gordy Jr., the legacy of Motown and the classic foundation it was built upon. It is with this set of high standards in mind that I am prepared to guide Motown Records into the 21st century and establish it once again as a leader in today's competitive creative entertainment environment." --George Jackson, president and CEO (1997)

History of Motown Records Company L.P.

The New Republic has called it "the most successful Black-owned business in American history." Many first think of the company's trademark sound--the bluesy, impassioned recordings that dominated popular music in the 1960s. A part of the PolyGram group since 1993, Motown Records Company L.P. has struggled to replicate its early success while celebrating its heritage in re-issued recordings, television specials, and the nostalgic Motown Cafe and Motown Museum.

Roots of the Motown Sound

Berry Gordy, Jr.,was born in Detroit on November 28, 1929, the first Thanksgiving Day of the Great Depression. He learned the rudiments of music from an uncle while an early taste for gambling may have foretold his calling to the riskiest of businesses, the music industry.

Gordy entered a variety of occupations from contracting for his father to shining shoes and hawking newspapers. After ditching a promising career in boxing in favor of the freer musician's lifestyle, he began writing songs full-time. He persuaded his family to let him record a jingle he had written for their printing business.

Before his musical career could begin in earnest, however, he was drafted and spent the next couple of years in Korea. When he returned to Detroit he opened the 3D-Record Mart/House of Jazz with the help of family members. The shop languished until jazz enthusiast Gordy warmed to the simpler blues records that were popular at the time. Still, his conversion came too late to save the store.

After a stint as a cookware salesman, Gordy settled down to write songs again, taking advantage of one of his father's apartments, available rent-free. After marrying and starting a family, however, he took a job on the Ford assembly line. Nevertheless, while fastening trim he was composing songs in his head.

Gordy and his writing partners Roquel Billy Davis and sister Gwen Gordy eventually made connections at a variety of small music labels. "All I Could Do Was Cry," recorded by Etta James on Chess Records, became a hit and made Gordy and Davis a sought-after commodity. Jackie Wilson's hit "Reet Petite," by Davis and Berry Gordy, became one of the most popular songs in the country. Still, after several consecutive hits, the writing team had little financial gain to show for their work.

Gordy therefore set out to build his publishing company, Jobete, and own record label, Tamla Records, in 1959. Gordy had discovered Smokey Robinson's group, the Miracles, and after the local success of their first single, he began acting as their manager as well as producer. (Robinson, invaluable to Gordy, stayed with the company for years, becoming a Motown executive.) Gordy next achieved an instant success with newcomer Marv Johnson singing "Come to Me." United Artists bought the recording and soon Gordy had signed another act to that label.

Gordy launched another label, Motown Records, with "Bad Girl," a collaboration with his friend Smokey Robinson. Motown, affectionately named after the "Motor City," Detroit, would be the label used for group acts, rather than solo artists which were still being recorded on Tamla. Gordy found himself short of cash to release his new record and hustled desperately to raise funds until Chess Records bought the recording. "Bad Girl" proved a hit for the Miracles only to be followed by the even more successful "Way Over There," which achieved hit status on a national level.

Gordy and his companion (he was divorcing his first wife) moved into a house at 2678 West Grand Boulevard, dubbed "Hitsville," that served as the company's headquarters. Gordy cowrote one of the first hits recorded in the house's improvised studio, "Money (That's What I Want)." Motown was likened to a Detroit assembly line, where artists came in as unknown, raw talent and were built into stars. International Talent Management, Inc. was created to oversee their development. Gordy borrowed concepts, such as quality control, from the Detroit car plants and applied them to his business. He even used the division of labor principles he had seen at work on the assembly lines: performers performed, songwriters wrote songs, and producers recorded them, with little switching between roles. In spite of its mechanistic efficiency, the "Motown Family," which included many of Gordy's own relatives, embraced its employees in a sort of familial paternalism.

Greatest Hits of the 1960s

The 1960s would be Motown's golden years. When the decade started, "Shop Around" by the Miracles was the second bestselling single in America (it sold a million copies). The next year, Motown signed the Supremes, then known as the Primettes. The Temptations, Marvin Gaye, and Stevie Wonder soon followed. In 1962, the Marvelettes gave Motown their first number one pop hit, "Please Mr. Postman."

The innovative Motortown Revue toured the country promoting the label's acts. In 1963, the writing and producing team of Brian and Eddie Holland and Lamont Dozier began working together, soon creating a unique string of hits, such as "Heat Wave" by Martha Reeves and "Baby I Need Your Loving" by the Four Tops. Motown also released Martin Luther King, Jr.'s speeches on the Gordy imprint in 1963. After King's slaying, Motown artists played a benefit concert for the Poor People's March to Freedom.

Mary Wells left the label after gaining a level of fame. However, the Supremes finally hit it big in 1964 when "Where Did Our Love Go" reached number one. The follow-up, "Baby Love," became Motown's first number one song in Britain. "Come See About Me" gave the "girl group" three top hits in a row.

In 1964 several Motown stars toured Europe. By introducing standards into the repertoire of the Supremes, Motown was also able to book its acts on the lucrative nightclub circuit, including New York's famed Copacabana, previously dominated by established stars such as Frank Sinatra.

Motown's fortunes rolled ahead, and its stable of productive writers grew. In his autobiography, Gordy credited much of the label's marketing success to employees like Barney Ales, a master salesman of Italian descent. The expanding company moved its administrative offices to downtown Detroit.

In 1968, the Holland-Dozier-Holland writing/production team defected in a flurry of multimillion-dollar litigation. After Motown's initial $4 million complaint, HDH filed a countersuit accusing Motown of failing to pay all royalties due. The parties finally settled in 1972.

In spite of the change in writing staff, the hits kept coming for acts such as Marvin Gaye and Gladys Knight and the Pips, who, oddly, both reached the number one slot with different versions of "I Heard It Through the Grapevine" within a year of each other. During the last week of 1968, Motown had half of Billboard's Top Ten singles. In 1969, it signed what would become one of the most popular acts of the 1970s, the Jackson 5. After maintaining a West Coast office for several years, the company relocated its corporate headquarters to Los Angeles in order to help foster movie deals.

The Soulful 1970s

The Jackson 5's first single, "I Want You Back," reached number one on the charts in January 1970. By April, their second single, "ABC," had displaced the Beatles' "Let It Be" from the first position. A third top hit, "The Love You Save," followed in June and their fourth single, "I'll Be There," also made number one--an unprecedented feat for a new act. At the same time as the Jackson's upbeat success, singer Marvin Gaye insisted upon producing a protest album, What's Going On, which sold surprisingly well.

Meanwhile, Diana Ross had left the Supremes to launch a solo career. Her development was a high priority at Motown. In 1971 she starred in a film Motown coproduced, Lady Sings the Blues, based on the life of the legendary jazz singer Billie Holliday. It garnered four Academy Award nominations. In 1974, another Motown Productions feature, Mahogany, also starred Ross. The video unit would also turn out a respectable body of made-for-TV specials and a miniseries.

Motown Record Corporation was restructured in 1973. At the time it was taking in about $46 million per year. Motown Industries oversaw Motown Records, Jobete Music, MPI (Motown Productions), and ITMI (International Talent Management, Inc.). Gordy appointed sales executive Ewart Abner president of Motown Records. Abner had earlier been president of another legendary, independent black-owned label, Vee Jay Records in Chicago.

In the mid-1970s, Stevie Wonder won three consecutive Album of the Year awards; his Songs in the Key of Life entered the Pop charts at number one. Still, Wonder was not beyond producing an expensive flop. His follow-up documentary soundtrack album, Journey Through the Secret Life of Plants, sold only 100,000 copies and was three years in the making. In 1975, a tumultuous year, Barney Ales returned to replace Abner as Motown Records president. An untimely upheaval came when the Jackson 5, concerned that Motown had not been promoting their records sufficiently, signed with CBS.

By the late 1970s, many of Motown's original roster of stars, writers, and producers had been courted away by other labels. The business had changed, and the process of making and selling records had become much more complicated. "Three Times a Lady," by the Commodores, was Motown's only Top Ten single for 1978.

On the brink of insolvency, Motown was forced to take a bank loan to continue operating. Fortunately for the struggling firm, Diana Ross, Stevie Wonder, and Smokey Robinson all delivered hit singles, enabling the company to pay off its loan within a year. Lionel Richie had left the Commodores to become a star in his own right, but the Motown artist and repertoire staff had uncovered a new generation of popular acts from Rick James to DeBarge. Jay Lasker replaced Barney Ales in 1979, ending Ales's long association with the company.

Eking out the Hits in the 1980s

Another parting came in 1981, when Diana Ross left Motown to record for RCA. She consented to appear, however, in a television retrospective staged for Motown's 25th anniversary, Motown 25: Yesterday, Today, Forever in 1984. The show gathered many of the label's legendary acts for a soul-affirming celebration and won an Emmy award in the process.

After interminable collection problems with independent distributors, Motown finally allied with a major record company, MCA, in May 1983. Within a couple of years, MCA had made overtures to buy Motown. MCA's offer seemed to undervalue Motown's hidden assets, such as its master recordings, and Gordy canceled the deal in December 1985.

The record business of the 1980s was difficult for Motown to master. Hundreds of thousands of dollars were then being spent to promote singles, and the music video became the chief tool in the music industry's publicity arsenal. Jay Asker, who had been reluctant to spend money on music videos, stepped down as president in 1987. While 25 Motown records made number one in the 1970s, Motown only reached that position eight times in the 1980s.

Sales negotiations with MCA resumed in 1988. This time, only the record company was offered, not publishing rights or film and television operations. MCA and the investment group Boston Ventures bought Motown Records for $61 million on June 29. Motown Productions was renamed Gordy-de Passe Productions. It and the Jobete publishing company became subsidiaries of the newly formed Gordy Company.

The Nostalgic 1990s

As difficult as the 1980s were, during the next decade the challenges increased. The average cost for music videos rose to $750,000 each. The company's only number one hits came from a new group, Boyz II Men. The company's president and CEO since 1988, Jheryl Busby, focused on Motown's back catalog, compiling box sets and other value-added anthologies in contrast to the budget-oriented re-releases of the 1980s. A new venture, the Motown Cafe, also focused on nostalgia. The first cafe opened in New York City in mid-1995.

PolyGram NV paid $301 to acquire Motown Records in late 1993. However, the label failed to turn a profit, much less regain its former hit-producing capacity. With declining sales of its catalog, which still brought in $45 million per year, and no major stars besides Boyz II Men, PolyGram CEO Alain Levy named Andre Harrell president and CEO of Motown in November 1995, offering $35 million in a five-year contract. A media account executive by day, Harrell had also developed a career as a hip-hop artist and started his own label, Uptown Records (which, like Gordy, he sold to MCA for a reported $50 million). Harrell's hugely expensive self-promotional campaign incensed many in the company, including some performers.

Motown lost nearly $70 million in 1996, with annual sales of about $90 million. Harrell, who had moved the company headquarters across the country to New York City, resigned his position in August 1997. Film producer George Jackson, who was responsible for Krush Groove, became president and CEO of Motown Records in late 1997. He was authorized to cut Motown's bloated staff. In addition, a new Boyz II Men album promised a positive beginning for his tenure.

PolyGram merged the rhythm and blues interests of its Mercury subsidiary with Motown in early 1998. The move eliminated some personnel (mostly from Mercury) due to redundancies and infused Motown's roster with a few new acts such as Brian McKnight.

In mid-1997, Berry Gordy finally parted with some of his publishing rights when EMI bought a 50 percent stake in his 15,000-song catalog for $132 million.