Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age

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1979-1982

Disco Crashes the Record Business, Michael Jackson Saves the Day, and MTV Really Saves the Day

One man almost destroyed the music industry in the late '70s.

His name was Steve Dahl, and he was a roundish Chicago rock disc jockey with huge glasses and a shaggy bowl cut. In a maniacally nasal voice, he pioneered shock radio with his outrageous stunts. Once, during the 1979 Iran hostage crisis, he made random on-air calls to Iran and savagely mocked the first person with a foreign accent to answer. But the WLUP-FM DJ didn't find widespread recognition until he started smashing Donna Summer records in the studio, calling to arms a crazed group of followers he dubbed the Insane Coho Lips.

Dahl's hatred for disco ran deep and personal. He had taken a long road to his first Chicago job, dropping out of high school at age sixteen to work at an underground station near his home in La Cañada, California. He scored a few DJ gigs and married a young woman who'd called one night to request Leonard Cohen's "Suzanne." Naturally, they divorced. But when he was nineteen, less than a year after they'd split up, Dahl sat in his Subaru in front of her house, waiting all night for her to come out. This was the 1970s, so rather than having him arrested for stalking, she used personal connections to land him a morning-show job at a struggling station as far away as possible, in Detroit.

Almost overnight, Dahl turned his new station's ratings around. Big-time Chicago rock stations came calling, and Dahl accepted a job at WDAI, where he worked until it abruptly switched formats in 1978, dropping Led Zeppelin and the Rolling Stones and transforming into "Disco 'DAI." Pictures of the Village People started appearing in its promo ads. Dahl, a rock guy, had no choice but to quit. He accepted a morning-show job at another Chicago rock station, WLUP.

"I was just mad at my previous employer," the now-white-haired, still-Hawaiian-shirt-wearing Dahl says. "And Midwesterners didn't want that intimidating [disco] lifestyle shoved down their throats." The antidisco campaign became the centerpiece of Dahl's morning show with cohost Garry Meier. They invited listeners to call in with their most hated disco songs; after airing a snippet, Dahl and Meier would drag the needle across the record and queue the sound of an explosion. The show was wildly popular. When the duo offered membership cards to a kill-disco organization, ten thousand listeners called the station within a week to sign up. Dahl took the show on the road, packing a suburban Chicago nightclub with a "death to disco" rally. But what was so intimidating about people dancing in nightclubs? Why did rock fans in Chicago hate disco so much?

Because it sucked. That's why.

The songs, the dancing, the roller-skating, the disco balls, the heavy makeup — it was all so massive, so goofy, and over the top. Andy Warhol, Studio 54, Skatetown, USA, "Disco Duck" — people were getting sick of this stuff. Besides, in order to make it with a lady, during the disco craze, a guy had to learn how to dance. And wear a fancy suit! It was an outrage. (It's also possible these rock fans hated disco because black and gay people liked it, although nobody talked about that in public.) Whatever the reason, the backlash was inevitable. Disco needed to be destroyed, and Dahl appointed himself the pied piper for this enraged crowd. He found a compatriot in twenty-eight-year-old Mike Veeck, a failed rock guitarist. "I loathed disco," Veeck said later.

Veeck happened to have an excellent forum for what would become the decisive event in Dahl's campaign: Comiskey Park, home of the Chicago White Sox. He was the son of then-Sox owner Bill Veeck, a seventy-five-year-old baseball legend. (When he owned the Cleveland Indians, the elder Veeck made Larry Doby the first black player in the American League.) With his father's permission, Mike Veeck and Dahl hatched a plan. On July 12, 1979, the White Sox were to play a night doubleheader against the Detroit Tigers at Comiskey. In the days leading up to the game, Dahl announced on the air that White Sox fans could enter the park for just 98 cents if they brought a disco record. Sister Sledge, Bee Gees, "I Will Survive" — it didn't matter. Everything would be obliterated.

The Sox averaged sixteen thousand fans at their home games that year, and they expected a few thousand people more than usual because of Dahl's stunt. They were completely unprepared for the army of fiftynine thousand fans who showed up at the first game, carrying stacks of Bee Gees albums in their arms. Another fifteen thousand spilled along the surrounding South Side streets. They wore Led Zeppelin and Black Sabbath T-shirts, smashed bottles on the ground, smoked Godknows-what and chanted their almighty rallying cry: "Disco sucks!" In the stands, sharp-edged records flew like Frisbees. The players were clearly unsettled. The Tigers' Ron LeFlore wore his batting helmet in center field during the first game.

Dahl was surprised. And nervous. He had prepared for a monumental failure, not thousands of minions waiting for him to lead. Wearing a green army helmet the size of a fishbowl and a matching jacket with wide lapels, looking like a hippie Colonel Klink, Dahl arrived in center field in a military Jeep between the two games.

"I didn't think that anyone would even show up," Dahl says today. The Sox fireworks crew had rigged crates of records to explode with dynamite. He managed a few incomprehensible screams and his best anti-disco catchphrase from the radio (borrowed from a popular Second City TV sketch of the time): "That blowed up real good!" It worked. Unwittingly, he rallied ten thousand fans to storm the field, climbing down the foul poles and turning the record explosion in center field into a raging bonfire. Sox officials hesitated to call in the cops for fear of stirring things up even further. They allowed fans to linger, shredding the dirt and turf beyond recognition. The senior Veeck and legendary baseball announcer Harry Caray impotently attempted to exhort people back to their seats over the loudspeaker. For thirty-seven minutes, Sox fans, disco haters, and all-purpose rabble-rousers united in a massive jamboree of public destruction.

One such Sox fan was a twenty-one-year-old South Sider who'd been sitting in the upper deck with six or seven of his friends from the neighborhood. One by one, they jumped over the barrier, then climbed fifteen feet down to the field. They were delighted to discover they could slide unmolested into third base and casually pick up bats and other paraphernalia their favorite players had left behind. The man was Michael Clarke Duncan, a stockroom employee at the Carson Pirie Scott department store downtown. You may recognize the name: He later broke into Hollywood and earned an Oscar nomination for his work as the hulking, doomed prisoner in The Green Mile, costarring Tom Hanks. None of the many TV newsclips of the scene captures Duncan, which is surprising, given that he stood 6'5", wore a huge Afro, and was one of the few black people on the field.

Duncan was also perhaps the only disco fan on the Comiskey field that night. "I loved disco music back then!" recalls Duncan, now fiftyone, a veteran of more than seventy movies, including The Island and Sin City. "I had the four-inch-wide shoes, the belt buckle, the tight pants with no pockets." He'd been to tons of all-night-dancing clubs, and his sister often let him borrow her stacks of Donna Summer records.

"After Steve Dahl did that, nobody wanted to wear the platform shoes in the following weeks. Nobody wanted to wear the bellbottoms," Duncan says. "People were like, 'Ah, that's getting kind of old now, things are kind of changing.' "

Dahl, who went to work the next morning expecting to be fired, wound up a bigger celebrity than ever. The week of the demolition, July 8 to 14, Chic's "Good Times" hit the Top 10 — one of six disco songs to do so. On August 18, three disco singles were in the Top 10. By September 22, the number dropped to zero. "It seemed pretty immediate. Bars that had gone disco immediately seemed to turn back into rock 'n' roll clubs. Live music began to thrive again," Dahl says. "All I know is that the Bee Gees and KC, of KC and the Sunshine Band, are still mad at me."

Disco sucks! Disco sucks!

It was the new mantra of white America. As a thirteen-year-old suburban Who fan, I myself carried a gold D.R.E.A.D. card, which stood for Detroit Rock-and-rollers Engaged in the Abolition of Disco. The local rock station, WRIF-FM, gave them out at concerts. My older brother, a station intern, brought them home by the boxload. Back then, they were hard-to-find totems of coolness. I must have owned three hundred of the damn things, not counting the fifty or so I gave out to kids on the block who suddenly wanted to be my best friends.

Almost thirty years later, the idea of furiously hating disco seems ridiculous. I dumped my D.R.E.A.D. cards in the trash during college, and I now hear Donna Summer and Chic as links in the musical chain between early-'70s funk and soul and the beginnings of rap music. Vicki Sue Robinson's "Turn the Beat Around"? Hot Chocolate's "You Sexy Thing"? It's incredible to me that rock fans would actually riot for the right to hear REO Speedwagon and Foreigner on their local airwaves instead. Anyway, disco's grooves never really died, they just went underground, in the form of house music and other big-city warehouse happenings of the early '80s. (That's not to mention every wedding in the universe, including my own, where the Village People's "Y.M.C.A." has been a dance-floor prerequisite.) Steve "Silk" Hurley, who as a high school DJ was souping up Chicago dances at the time of Dahl's demolition, remembers wanting to track down the records that hadn't blown up real good. "Most DJs never stopped," says Hurley, a Grammywinning remixer and veteran DJ. "It didn't affect me at all. I thought it was a joke."

But in 1979, disco had rammed headlong into the wall of the brick house. "People were trying to murder it," says Gloria Gaynor, who had the misfortune of peaking, with "I Will Survive," in the year of the backlash. "Someone was saying, 'I'm bringing in rock acts and every time I try to promote my record they're putting Gloria Gaynor or Donna Summer in my slot. And this sucks. Disco sucks.' I began to think it was an economic decision."

The reason disco died was economic, but it wasn't really a decision. As always, record labels went where the sales were, and for much of the late 1970s, that was disco. Soon, the boom made executives complacent when they should have been scouting for new talent. "The labels should have lost more money. They should have fucking closed for what they did," says Nicky Siano, who used to DJ in drag as two thousand dancers writhed all night at his influential The Gallery club in New York City. "Between 1974 and 1977, any record that had the word disco on it would just sell. People didn't have to hear it. They just took it and bought it. When the record companies saw that happening, they put any old piece of garbage in that wrapper. People started getting burnt, and they got really pissed off. And they stopped buying."

When disco fans stopped buying, record stores around the United States suddenly found themselves inundated with millions of unwanted LPs. The stores had to return them to the labels. It was a recipe for music-business disaster, and in 1979, labels started to crash. Sales plummeted that year by almost 11 percent after more than a decade of growth. The first to go down, in spectacular fashion, was over-the-top Casablanca Records.

Casablanca had been founded six years earlier by Neil Bogart, who had an ear for fads and a gift for burning through a lot of money. Born Neil Bogatz, he was a postal worker's son who learned show business by singing and dancing in the Catskills. His first industry job was ad salesman for the trade journal Cash Box, and by the end of the '60s, he'd worked his way up to president of a new label, Buddah Records. In its first year, Buddah made $5.6 million, thanks to bubblegum hits like the Ohio Express's "Yummy, Yummy, Yummy" and the 1910 Fruit Gum Company's "Indian Giver."

Bogart's specialty was elaborate, shameless promotions — some worked and some imploded. While at Buddah, he tailed a prominent radio program director through the streets of New York City in a rented limousine, using a loudspeaker on top of the car to blast the names of his acts. He also signed one of the most unique recording acts of 1969, the New York Mets, and dragged the entire team, many of them drunk, into the studio for an all-night session after they won the World Series. Buddah managed to release this album the day of the city's ticker-tape parade for the Miracle Mets, and an album of gimmick songs like a version of the Damn Yankees show tune "You Gotta Have Heart" sold nearly 1.3 million copies. Bogart also botched a new act, Elephant's Memory, a rock band that would later back John Lennon during his politically active phase in the early 1970s. Bogart surrounded the band at one showcase with inflatable elephants and various barnyard animals, and was surprised when they drew derision from the crowd.

Bogart flirted with bankruptcy until the mid-1970s, when he met Italian producer Giorgio Moroder, who introduced him to a gospelturned-disco singer named Donna Summer. With singles like Summer's "Love to Love You Baby," Casablanca rode the disco boom hard, going platinum on just about every record it threw into the marketplace. But more than songs or sales, Casablanca was legendary for its excesses. Quaalude dealing was rampant, as were elaborate food fights at the fancy restaurant across the street. Bogart equipped all fourteen of its executives with brand-new Mercedeses. He presented Donna Summer, when she flew from Germany to New York to promote her Love to Love You Baby album, with a life-size cake that looked exactly like her. It was even the same size. The cake, according to Fredric Dannen's book Hit Men, took two seats in a cross-country airplane and a freezer ambulance to get to Summer's performance at the Penta discotheque in New York. The company's executives were out of their minds. Promo man Danny Davis, who didn't do drugs of any kind, famously recalled talking to a radio programmer on the phone while a colleague trashed the stuff on his desk with a golf club, then lit the desk on fire.

"Almost anything could have happened at Casablanca," says Bill Aucoin, who managed Casablanca's most famous rock act, Kis, in those early days. "The first offices were a converted home with a pool house. If you went to the pool house at any time, day or night, as a record promoter or a DJ, you probably could get laid at any moment."

"[The office] was being used for nonsocial purposes," is David Braun's euphemism of choice. He would know. A veteran music business attorney who represented Bob Dylan and Michael Jackson, Braun moved from Los Angeles to New York to become president of PolyGram Records in 1981. PolyGram had purchased half of Casablanca for $10 million in 1977, thinking the disco hits would continue. Unfortunately for the label, Summer broke her contract and fled to industry mogul David Geffen's new record company. KISS's hits dried up — for a while. New acts like over-the-top rock band Angel, whose members would emerge from pods on stage, possibly inspiring a key scene in This Is Spinal Tap, never caught on. Then there was the tricky little matter of Casablanca executives shipping hundreds of thousands of records at a time, with little regard for public demand, and being unprepared when stores returned them. (This problem was common in the industry.) And as Steve Dahl's demolition suggested, the public suddenly wasn't quite as enamored of disco as it used to be. Braun had to clean up Bogart's $30 million mess. These missteps almost killed PolyGram Records, whose market share had jumped from 5 percent to 20 percent in the disco era. For a few years, it had been the world's largest record label.

Casablanca imploded, and so did the industry. (And so did Bogart, who died in 1982 at age 38 of cancer.) Although record companies' sales had climbed from just under $1 billion a year in 1959 to a Saturday Night Fever-fueled record of $4.1 billion in 1978, the antidisco backlash lingered from 1979 to 1982. CBS Records laid off two thousand employees and drastically cut its artist roster and budgets. Susan Blond, a publicity executive at CBS-owned Epic Records, says the company lost three hundred employees on her first day. Her staff eventually disappeared entirely. Blond's boss, CBS' flamboyant attack-dog chairman, Walter Yetnikoff, declared the industry "in the intensive care ward."

But then came the savior.

The former Motown child superstar arrived in a black leather jacket spilling over with belt buckles. He danced like a backwards angel, screeched and squealed, and — inexplicably — wore one white glove. In late 1982, Michael Jackson almost magically restored the music industry's superstar clout by releasing one record.

Jackson didn't do it on his own. The most important music business guy behind the success of Thriller was Yetnikoff, a coke-addicted, fastliving, bomb-throwing, disrespectful, disloyal provocateur. He grew up in Brooklyn, the son of a painter with a hot temper and a sympathetic mother who cleaned his wounds whenever his father knocked him around. His grandparents were Jewish immigrants from Austria or Poland — they were never quite clear which — and they spoke Polish and Yiddish around the house. They called Walter "Velvel," his Yiddish name. With his mother's encouragement, Yetnikoff picked up garbage and made city deliveries on nights and weekends to put himself through Columbia Law School. His first job out of college was at a New York law firm, Rosenman & Colin, where he met a young lawyer named Clive Davis. Harvard-educated and imaginative, Davis had tired of the legal business and taken a job as counsel for CBS Records down the street. Davis called Yetnikoff in early 1961 to offer him a job.

The head of CBS was Goddard Lieberson, an Eastman School of Music-trained man in impeccable tweed suits. He and Yetnikoff couldn't have been more different, but the crude Yetnikoff befriended the erudite Lieberson. Though Yetnikoff called Lieberson "Potted Lieberfarb" behind his back, the relationship stuck, and Velvel climbed through the CBS ranks around the same time the Beatles turned rock 'n' roll into a gigantic worldwide commodity. Through the 1970s, following Davis's lead, Yetnikoff grew rich off Miles Davis, Bruce Springsteen, Earth, Wind, and Fire, and Barbra Streisand. By the 1980s, in his own words, he'd grown into a "wild man," the bearded, squinty-eyed tough talker whose autobiography, Howling at the Moon, begins with this (fictional) sentence: "After her third orgasm, Jackie O looked at me with a mixture of gratitude and awe."

Yetnikoff was smart. To win the respect of Mick Jagger at a Paris wine bar, he calculated the value-added tax in France on a cocktail napkin. Jagger, a London School of Economics dropout, subsequently signed the Rolling Stones to a CBS record deal. Yetnikoff was also known for throwing outrageous tantrums. One of his legendary office exchanges with Larry Tisch, head of CBS Records's parent company, television monolith CBS Inc., ended with Yetnikoff threatening bodily harm and pounding his fist on the table. During a 1975 contract renegotiation with Paul Simon and his attorney, the mogul and the singer-songwriter's aggressive bargaining escalated into a full-blown argument, and Yetnikoff banned Simon from CBS Records's building for life. "Walter Yetnikoff was crazy and wild and weird like a fox," says George Vradenburg, former general counsel for CBS Inc. "He could yell and scream and throw things, and at the same time wink at me."

And Yetnikoff was fiercely loyal to his artists. He helped a post-Thriller Jackson weasel out of a promised duet with his brother Jermaine. Yetnikoff once referred to Bruce Springsteen's very serious 1982 masterpiece Nebraska as Omaha — in front of him, no less — but agreed to release it, even if it didn't sell, to make Springsteen happy. Which he did. (And it didn't sell.)

He cheated on his wife with his secretary. He cheated on his wife with a fellow music-business type he called Boom Boom. He snorted copious amounts of coke. He openly rebelled against his superiors at CBS. He tried to get Mike Wallace of CBS's 60 Minutes fired for investigating the music business. He engineered coups. "If anything," he said after an NBC payola exposé, which pegged him as a cokehead, "I became more defiant, more arrogant, more contemptuous of my adversaries."

But as the fast-living Yetnikoff suffered through the record industry's postdisco crash, he was growing antsy. Jackson's last album, Off the Wall, which had sold 8 million copies in 1979, was one of the few bright lights in a terrible year. Soon that minor gold rush had faded. By the end of 1981, CBS Records took in a little more than $1 billion, its worst yearly earnings since 1971. So Yetnikoff pressured his biggest star. With just months left in 1982, he gave Jackson and producer Quincy Jones a deadline: Finish a new album, and make it a blockbuster, by Christmas. They weren't happy about having to rush, but they obeyed and finished the final Thriller mixes in a month. They turned them in to Epic Records, for release just before Thanksgiving.

"I told you I'd do it," Jackson told Yetnikoff. "I told you I'd outdo Off the Wall."

Yetnikoff responded: "You delivered. You delivered like a motherfucker."

Jackson: "Please don't use that word, Walter."

Yetnikoff: "You delivered like an angel. Archangel Michael."

Jackson: "That's better. Now will you promote it?"

Yetnikoff: "Like a motherfucker."

Thriller, like Off the Wall before it, wasn't just brilliant music — it was brilliant business. Michael Jackson had effectively replaced disco by absorbing the dying genre into his own brand of dance music. Steve Dahl's Chicago demolition-turned-riot may have killed disco commercially, but the fans were still alive — and Jackson was a master of providing the slinky rhythms to warm their hearts. The melodies catch in your head in the perfect way. The bass lines sound like poisonous snakes. The rebellious anger in "Beat It" and "Billie Jean" is palpable but never over the top.

It was the right album at the right time: All seven of its singles landed in the Top 10, the album lasted a ridiculous thirty-seven weeks at No. 1 on the Billboard charts, and it went on to sell more than 51 million copies — the best-selling album in the world until the Eagles' Their Greatest Hits surpassed it (in the United States, anyway) in 2000. Thriller singlehandedly rescued CBS from its late '70s doldrums — the company's net income jumped 26 percent in 1983, to $187 million — pushing fans back into record stores and propping up the industry.

"Thriller was like Moses carrying all the Jews across the Red Sea,"* says Lee Solters, a veteran Los Angeles music publicist who worked on the album's campaign. "He rescued the music industry. The music industry suddenly became alive again." And as Thriller climbed the charts, it awarded even more power to Yetnikoff, the star maker with a direct pipeline into the reclusive Jackson's mysterious personal life.

Thriller's singles took off on the radio, beginning with Top 40 stations and crossing over to rock thanks to Eddie Van Halen's guitar solo on "Beat It." Then Jackson's people produced a video for "Billie Jean." It was sharp and clean, with Jackson in a pink shirt and red bow tie dancing all over the mean streets, and seemed perfect for a new music cable channel that had made instant stars out of nobodies like the Stray Cats and Billy Idol.

But there was a problem: MTV didn't play videos by black artists.

Miles Davis complained about the lack of black stars on the video channel, formed in 1981, which was rapidly growing its influence and power within the record industry. So did Stevie Wonder. Rick James, who had a smash radio hit with "Super Freak," publicly railed that MTV was "taking black people back four hundred years." Nobody at MTV adequately explained this unspoken policy in public. The closest thing to a defense came from the channel's only black VJ, J. J. Jackson, who told Davis at a party that the channel's format was rock 'n' roll, and most rock stations didn't play black artists, either, other than the late Jimi Hendrix.

Michael Jackson smashed through MTV's color line, but it was Yetnikoff who solved the problem behind the scenes. "I was the instigator, I guess," recalls Ron Weisner, Jackson's early comanager. "I took the finished 'Billie Jean' to MTV and they refused to air it. So I went to Columbia Records. Walter Yetnikoff and I went to [powerful CBS Inc. chief] Bill Paley. He called MTV and said, 'This video is on the air by end of business today or else Columbia Records is no longer in business with you.' One day changed the whole thing."

MTV cofounder Bob Pittman remembers the history a little differently. Then again, that story has been told and retold so many times, by so many people with conflicting interests and clashing egos, that it's impossible to nail down the facts. "I'll give you my story, which I hope is the true story, but God only knows," says Pittman, who would later be a top executive for AOL Time Warner and today runs a New York City media-investment firm called the Pilot Group. He'd heard about Rick James's complaints, but the "Super Freak" video, with its very kinky girls in Lycra and lace, didn't meet MTV's pre-Madonna standards. "It seems ridiculous today," Pittman admits. In fact, he says, the channel couldn't wait to play the Thriller videos.

Either way, the combination of MTV and Michael Jackson was a one-two commercial punch that began the resuscitation of the record industry. When MTV first went on the air on August 1, 1981, with the Buggles' "Video Killed the Radio Star," it was the product of a unique brain trust of frustrated and slumming music-business types waiting for something big and interesting to come along. John Lack, a thirty-threeyear-old rock fan and former CBS news radio executive, first came up with the idea. Marketing whiz Tom Freston was an advertising executive who'd worked on the G.I. Joe account before fleeing the toy business to hike through the Sahara with a girlfriend, then landed in Asia to run a fabric-export company. And John Sykes, who had been working at Epic Records, was responsible for the wildly effective promotional ideas. During MTV's early days, he offered a teen Van Halen fan fortyeight hours of "pure decadence" (i.e., Jack Daniel's and groupies) with the band. The slickest of the group, by far, was Pittman, son of a Mississippi Methodist minister. He'd begun his career as a fifteen-year-old DJ and worked up to program director for a planned cable-TV experiment called the Movie Channel.

Lack received a visit one day from Elektra Records founder and Warner Music executive Jac Holzman, who showed up in his office with a stack of videotapes. Some were of Holzman's old discovery, the Doors, who'd recorded an amateurish $1,000 film for "Break On Through" and aired it on afternoon TV dance shows. Others were surprisingly innovative clips, like "Rio," a psychedelic collection of rainbow-colored effects set to music by Michael Nesmith, formerly of the Monkees.

The clips gave Lack an idea. The idea. Music on television had been around for years in the form of weekly shows, from American Bandstand to Album Tracks. But nobody had ever attempted a twenty-fourhour music-video channel. Everything happened quickly after that. Lack, Sykes, Pittman, and Freston put on suits and ties, fired up Olivia Newton-John videos for middle-of-the-road executives at parent companies Warner and American Express and came out of the meetings with $25 million in financial backing. They scooped up as many old videos as they could find, and tried to coax all the major record label executives to send them new ones — for free. That part of the plan was not popular.

"John Sykes and I would go out to the record companies, and we would take a whole presentation: 'Look, the record companies are in the doldrums. The pitch is, you're losing money for the first time in decades, radio stations have very tight playlists, and when they do play your new stuff they don't identify what it is,' " Pittman recalls. "We said, 'We're going to play more music than they are, and when we play it we're going to put on the name of the artist, the album name, the song name, and the label. And it'll cost you nothing to give them to us. If this happens to work, we will change the record industry.' "

A few label chiefs were actually enthusiastic. Doug Morris, head of Atlantic Records at the time, signed on right away. Warner Bros. Records's Mo Ostin and Elektra Records's Joe Smith soon followed his lead. So did Gil Friesen, then president of the influential independent label A&M. But Sid Sheinberg, president of MCA-Universal, declared at an industry convention: "This guy Lack is out of his fucking mind." CBS's Yetnikoff shared Sheinberg's view — he still rued the day record labels had started giving radio their music for free some fifty years earlier. But eventually Yetnikoff's underlings and CBS's biggest-name artists started pressuring Yetnikoff. He had no choice but to sign on.

"I was a skeptic," says Joe Smith, now in his late seventies, retired and living in Beverly Hills. "I said, 'Now, why would anybody want to buy their record off of a video?' You're never that eager to give away your product to anybody." But labels agreed to part with a few small videos, and when an unknown band, Duran Duran, became a superstar purely through MTV airplay, Smith was convinced. "We said, 'Whoa! There's something happening here.' They convinced me. [Veteran songwriter] Van Dyke Parks, the head of [Warner's] video department — he was a lunatic, stoned twenty-six hours a day, he was making videos with Randy Newman and some of our other artists. We were investing money like crazy." Before long, David Bowie, Mick Jagger, and Pete Townshend were lining up to shout "I want my MTV!" on the air. Soon, other artists were jumping on board, too, like Tom Petty, Peter Gabriel, Talking Heads, and, most dramatically, a young Bay City, Michigan, singer and dancer named Madonna Louise Ciccone.

Music stars were huge again. They were on TV! The money from record sales, which had dropped precipitously in 1979 and wobbled up and down through the early 1980s, jumped 4.7 percent in 1983. Out of disco's ashes had risen a new sales monster, Thriller, which established the video-driven blueprint for fellow superstars Madonna, Bruce Springsteen, and Prince. "Like everything else, when the tide comes in, all the ships go up," says Dick Asher, who at the time was a top CBS Records executive and long-suffering Walter Yetnikoff underling. "It was not only good for CBS but good for the whole industry."

Asher didn't know it yet, but while the record industry had built gold-standard software (the music) and a revolutionary new international marketing tool (MTV), it still needed new hardware. And that was coming.

Veteran artist attorney David Braun began the 1980s by negotiating, on behalf of Michael Jackson, an unprecedented 42 percent of the wholesale price on each US album sold. The deal with CBS Records was extraordinary, given most superstars received 10 percent to 20 percent at the time. In 1981, Braun quit his law firm to become president of PolyGram Records. He lasted less than a year. He had spent so much of his career trying to secure the biggest possible advances for his artists, and hadn't seriously considered the constraints record labels were under when they'd tried to tamp down his numbers. As head of a major label, he was suddenly learning those constraints firsthand — and he didn't like them. But one day, during his short time at PolyGram, he showed up twenty minutes late to a historic meeting. Back then the label was owned by Philips and Siemens, two European companies that specialized in home electronics. An emissary from Siemens showed up at precisely 9:00 one morning to meet with the PolyGram staff about a small, round, shiny, silver object that stored data digitally. Nothing special, right? Braun had been on the phone with some artist managers, and by the time he straggled into the meeting, the Siemens guy was just about finished. "Unlike the Americans, when the Germans say 9:00, they mean 9:00," Braun says.

That meeting was the beginning of the compact disc business, although it wasn't like record companies saw the future and jumped in right away. Several label chiefs, including Walter Yetnikoff and Sid Sheinberg, had their misgivings. But once they did: boom. "I left as the compact disc was coming in," Braun says. "And the CD saved the industry."

Copyright © 2009 by Steve Knopper