How Was STAX Records Built? - or -
How Was Any Independent Record Company Built?

STAX was not a RICH company.  In fact, it was a struggling company with about three dozen truly talented, soulful individuals that collectively didn't earn as much cash in ten years as Michael Jackson earns on one 10 day tour.  Until Isaac's "Hot Buttered Soul" album, STAX never actually had a genuine smash record.  STAX didn't start out with huge funding and a roomful of investors.

Really BIG money was never in soul music.  Rock artists of the 60s, such as the Rolling Stones, the Beatles, etc. were big, BIG money acts.  Very, very few black artists in that era could even hope to approach that level of record sales.  Some Motown artists, for example, the Supremes, could sell a lot of records, but never approached the sales level of white rock and roll.  These facts speak for themselves.

These statements don't in any way reflect on or diminish the greatness of STAX, and everyone connected to it.  STAX was THE GREATEST, and it should be obvious how much I love STAX.  Instead, this story should shed some light on the realities that existed back then.

Mostly, as we consider various aspects of STAX, our perspective comes from right now, the present.  In the 1960s, nobody at STAX had the vaguest notion that the popularity of STAX music would increase to today's proportions.  I believe more STAX music has sold in the last 15 years, than when the company was in business!  How could anyone know?  If an artist wasn't selling a lot of records, that artist was probably doomed - he would likely be dropped from the label.  And today, many of these obscure records are in tremendous demand.  Try and remember these two words: "who knew?"

Current interpretation of the STAX magic is not based on real time.  In real time, there were some major problems - the greatest being restricted funds available, and that fact affected everything.

Let's Do It Ourselves - Let's Build A Record Company

In the very early days, STAX wasn't much different than a record company that YOU could start in YOUR garage, right now, today.  Using that as an example, let's do just that!   There are only three basic conditions:

 

you're in your late twenties

all your friends, musicians, singers, and writers, are either in their teens or early twenties

nobody in this scenario has cut a hit record - yet

 

You're going to start a new record company with your own label, and build your own studio to cut hit records in!  You have fifteen good friends - musicians, singers, and writers, and all of them have unlimited faith in this idea.  Real, total commitment.

You'd go out and buy whatever you could afford - recorders, microphones, amplifiers, speakers.  You'd borrow what you couldn't buy.  Your friends or family might contribute, a few hundred here, a couple thousand there.  Your musician friends would bring whatever they happened to own, some of which might be high quality equipment, probably most of it not very high quality.  In any case, the musical equipment (amplifiers, drums, etc.) would either have to be constantly moved in and out of the studio whenever the players needed it, or it would have to be "spare" equipment that they didn't need for their own gigs.  Realistically, there aren't very many "spare" grand pianos or Hammond organs around.  You've borrowed and scraped together what you need to get started.  You've talked to a lot of other guys, visited a lot of studios, and you know you can record good, quality tracks.  You've learned a lot about maintaining a publishing company, so you start one for your writers.  It's almost all paperwork, so basically, all you need is a typewriter in the beginning.

Once you've actually recorded a few tracks in the garage, and learned how to get the most out of the equipment you have, it's apparent that you need a larger building to do this.  In getting this far, you realize you could do so much better, if only you had this or that piece of equipment, or better microphones, or a better mixer.  But first, you really need a large enough space to work in - a place where you can work late into the night if necessary.  There's a vacant movie theater not too far away, so you rent it for $100 a month.  It's large enough to have several studios someday, plus dozens of offices.  That can come later, right now, all you need is a studio and a control room.  But it's going to need some construction work inside - walls, partitions, some sound baffling, electrical work, lights, and so on.  So you borrow some more money and get started.  Since you have barely enough money to do the construction and electrical improvements, you won't be buying $27 per yard carpeting for the studio yet - that will have to wait.  In the meantime, you, and everybody else, are still working at your day jobs and/or playing in the clubs at night, to earn some money.  Two of the younger writers are still in high school, and work part time at a grocery store.

Fortunately, all your friends, the singers, musicians, and writers, believe and have total faith in this record company and studio, and they all have construction and electrical skills, too!  So the work proceeds smoothly.  Because the work is being done by "the family", it isn't costing thousands and thousands of dollars for a construction company to remodel the theater.  Finally, everything is in place, and you do some test recordings.  You fix some little problems, make a few minor adjustments, and you're ready to cut some RECORDS!

Up to this point, all the money is going out - nothing is coming IN.  None of your friends have been paid one dollar so far, all their work has been done on faith.  You've written up an agreement with everyone, stating how future profits will be shared between "the family".  Now it's time to cut some hits.

During the next several months, you reach in your pocket and buy cartons of tape, a couple of  microphones, other odds and ends that the studio must have, and you cut tracks.  And more tracks.  And more tracks.  You send some tapes of these tracks around to the local radio stations, hoping to get some interest.  Copies also go to some of the larger record companies - New York, Chicago, LA.  One or two of the songs are being played quite a bit on a few local radio stations, and people seem to really like them.  They call in and request them, and ask the DJs about them.  Suddenly, one day, you get a call from Pacific Records in Los Angeles!  Someone from Pacific heard one of these songs, and they're very interested in promoting and distributing it.  Basically, the agreement is - you will receive a $1000 advance against future record sales, you will provide them with a final mix tape, they will master it, press it, package and label it, advertise it, promote it, and distribute it through their established distribution channels.  This is IT!   This is what you've been waiting for!  For each copy sold, a certain amount of money will be paid to your record company, after Pacific recovers its costs.  The whole "family" hears the great news, and there's an OFFICIAL CELEBRATION PARTY at the studio that night! 

Within 30 days, $1000 has been deposited into the studio account.  Checks have been written to your musicians, singers, and writers, and more checks will be coming in the next few months, as the record sells.  The more the record sells, the bigger the checks.  You're in touch with Pacific every few days, keeping up with how many records they shipped, where they're going, and if they're selling.  Everyone in "the family" is excited, the enthusiasm is visible - and more songs are being written every day.  You cut more tracks, and spend more time in the studio.  You borrow more money to buy a few more pieces of recording equipment.  You rent a piano, and borrow an unused Hammond organ from a local church.

Six new songs have been cut and mixed, and you send the tapes to California to see about distribution for those songs.  Unfortunately, Pacific is only interested in one of them, though, and agrees to the same terms as the first record.  You feel these records are really good, and desperately wish you could find a way to get them into the market, or press and distribute them yourself.  If you had a few good people for a promotion department, like the bigger record companies, you could get these great songs out in the public yourself.

Although the first record is selling, it seems to have peaked.  It made it into the Top 100, but never got above 91 on the list.  A record on the charts is nothing to be ashamed of, so you go to the bank to see about a business loan.  If you had the resources to do it, you could put everyone in "the family" on a weekly salary, and, hopefully, expand record sales by pressing, promoting, and distributing them yourself.  The bank needs documents to see how much actual income resulted from that first record, and even though you're excited about it, you're a little ashamed to say that the total payments have only been $2370 so far.  That includes the $1000 advance, and another $1370 from record sales, after Pacific deducted its expenses.  After some negotiation, the bank agrees to loan you about one fifth of the amount you applied for, but that doesn't diminish your enthusiasm at all.  In your mind, you've already spent every dollar. 

For just a moment, let's consider the above.  You have a record out that peaked at 91 in the Top 100, and the gross income for that record is, to date, $2370.  At this point, you know sales for that record have basically ended, as the record is no longer being played very much in the markets it sold in.  From this total, you have paid the players, writers, singers, bought tape, paid the rent and electric bills, and cut several more tracks.  You threw a great celebration party, too.  And you've learned some very important lessons - only a little of the money from record sales trickles back down to the artists and producers and players and writers.  Actually, you haven't paid yourself anything at all from this record!

(Remember the scenario above?  Nobody involved in this adventure is over 30 years old.)

As the weeks go by, more and more tracks are cut, and a few more are picked up by Pacific for distribution.  Pacific has become very interested in an exclusive agreement to distribute your records, and ultimately, a contract is negotiated, which contains slightly better terms than the original agreements did.

One major problem you see with this agreement is that you're paying a very high price for the services of Pacific.  Much more of the profits could be channeled into your record company, if you could perform these services yourself, in-house.  You also realize that Pacific has its own artists, and you wonder if the promotion and distribution of your tracks are aggressive enough?  Or are Pacific's promotion people pushing their own artists and making less effort with yours?  These thoughts weigh very heavily in your mind.

Several more months go by.  Checks, although not in very large amounts, are coming in, and you've signed three new writers and three artists.  You finally put enough money on the side to buy carpeting for the studio, and, while you were at it, you built six offices in some of that spare space. 

At this point in the story, we come to a kind of crossroad.  In about one year, you've reached an excellent level of success, with several records selling and charting.  But it's not like the kind of success that a real HIT RECORD will bring.  You need a record at the TOP of the charts.  And you need artists that can do it again and again.

One possibility is that your record company will continue to cut records that are distributed and promoted by "non family" people in California, thousands of miles away.

Another possibility is for you to bring new people into "the family", and develop your own teams for promotion and advertising.  That will require a considerable investment.

And yet another possibility is that you will sell part of your company, taking in partners, to fund the growth requirements.  It's a huge decision.

As your company grows, so do the responsibilities.  Just about a year ago, you were stapling burlap, and building a soundproof wall.  Today, you face decisions that could literally put you back in the garage you started from.  How far do you go?  Do you believe enough to go into debt forever?  How will your decisions affect everyone else in "the family"?

Off On A Completely Different Tangent

Today, people talk a lot about the really great, vintage musical equipment used at STAX.  But it wasn't really great vintage equipment back THEN.  It was just average, typical stuff that you'd find in any music store.  And most all of it was fairly inexpensive, as some research will prove.  The old Fender amps and early Telecasters were a lot cheaper then - today you see them selling on Ebay for astronomical amounts.

Listening to early STAX records shows how marginal the recording equipment really was.  In many tracks, the distortion levels are unusually high, and some serious tape problems can be heard occasionally, if you're listening objectively.  Those recordings were crude - but they weren't intentionally crude.  In those early days, STAX - like any other young, starting company - simply couldn't afford to buy the very best equipment available.  These problems weren't restricted to STAX, all the smaller labels and studios were in exactly the same situation.  The huge, major corporations, such as ABC, Capitol, Columbia, etc., had the resources to maintain state of the art recording rooms.  I believe STAX wanted to buy the best, and eventually, they did.  But like any other independent record company, they had to wait until cash flow allowed that.