Strategies of the Transnational Recording Industry

Since 1965, when Capitol Records arrived as a joint-venture operation with members of the Azcárraga dynasty, the music scene in Mexico had been

dramatically transformed by the heightened level of competition among the transnationals. This competition reflected a more general expansion of the transnationals' global reach, especially in Latin America, but also the rising profits from rock music. For example, citing the popularity of several noted U.S. rock groups, along with the Broadway musical recording of "Hair," RCA reported that in 1969 its Records Division recorded its largest sales volume to date. During that year, a new corporate headquarters had also been established in Mexico City.^[1] In 1970 the company reported that "popular music now accounts for more than half of all industry sales." Despite the weakness of the U.S. economy, the report continued, "both export sales and revenue derived from royalty payments [of records] from foreign countries increased" during the year.^[2]

For CBS, the growing market for rock and other music also had an important impact on corporate profits. Continuing its expansion into Latin America, in 1965 a new subsidiary was established in Colombia, and in 1966 the company reported on the phenomenal impact international record sales in general had had on the company: "1966 was the most successful year to date for CBS in the international record market. Offshore record sales were the highest ever achieved, climaxing a five-year period in which sales of CBS-produced records abroad nearly tripled.... The [Records] Division now has a subsidiary in every major European market. Acquisition of a wholly-owned subsidiary in San José, Costa Rica gave CBS a record pressing plant in that country and a record distribution organization through-out the Central American countries."^[3] By the end of the decade, CBS was fully immersed in promoting the rock revolution. "Our orientation at CBS is now, and always has been, directed toward the creative elements of business and art," stated the company's Annual Report for 1968. "Therefore, it is safe to say that when there are musical and cultural revolutions, we will be in the forefront."^[4] In 1970 CBS reported that "[r]ock and other music now especially popular among young people constituted over 50 per cent of the Division's sales."^[5] By 1971 CBS reported that its International Records Division was the company's fastest-growing segment, with operations in more than one hundred countries. Compared with average annual growth rates of 20 percent for domestic records sales since 1966, growth in international sales averaged 24 percent. In 1971 new recording studios were opened in Mexico, and a factory-office-warehouse complex was built in Argentina.^[6]

In Mexico, this global marketing strategy by the transnationals edged aside the role of local companies, especially in the production and distribu-

tion of pop music aimed at the youth market. In 1966 a local company operating under the name Discos Universales (DUSA) was established in Mexico City. Shortly thereafter the company underwent a complete reorganization designed to position itself for "a cautious, careful preparation for the competition coming up."^[7] By the end of the year DUSA was advertising itself as a company characterized by "youth, optimism, dynamism, aggressiveness [and] enthusiasm,"^[8] exemplified by a wide-ranging rock-music catalog that included such groups as Cream, Jimi Hendrix, Eric Burden and the Animals, and the Doors. These groups all appeared on labels controlled by the transnational recording company, Polydor.^[9] (Polydor was at the time controlled by the German company Deutsche Grammophon, which shortly thereafter fully merged with its sister company, Philips of the Netherlands, to form the transnational known today as Polygram.) DUSA, explains Herbe Pompeyo, who worked as an artistic director, "was a minor company ... with the objective of becoming a strong company."^[10] With the arrival of Polydor as a major share owner of DUSA in 1970, the company was indeed transformed into an transnational player with marketing linkages around the world.

Thus, by the end of the decade, the majority of foreign pop-rock bands were already represented through the four transnationals that now predominated: CBS, RCA, Capitol-EMI, and Polydor. Several local companies still acted as distributors for foreign labels, especially from Spain and Latin America, and certain companies, such as Musart, Peerless, and Gamma (a joint venture with Hispavox of Spain), in fact managed to distribute a limited number of foreign rock recordings via contracts with independent labels. Peerless, for example, distributed the Rolling Stones on the London record label as late as 1969. In another example, Musart (which had distributed the Capitol-EMI label up to 1965) still had the rights to the Liberty label, which produced such bands as Creedence Clearwater Revival and Canned Heat. And via Gamma, several U.S. labels, including Warner Brothers, United Artists, and Reprise, were all represented. Yet the transnationals, armed with greater resources and their wide-ranging rock catalog, clearly dominated the market for foreign rock. As far as Mexican rock was concerned, with the exception of Orfeón's earlier linkages with rocanrol, virtually all of the newer bands established contracts with the transnationals.

After 1968, the increasing demand for rock music was felt throughout the music industry, which intensified its efforts to promote and market a sellable rock product. This occurred at two levels. The first was an acknowl-

edgment that the middle classes, whose buying power largely defined the pop market, wanted greater access to rock music produced abroad. Up to this point, record companies largely contented themselves with compilation albums of selected hits by groups drawn from a master. Yet as the focus of rock shifted from hit singles to a rock-art concept embodied in album-cover design and song order, record companies came to recognize the need to accommodate changing consumer demand. As Enrique Partida recalls from his days with Polydor, "Well, the rebel cry of youth begins to resonate, and so you view it ... more from a market perspective: 'I've got to do something to keep this market from disappearing!' And sure, it was a rich mine [to tap]. I think that Woodstock had a lot to do with this.... Young people didn't want to watch a TV program anymore where they could see the same twenty hits they heard on the radio. They wanted their music. So, what did the companies do about it?"^[11] Direct importation was still too costly, though it would continue to provide a niche for private dealers. Instead, the option chosen by the companies was a strategy based on replication of the original album. This involved an exact copy of the contents taken from the master tape and a faithful reproduction of the album cover itself. Though pressed in Mexico, the album appeared virtually identical to its imported original.

Polydor was the first company to make this shift to in-country pressing with its introduction of the series Rock Power (written in English) in 1970. Each release in the series was dedicated to the presentation of a rock album in its entirety (no more composite albums of hits), with a replica of the original album cover. Superimposed on each cover, a reminder that this was a re-presentation and not the original, was the series' logo: a raised fist in the peace sign on one side and a frontal view of an electric guitar on the other, which together framed the text: "Serie rock power: La nueva generación eléctrica" (The Rock Power Series: The New Electric Generation). Polydor advertised "Rock Power" as "The conspiracy of sound": "Polydor presents the advance guard of a great musical movement. A series destined to be converted into the vanguard of rock in Mexico. [Featuring] only current great artists and groups, [with] their best creations."^[12] Recognizing the significance of this marketing move, the other major companies followed in direct suit: CBS with "Rock Revolution," Capitol with "Convivencia sagrada," RCA with "Heavy Blood," and Gamma with "All Sounds of Rock." As their music catalogs expanded, so did the perspective of personnel responsible for introducing the new music. Indeed, if the companies had initially been outpaced by individuals in their role as agents for foreign culture, this was rapidly changing. As Herbe Pompeyo explained:

We [at Polydor] knew that, hey, if we're watching [foreign films], then we also have to be listening to Jimi Hendrix. Why? Because Mexico is part of the world, and that was a part of world culture. So if important books are coming into Mexico, and important movies are coming into Mexico, and there are also people like Simon and Garfunkel, the Mamas and the Papas, Crosby, Stills, Nash, and Young ... they also had to be distributed in Mexico. Because we couldn't be separated from what was happening in the world.... This was world culture. I believe there are things that are not specific to one's nationality.^[13]

This marketing shift also had important repercussions within the communications media as a whole. At the time, at least three radio stations in the capital featured English-language rock, but programming was based overwhelmingly on passing hits rather than a more in-depth exploration of new rock groups and trends. With the change in attitude at the record companies, however, came an abrupt shift in commercial radio programming. As one writer recounted his discovery of the rock-specialty program "Proyección 590," "Cool, great, at last we were listening to short-wave radio! We anxiously waited for the song to end so we could find out what the transmission was and figure out what feat we had achieved.... Whaaat? It was radio 590! We hadn't left Mexico City! We kept listening, where it was explained to us that this was a new program that only transmitted the best music from the U.S. and Britain, the music which created and applauded La Onda."^[14] Another rock station, Radio Exitos, likewise began to promote a new format. In an advertisement from the newly founded magazine Piedra Rodante (based on material drawn from Rolling Stone ), the hip language of La Onda was adapted in a play on words: "Radio Exitos agarra el patín." Here patín referred to patinar (to skate: a roller skate constitutes the visual image of the advertisement), and agarrar el patín meant "to be with it." The advertisement continued: "Jim Morrison. Rolling Stones. Jimi Hendrix. Janis Joplin.... Each week Radio Exitos dedicates itself to praising the contribution of the great creators of rock. Their life and their music is commented on and presented throughout the course of the day in the first attempt to introduce seriously and rigorously the most important movement of our time, the music of rock."^[15] At Radio Educación, the university station that prided itself on its high cultural programming, the first of what later developed into a wide range of weekly shows dedicated to rock culture also appeared.^[16]

The massification of rock at the end of the decade via the transformation of the marketing structure—the promotion of native bands, the expansion of music catalogs, the shift in programming on local radio stations—

accelerated the accessibility of rock to urban youth. The initial contradiction of rock's intrinsic characteristic as a mass cultural commodity but with limited distribution was being overcome. Increasingly rock as a commodity was becoming accessible to larger segments of society. Commenting on the shift in strategy at Capitol Records, one critic noted that "the list of consumers will expand to reach the marginalized and popular sectors [of society], as a result of this correct projection [of rock music] toward the general public."^[17] Together with the continuing proliferation of scores of native rock groups, not only was a more ambitious marketing strategy emerging—one that sought eventually to internationalize native bands—but the very fabric of the Mexican counterculture was developing in a complex and contradictory direction.

While the wider distribution of foreign rock reflected one level of shifting strategy to accommodate heightened demand, a second level involved the wider latitude afforded local musicians. Pressed into performing Spanish-language covers, native bands since the late 1950s had continually been frustrated by the conservative position of the cultural industries. Around 1968, however, this conservatism had begun to give way to greater experimentation. As one young producer with Capitol Records stated toward the end of 1968, "We're waiting for the important language of youth. The doors are open.... It's possible that rock is foreign to our culture, because we do not have the influence of blacks, but we do have a musical language that has been totally influenced by rock 'n' roll."^[18] This call from the recording industry was widely heeded by musicians, who now openly rejected the fusiles that had defined the vanguard of rock in Mexico since the mid-1960s. Participation in the "universal rock movement" meant more than simply consuming direct copies of others' hits; it also meant producing hits of one's own making. "[A]ny mental retard can put together a cheesy band that dedicates itself to copying and [making] ridiculous translations of the gringos,"^[19] wrote one rock critic. On the other hand, being truly modern, participating in the global movement of rock's transformation of modern society, required the dialectical construction of new musical sounds, as well as new rock gestures. (Indeed, the success of Mexican-born Carlos Santana proved that a role existed for Latin rhythms, if not for Mexico especially, in this global cultural-revolutionary process).^[20]

Measuring a group's dedication to this dialectic increasingly became the norm for critical acceptance by rock critics and fans. Writing about a Chihuahuan band, Los Químicos, one critic noted, for example: "They prefer UNDERGROUND (subterranean) music to any other kind, which is to say they love the blues, acid rock and hard rock, although they also dig pure rock....

[B]ut they also have original compositions, because for them ORIGINALITY is very important, something that is lacking in the rest of Mexico's [rock] groups."^[21] No longer content with either refritos or fusiles, Mexican bands after 1968 began to write original compositions, but overwhelmingly in English. The influence of foreign rock on a native idiom had come full circle; many bands would soon cultivate an image aimed at an international audience.^[22] Whereas before Mexican bands found their efforts at originality blocked by the recording companies, suddenly their music was embraced at all levels of the cultural industries. This shift reflected the more aggressive pursuit of local talent, especially by the transnationals, in the context of a transformation in industry strategy more generally. For at the same time, the very success of the fusiles had acted as a "launching pad," in the words of Enrique Partida of Polydor, for the mass marketing of foreign rock throughout the country.^[23]

A clear example of this transition from fusiles to original compositions comes from the group La Máquina del Sonido. Contracted through CBS Records, they encountered fame through a cover version (in Spanish) of the Iron Butterfly song "In-a-gadda-da-vida," which was played on local radio. Then, in a dramatic marketing shift, CBS allowed them to produce an album of original music (with songs in both English and Spanish).^[24] Jose G. Ayala, artistic director for CBS at the time, wrote for the album's liner notes: "The moment has arrived: Mexican rock groups (or at least, those here at CBS) are forgetting about copies. All of the groovy sounds that are heard on this album are totally their own." Víctor Blanco Labra, founding editor of POP magazine, was also quoted on the liner notes: "La Máquina del Sonido [is] an original anti-fresa, underground group that rejuvenates our faith in the productivity and creativity of Mexican rockers."^[25]

Generally speaking, the transnationals were not only more eager but better equipped to record original music. This was true for a number of reasons. For one, the transnational subsidiaries generally featured newer equipment and better production expertise. Continued capital investments by the transnationals—for instance, to upgrade plant and technical facilities—were a steady feature during this period.^[26] Second, common knowledge had it that recording with a transnational improved one's chances of reaching a broader public, likely even beyond the nation's borders. The "attendant advantage" of "[m]embership in a transnational system," as one author has put it, is that marketing and promotional campaigns are likely coordinated at a regional and international level simultaneously. "In other words, the transnational corporate system facilitates the recognition and seizure of opportunities in several markets at once while other firms are more narrowly

intent on pursuing opportunities in only one."^[27] In adopting an English-language performance style, these groups now aimed directly for the U.S. and European markets.^[28]

A third reason was that the major local competitors either largely stood clear of this nueva onda of rock music or were dramatically overshadowed by the corporate reach of the transnationals. Orfeón, a major player during the refritos phase of rocanrol, had just a few new contracts of note, most of which were unstable. Lacking a definitive association with the distribution of foreign rock and having earlier dedicated itself to promoting Spanish-language covers, Orfeón did not actively pursue the new market for Mexican rock. Responding to the question of why the company was not more aggressive, Carlos Beltrand Luján, a former marketing agent with Orfeón, recalls: "Yes, there was a market, [and] perhaps we lost our compass a little bit there. We didn't have much economic success with what we used to carry [refritos], and we dedicated ourselves to other [musical] tendencies such as balada and promoting other new artists. The [rocanrol] groups that we had launched, well, the public was losing interest in them and that ended.... We moved away from rock; they were selling the original much more than the covers, that was the reason."^[29]

In fact, the decision by Orfeón and other local companies not to invest heavily in the new wave of bands turned out to be economically astute: for a number of reasons, their popularity and promotion were short-lived, as we will see. While the transnationals ultimately could afford to incur certain investment losses, for other companies the shift in resources probably would have been financially more significant. One important exception to this development was the small recording label Cisne, which emerged around 1966. Joining forces in the 1970s with a second small label, Raff, the Cisne-Raff studios not only recorded some of the most important native rock in the early 1970s but, in continuing to produce albums after this period (especially by Three Souls in My Mind), directly sustained the native rock movement after the transnationals had broken or otherwise abandoned their existing recording contracts.^[30]