The Beatles' Early Royalty Rates

George Martin with the Fabs, circa mid-1964.
We draw today from "The Beatles; The Biography," by Bob Spitz, Little, Brown and Company, 2005. The Beatles indeed reaped the rewards of their work throughout their career as a band. But no one made out better than EMI, the parent company to their label, Parlaphone.
Right around the time "Please PLease Me" hit #1 in England, George Martin admitted later that he began to feel guilt over how he had tied the Beatles down to the contract that they had signed. Brian Epstein (band manager), as well as the band, had been so utterly desperate when he first met them; Brian at Martin's office upstairs at Abbey Road Studios and later the band inside the Abbey Road studios that it was clear they would have signed just about any kind of contract just to get into a proper studio and record albums.
At the end of the Beatles' first full year, in the event EMI opted to pick up the option on the Beatles' contract, the band was guaranteed a 25% raise that would kick in at the start of each successive option year. Sounds good doesn't it? But, while sounding generous on paper, a quarter of a penny per disc was worse than miserly. Especially so considering the Beatles were fattening up EMI's coffers like no act ever before. George Martin knew it and thought it was "patently unfair."
Thus, as the Beatles' option date approached, he talked to L. G. Wood, one of EMI's vice presidents about doubling the Beatles' royalty rate immediately, rather than waiting. Wood agreed, provided the Beatles agreed to another five year option. Martin balked at the deal. Martin explained, "No, you don't understand. I don't want to ask for anything in return." He just wanted to give it to the band as a reward for their phenominal success.
What George didn't realize was that he had just unlocked a pandora's box. While dependent upon their artists for income and their support staff at the studios to help the artists, EMI operated much like a feudal monarchy that gazed down upon it's "subjects" like a wealthy and benevolent patron while not tolerating a iota of impertinence. EMI operated with impunity and whim. Whatever they gave out was non negotiable and the artists (as well as staff) better be damn happy to get what they got. Thus, the very idea that they should raise a royalty rate without getting something in return was unthinkable. Literally unthinkable. EMI was not programmed to think and react on the fly.
In effect, George Martin had committed treason as far as EMI was concerned. "From that moment on, I was considered a traitor within EMI," Martin recalled. However, the day after "From Me to You" was released in America, Parlaphone exercised its option extending the Beatles' contract for another year and increased their royalty rate from one penny to two pennies.
As for George Martin, he eventually left EMI altogether by early 1966 to form AIR studios. This was an independent recording studio and very ahead of it's time, at the time. George quit because of the lousy pay he was getting at EMI. His meager raises were the result of his existing contract, not the supreme production of the Beatles' fabulous singles and albums that were literally selling in the tens of millions. EMI just didn't care what Martin did and how well he did it; a contract was a contract and so, the greatest producer in a gereration and perhaps in the history of EMI was left to walk. Martin bet his entire future on the gamble that the Beatles would still want him producing their albums even if he wasn't with EMI. The gamble paid off and EMI was forced to hire Martin back at whatever rate he wanted to produce all the Beatles records because they wouldn't work with anyone else. Only the Beatles had that kind of clout with EMI. Lesser artists would be told to deal with whatever producer was available and that would be that.
Still, most people would agree that without Brian Epstein running all around desperately trying to land a recording contract for the band and finally finding a sympathetic ear in George Martin; and George Martin, who presciently "heard" something in the Fab's somewhat primitive Decca Audition tape and gave them their first crucial record deal, the story of the Beatles might very well have turned out much differently.
By the new millenium, record companies were in disarray and going broke due to Internet Piracy and a plethora of independent recording studios to say nothing of digital technology. Fans around the world thought nothing of taking music off the internet due to the arrogance of record companies like EMI and many others and the price of LPs over the years. Music publishing eventually gained control of internet downloading but not before most labels went bankrupt.
By John Haberstroh (Bassist for BeatleTracks) Find us at www.beatletracksband.com