Jerry Moss Fiercely Opposed CDs — But Then They Made Him (and A&M) Super Rich

Jerry Moss once spent a day in Athens, Greece, screaming at the heads of the world’s top electronics companies during a Billboard music-industry convention. It was 1981. Sony’s Norio Ohga and Philips’ Jan Timmer were trying to persuade record executives to switch from their beloved LP to this new, high-tech “compact disc,” and Moss, co-founder of storied indie A&M Records, which would break Janet Jackson, Sting, Soundgarden and Blues Traveler, led the opposition. 

Moss, who died Thursday at 88, believed CDs “would kill the industry because the perfect digital master would invite and facilitate piracy,” according to John Nathan‘s 1999 book, Sony.

As I was researching this subject for my own book, Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age, I had to verify this claim. Nathan described a mob of outraged record execs chanting, like soccer hooligans, a “slogan that sounded like a Madison Avenue nightmare”: “The truth is in the grooves!”

This was the generous and magnanimous sales expert who was endlessly patient with his artists, willing to lose money on an album to advance a long-term career, whom Sting would describe as an “elder brother, a wise head, a man’s man and a mensch”?

I was sure Moss would be too embarrassed to rehash this history, because, eventually, the CD helped him and his partner, trumpeter Herb Alpert, become super rich, selling A&M to PolyGram for $500 million in 1989. (That’s $1.23 billion in today’s dollars.) But the exec who co-founded A&M with Alpert in a garage in 1962, after selling the master for Alpert’s Tijuana Brass instrumental “Tell It to the Birds” for $750, quickly agreed to a phone interview – and a wonkier follow-up later.

“I made a bit of a small statement at the meeting,” understated Moss, who at the time of our interview was running his post-A&M label, Almo Sounds, which had signed Gillian Welch as well as Garbage and Imogen Heap. “I liked the hardware and the whole ease of the CD, and I generally applauded the idea that Sony and Philips were getting together on this one piece of machinery.

“But,” he added, “I thought they could have done something to stop piracy.”

On Second Thought…

What finally turned Moss around was the economics of the CD. The price of vinyl records was stuck at $8.98 — and after Tom Petty threatened to affix a huge “$8.98!” sticker on his 1981 album, Hard Promises, his own label, MCA, and the rest of the industry were blocked from raising prices. The CD allowed A&M to “charge a multiple for this thing,” Moss said. Also, retail stores were charging labels for advertising — a “mighty blow,” Moss called it. After disco crashed in 1979, LP sales plunged. “Retailing and selling became very pinched,” he added.

“The retailers wanted more and artists and producers wanted more for what they were doing. The record companies were getting squeezed further and further,” Moss went on. “And here comes the CD.” 

The shiny, futuristic format was in high demand, and retailers were willing to buy it from labels for $10 wholesale, far higher than the LP, then sell it to customers for $16.

“So A&M, after just a tiny bit of study, decided this was going to be our future,” Moss said.

Like the bigger labels, A&M had to find plants to manufacture the CD, quickly making a deal with a German company. And the CD, to which Moss had been so screamingly opposed in 1981, made A&M profitable beyond anything Alpert and Moss had once imagined: “The company was a different company from 1979 to 1989, certainly.” 

A Bittersweet Sale

Alongside Alpert and the late Gil Friesen, then the day-to-day operations exec who referred to himself as the ampersand in A&M, Moss decided they had no choice but to sell the company they loved. Music stars in the late ’80s and early ’90s were demanding multimillion-dollar advances, and, as an indie, A&M couldn’t compete with bigger labels for the up-front guarantees. The trio stayed on for a couple of years after the sale, but PolyGram had a mandatory retirement age of 61. In 1991, Moss found himself with a new boss, Alain Levy, who became PolyGram’s worldwide president and CEO, and, Moss recalled, “wasn’t laughing at my jokes.”

(In 1998, PolyGram was sold to Seagram, which merged it with Universal Music Group, today the world’s biggest label.)

“I don’t regret selling, because I felt we had nothing but to do that. There was no alternative. We would have had to have gotten a lot smaller, and gotten our investment in different, other ways,” Moss told me. “I can’t say I’m sorry I sold A&M. I will say I’m sorry I had to leave.”