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June 18, 1937 – The founding of Deutsche Grammophon GmbH
Record with the music of Erhard Bauschke, 1937
The history of Deutsche Grammophon Gesellschaft goes back to 1898, when Emil and Josef Berliner founded the company in their home town of Hanover and proceeded to open up the European market for the recording discs they had invented. Until then, it had only been possible to make sound recordings on cylinders, and a new cylinder had to be produced for each recording. By contrast, the innovative matrix process produced flat discs which could be reproduced relatively easily. Thanks to this advantage, the discs prevailed within a very short time. Already the first year, some 25,000 records were being pressed every day – an incredible number back in those days.
The electro-acoustic recording process developed in 1925 and the boom of jazz and popular music also did their part to drive sales. In 1929, Germany’s recording industry celebrated its best year to date, with sales of 30 million records. It was unthinkable that the entire industry would face existential difficulties just a short time later. The delayed impact of the worldwide economic crisis started to be felt in 1932, exposing the structural problems of this branch of the entertainment industry – problems that were closely tied to the ongoing expansion of the competing medium, the radio. Record sales plummeted, totaling just 6 million industry-wide in 1934, with DGG accounting for nearly half of this total. Many small and very small record labels did not survive the crisis, and market leader DGG suffered a dramatic decline in sales. Even the recording stars of the day, such as the dance orchestras of James Kok, Oskar Joost and Erhard Bauschke, could business only marginally. The negative development could be mitigated only by slashing prices and introducing a series of inexpensive records costing just 2.50 Reichmarks instead of the earlier price of 4.00 Reichmarks.
Before an attempt could be made to sell the loss-making DGG – as intended by the primary shareholders, who had emigrated in 1933 – the company had to be fundamentally restructured. Negotiations with Telefunken – a subsidiary of Siemens & Halske and AEG – resulted in a conveyance agreement being declared for Deutsche Grammophon Aktiengesellschaft in 1937. At the same time, a consortium led by Deutsche Bank and Telefunken was established, which then founded Deutsche Grammophon GmbH. Concurrent with this campaign to save the company was the gradual stabilization of the entertainment industry. In 1936, 9 million records had been sold; in 1937, the total was already 10 million. Many of these sales were attributable to DGG, with its famous His Master’s Voice trademark.
As a result of the so-called Telefunken transaction in the spring of 1941, when Siemens & Halske as well as AEG undertook portfolio adjustments, all shares in DGG were transferred to Siemens AG. During the 1940s and 1950s, Ernst von Siemens, a music lover, made the company the clear industry leader in Germany and garnering international recognition with his successes. The grandson of Werner von Siemens, Ernst von Siemens worked passionately to build up a spectacular repertoire of classical music, financing these extraordinarily expensive recordings with pop and dance music – of which large quantities had been produced and also exported to other European countries during the war. He also fostered the up-and-coming conductor Herbert von Karajan.
The absolute heyday of DGG was in the 1950s and 1960s, when the company’s Polydor brand was a household name. Both the brand and the orange label with the stylized stars were designed by Siemens advertising consultant Hans Domizlaff. As of the 1960s, Siemens gradually exited from the record business.
June 14, 2012 – Dr. Frank Wittendorfer