Did Allen Klein Really Ruin the Beatles and Cheat the Rolling Stones?
Allen Klein, the controversial music executive often accused of getting rich off his artists is recast in a more sympathetic light.
Fred Goodman’s savvy, evenhanded biography of one of the music industry’s most controversial figures is likely start arguments even with its title: Allen Klein: The Man Who Bailed out the Beatles, Made the Stones, and Transformed Rock & Roll.
A lot of people who butted heads with Klein, or who know him only by the fearsome reputation he acquired in the 1960s and ‘70s, would be inclined to rewrite that as, “The man who broke up the Beatles, cheated the Rolling Stones, and turned rock ‘n’ roll into a sleazy, money-driven business.” Not true—or at least, not the whole story—avers Goodman, a former Rolling Stone editor and author of several smart books about the complex interconnection of commerce and art in popular music.
When Klein joined an accounting firm that serviced music publishers in 1957, rock ‘n’ roll and 45 RPM singles were fueling a huge market expansion. While the record companies were striking it rich with hot new stars like Elvis Presley, music publishers (and their accountants) were in the boring business of making sure copyrighted songs received their proper royalties when they were recorded. Klein’s aha! moment came when he was sent to Los Angeles to check the sales figures of a record company, and his audit revealed widespread underpayment to the publishers.
“If that was the situation for…a group with the professional organization, money, and wherewithal to police record-company payments,” Goodman writes, “how bad was it for the performers?”
Klein made his career by promising performers to get them the big bucks their record companies already owed but that, without his help, they would never be able to extract from haughty executives who regarded them as employees. “Klein wasn’t just going to challenge the economics of the deal; he wanted to upend the entire relationship,” Goodman explains. “It wasn’t the companies that were irreplaceable; it was the people who made the records.”
Klein took his cue from the movie industry, where actors like Burt Lancaster were forming their own production companies and making distribution deals with studios, transforming themselves from salaried employees into independent entrepreneurs who kept much more of the money their films made. When Klein, now in business for himself, hooked up with soul singer Sam Cooke in 1963, he crafted a similar strategy for musicians. Klein set up a company for Cooke that produced, manufactured and packaged his recordings, which it then sold to RCA for resale to retailers. Cooke’s company owned the recordings and gave RCA exclusive rights to distribute them for a finite period of years, in return for payments much higher than the royalties Cooke had formerly received.
This unprecedented new contract gave Klein the reputation of an aggressive advocate for artists with record companies that routinely stacked the contractual deck against them. His tactics were particularly attractive to the British Invasion bands swarming across America in the Beatles’ chart-topping wake, only to watch their English record companies collect millions from U.S. sales while paying them reduced foreign royalty rates.
Klein had already struck better bargains for the Animals and Herman’s Hermits when the Rolling Stones’ flamboyant manager came to him for help; Klein got the Stones’ American and English contracts separated and negotiated advance royalty guarantees of $2.6 million. It wouldn’t be long before the Beatles (well, three of them) were begging him to fix the financial mess they were in thanks to lousy deals made by their manager Brian Epstein and a hemorrhage of cash from their idealistic, mismanaged “hippie corporation”: Apple.
This is a business book, with lots of financial details and not much about the sex and drugs side of rock ‘n’ roll, but Goodman makes the nuts and bolts really interesting, linking them to the seismic shift in music-industry economics that Klein instigated. Sharp thumbnail sketches of various performers, managers, and record company executives also liven things up, and Klein himself is a titanic character worthy of a novel. As insecure and needy as he was belligerent, Klein was never shy about making it clear that he was the smartest guy in the room, and he always needed to win. He could also be a wonderful boss and a devoted business manager, so long as you didn’t mind an employer who worked you to death or a financial advisor who enriched himself from the clever dodges he designed to minimize your tax bills.
Klein may have changed the music-industry balance of power in artists’ favor, but he also inserted himself into his clients’ business affairs in ways that frequently crossed the line into conflict of interest, Goodman judges. Performers were less grateful about the boatloads of cash he generated for them when they realized it was stashed in holding companies Klein owned that doled out the cash in installments over many years while he made money investing it. And they were infuriated when they discovered that he somehow wound up owning their original masters and publishing rights. The Stones broke with him in 1970; the next year, Paul McCartney sued the other three Beatles to dissolve their partnership, a move clearly aimed at Klein, who had been hired over McCartney’s objections.
After many rounds of litigation, the only thing Klein was ever convicted of was making false statements on an income tax return, and his friends in the music business (yes, he did have some) felt this was at the very least a case of “extremely selective prosecution.” New clients weren’t exactly banging on his door, but the rights he retained to the Stones’ and Sam Cooke’s catalogues kept him financially comfortable until he died in 2009. Goodman doesn’t waste a lot of space on those years, judging correctly that Klein’s significance rests on his groundbreaking work in the ‘60s. This astute and lively chronicle of that decade makes it clear that however rapacious and occasionally unethical Allen Klein was, he was also a transformative figure in an industry that deserved to be shaken up.