Merchandising The Beatles (Expanded Edition)
Merchandising among today's music artists is quite common. I first became aware of this type of thing when I saw some Elvis Presley comic books in the late 50's. After Elvis came the British Invasion and the musical phenomenon known as The Beatles. I think that the merchandising that occurred during the heady days of Beatlemania was perhaps the most rampant branding of a group of music artists that I can recall.
From an article by Nathan Jolly on The History of Music Merch: "As with most things in modern music – it started with The Beatles. Every year the Elvis Presley estate pulls in $40 million in revenue, however Elvis Presley Enterprises, the arm set up to hopefully profit from Elvis merchandising was set up in 1954, and lay dormant for many years, until his death in 1977. Brian Epstein, The Beatles manager was an instinctive musical magnet, however as a band manager he was inexperienced and lacked forethought, which led to both the slew of official Beatles merchandise flooding the early ‘60s market, and the appalling low profits that the band saw from it. Of course, as with most new business opportunities, few saw the potential at the time. In late ’63 Epstein handed The Beatles merchandising arm over to his solicitor, David Jacobs who in turn handed it to Nicky Byrne who he had met at a party. They issued an official licence to companies in return for 10% of the profits. And so started the onslaught of tat. The meteoric rise of The Beatles meant that a lot of business deals were not accounted for, and records were shabbily kept, if at all. Their were no clear records of which companies were officially licensed to create Beatles merchandise, and the indiscriminate nature in which licences were issued meant that almost every imaginable product was affixed with The Beatles name or likeness. Press officer Derek Taylor recalls that a US company wrote asking if they could sell their bath water at one dollar a bottle. Elsewhere it was no less crazy. In 1964, a factory in the US was manufacturing 35,000 Beatle wigs per day, a Liverpool bakery sold 100,000 Ringo rolls in two days, and a Blackpool company received an order for 10 million sticks of liquorice with the Beatles’ name on it. Beatles chewing gum made millions of dollars within a few months, while in New York a ballsy entrepreneur marketed empty cans of Beatle Breath."
Beatles Bubble Gum
Beatles Hair Brush
Beatles Plastic Dresses
Beatles Hair Spray
Beatles Nylon Stockings
Beatles Vinyl Album Rack
Beatles Audio Headphones
The Beatles, Brian Epstein and solicitor, David Jacobs
Nems Selteab 1964 Beatles Dolls In Boxes George John Paul Ringo
"Seltaeb was a company set up in 1963, by Nicky Byrne (né Douglas Anthony Nicholas Byrne) to exclusively look after merchandising interests on behalf of Brian Epstein, who managed NEMS Enterprises and The Beatles: John Lennon, Paul McCartney, George Harrison, and Ringo Starr.
Directly prior to The Beatles' first American visit, Brian Epstein wanted someone to manage the escalating volume of merchandising requests that NEMS found itself unable to cope with, and asked his lawyer, David Jacobs, to oversee this task. Jacobs knew Nicky Byrne and asked him if he would be interested in taking over the merchandising subdivision from NEMS altogether, paying NEMS a commission. Byrne accepted the offer subject to a 90% rate, leaving only 10% for the Beatles and NEMS combined. Completely unaware of the potential market that existed, particularly in America, Epstein agreed to the deal, and subsequently lost The Beatles an estimated $100,000,000 in possible income.
In December 1963 Byrne took over the control of Stramsact in the UK, and then set up Seltaeb (Beatles spelt backwards) in the United States. Epstein was able to renegotiate a more favorable commission of 49% in August 1964, but then became embroiled in a three-year court battle with Byrne regarding payment of monies due, during which time potential sponsors lost interest. In August 1967 Epstein died, from what was ruled an accidental overdose of a prescribed drug. Jacobs, Epstein's lawyer, was found hanged in his garage on 15 December 1968. Byrne later retired to the Bahamas.
Before the Beatles achieved nationwide success in Britain, Epstein had permitted a small company (run by his cousins, and which initially catered only to fan club members) to produce Beatles' sweaters for 30 shillings and badges for six pence, eventually selling 15,000 sweaters and 50,000 badges as the Beatles' popularity grew. When Beatlemania stormed the UK in 1963, Epstein was besieged by novelty goods companies wanting to use The Beatles' name and images on plastic guitars, drums, disc racks, badges, belts and a huge variety of assorted merchandise. Epstein was adamant that the Beatles would not directly endorse any product, but through NEMS Enterprises he would grant discretionary licenses to companies who were able to produce a quality product at a fair price, although many companies were already selling products without a license.
When NEMS was swamped with offers of endorsements from America following the success of I Want To Hold Your Hand, Epstein, who was usually meticulous in matters involving the Beatles, decided to delegate this responsibility as he felt it was distracting him from his main task of managing his expanding roster of artists. He then asked Jacobs, his London-based, Hove-living celebrity lawyer (Jacobs's other clients included Marlene Dietrich, Diana Dors, Judy Garland, Liberace and Laurence Harvey) to appoint someone specifically to take over the assignment and gave Jacobs power of attorney in the matter. Jacobs at first handed the daily management of this to his chief clerk, Edward Marke, but it transpired that Marke knew almost nothing about the merchandising business, and so Jacobs was forced to look elsewhere.
Jacobs knew of a Chelsea socialite, a 37-year-old divorcé called Nicky Byrne, and when encountering him at a friend's cocktail party offered him the project, saying that 'Brian [Epstein] has made a terrible mess out of this [merchandising].' Byrne, who has said he had been 'sitting around doing nothing for half of 1963' was an ex-Horse Guard trooper and amateur racing driver. He had also previously been involved in music publishing, clothes design, theatre production, managing the Condor club in London, and was also known as being a part of a group of people who called themselves "The King's Road Rats". He had not had any previous experience of merchandising or managing a large business.
Byrne was at first reluctant but later agreed, and delivered the merchandising contract to Jacobs's office on 4 December 1963, leaving blank the percentages. Jacobs asked Byrne what percentage rate he should write down to which Byrne ambiguously replied: 'Oh, look, just put in 10%'; a typical percentage would have been 75% or 80% for NEMS, and Byrne expected Epstein would begin to negotiate. However, the contract came back initialed (meaning Epstein had read it) and signed by Epstein and Jacobs. Jacobs's advice to Epstein was, '10% is better than nothing'. This lapse of shrewdness set the scene for what would later become a legal battleground which deprived the Beatles and Brian Epstein of such large sums of money they would have easily overshadowed any royalties they would receive in the medium term from the sale of records. Byrne later said: 'They couldn't wait to get somebody else to do this, because they were in a mess themselves.' Epstein would later realize that he had made a colossal error of judgment, as Byrne charged 10% commission to the merchandisers for a license (receiving $10 out of every hundred) and then giving 10% of that to NEMS, which was $1.
Byrne controlled two companies: Stramsact in the UK and Europe, and Seltaeb in the USA. He invited five friends to become partners — four of whom were unknown to either Jacobs or Epstein — with each investing around $1,600. They were: Mark Warman, Simon Miller-Munday, John Fenton (a business acquaintance of Jacobs) Peregrine Eliot (heir to the ninth Earl of St Germans) and Malcolm Evans (not to be confused with Mal Evans, the Beatles' roadie).
During the first Beatles' flight to America Epstein was offered numerous samples of products by merchandisers who required a license to be allowed to sell them such as clocks, pens, plastic wigs, bracelets, and games. Epstein rejected all of them; directing the merchandisers to Byrne instead, who was already in New York ensconced in The Drake Hotel on Park Avenue at 56th Street. Byrne rented expensive offices on Fifth Avenue, hiring two limousines (on 24-hour standby) and a helicopter to fly clients to and from the airport, insisting that only the presidents of merchandising companies were allowed to talk directly with him, or with his partner, Lord Eliot, who helped to promote the company name with use of his title. Eliot would later recall going to the Seltaeb office once or twice a week to draw $1,000 from petty cash.
The Wall Street Journal predicted that American teenagers would spend $50 million during 1964, on wigs, dolls, egg cups, T-shirts, sweatshirts and narrow-legged pants, and the New York Times wrote that the Reliance Manufacturing Company's factories were 'smoking night and day ... to meet demand', and had already sold products valued at the retail value of $2.5 million. The Reliant Shirt Corporation paid $100,000 for a license and sold over a million Beatle T-shirts in three days, Remco Toys had produced 100,000 Beatles' dolls and had orders for another 500,000, and the Lowell Toy Corporation were selling Beatle wigs faster than they could produce them, at more than 35,000 per day.
Seltaeb licensed over 150 different items internationally: Beatle dolls, scarves, mugs, bath water, wigs, T-shirts, bubble gum, liquorice, empty cans of Beatle Breath, badges, and many more. The badges had 'Seltaeb 1964 Chicago Made in USA' on one side, and 'Green Duck Co., Chicago Made in USA' on the other. (The Green Duck metal stamping company was based at 1520 West Montana, Chicago, operating from 1906 until the late 1960s, making election badges for politicians, as well as memorial spoons). American businessmen saw The Beatles' merchandising as the 'biggest marketing opportunity since Walt Disney created Mickey Mouse'.[ The Columbia Pictures Corporation offered to buy Byrne's share in the companies for $500,000, with the incentives that the money would be paid into a low-tax offshore bank account in the Bahamas, Byrne and his partners would retain 50% control of the companies, and Ferrari cars would be given free to every partner, but Byrne turned down the offer.
Byrne passed on the first check for $9,700 to Epstein, who was impressed, but after innocently asking how much out of the amount Byrne was owed, was told, "Nothing Brian, that's your 10%". Byrne then went on to describe the massive amount of interest he was getting from companies across the USA. Epstein was horrified, realizing he had made an appalling error by accepting such a small percentage, and decided he could never tell The Beatles. He immediately instructed Jacobs to re-negotiate the contract with Byrne, which was finally achieved seven months later, in August 1964, which raised the royalty to 49%.
In The Times on 9 December 1964, it was reported that Eliot was suing Byrne for damages of $1 million. Eliot accused Byrne of spending $150,000 for his personal comfort and benefit, over some months. The suit also accused Byrne of charging hotel bills to Seltaeb, which were as much as $19,000 every week for girlfriends, and also opening 'charge accounts for them in Fifth Avenue shops'. Eliot also alleged that Byrne had hired a chauffeur for $700 a week and had withheld $55,000 in royalties to NEMS, after which NEMS had said they would cancel the agreement between the two companies unless monies were forthcoming. Byrne denied all the charges, but admitted he had hired a chauffeur, as he was not familiar with the streets of New York. A supreme court judge reserved his decision.
Epstein accused Seltaeb of not accounting properly, and cancelled its power to grant licenses, which started a counter-lawsuit by Byrne against Epstein's New York accountant, Walter Hofer, asking for $5,168,000 in damages. Epstein then instructed NEMS employees to deal directly with American companies, so Byrne instigated court proceedings, which took three years to settle, as it entailed 39 individual claims against NEMS. Byrne won the case, and Epstein paid the court costs and legal bills himself, although the judgement was later vacated;[when?] meaning to cancel it, or render it null and void. Due to the legal battle, Woolworth's, J. C. Penney, and other companies refused to finalize any merchandising agreements, cancelling orders worth $78 million. The court case and its effect was estimated to have lost NEMS and The Beatles approximately $100,000,000.
Epstein, in 1967, launched Maximus Enterprises Ltd., to try to capitalize on the merchandising boom, but as so many companies had withdrawn their interest in the wake of the Seltaeb fiasco, and Lennon had angered America's bible belt with his remark suggesting that The Beatles were 'more popular than Jesus', the opportunity had passed. Epstein feared that the Beatles would not renew their contracts with him—due to expire in the Autumn of 1967—if they discovered the truth about Seltaeb. Epstein's problems with Seltaeb would remain with him until his death on 27 August 1967, from what was ruled an accidental overdose of a prescribed drug. Many investors had also missed out on massive profits following the cancelling of contracts, and Byrne would later claim of having received two mysterious phone calls foretelling of Epstein's death. Jacobs was found hanged in his garage on 15 December 1968. Days before his death Jacobs had asked for police protection, telling a private detective, "I'm in terrible trouble, they're all after me," and going on to list six well-known showbusiness people. Byrne retired to the Bahamas on his yacht, later moving to the Trowbridge area of Wiltshire.
In America, Epstein had met the well-known divorce lawyer, Nat Weiss, whom Epstein later asked to take over the merchandising affairs of the Beatles and NEMS. Weiss would later state, 'The reality is that the Beatles never saw a penny out of the merchandising ... Tens of millions of dollars went down the drain because of the way the whole thing was mishandled. Even after the judgement was vacated, you could smell the smoke from the ashes, that's how badly they had been burned.' Beatles' memorabilia, licensed by Seltaeb, is still sold at Beatles' conventions and on the internet.
Lennon said years later: 'On the business end Epstein ripped us off on the Seltaeb thing.' McCartney also said: 'Epstein looked to his dad for business advice, and his dad knew how to run a furniture store in Liverpool.' " (Wikipedia)
Beatles Pinback Buttons
Beatles Ice Cream Bars
Beatles Bath Soap
Official Beatles Nylon Stockings
Beatles Edible Licorice Records
"In Philip Norman's book Shout!: The Beatles in Their Generation (Phillip Norman, Touchstone Publishing 2005), there was a separate squabble between Byrne and some of his partners, who alleged at the time that Byrne was squandering huge amounts of money on himself. Byrne based himself in a hotel and it was said he kept two limousines on twenty-four hour call and had a helicopter to ferry businessmen to and from the airport. It was also claimed that he'd run up a bill of $50,000 in personal expenses and used company money to pay his girlfriend's charge accounts. NEMS (Epstein's company) sued Seltaeb and Seltaeb counter-sued NEMS. and ordered it to pay over $5 million. A worried Epstein needed a new lawyer to sort out the mess. The lawyer asked for a hefty $50,000 retainer, which Epstein paid with his own money, perhaps as a tacit admission of culpability, or at the very least of a degree of negligence in the running of The Beatles' affairs. It's estimated that the consumer spending on Beatles-branded products in the USA in 1964 came in at $50 million. The potential losses worldwide were incalculable. The lawsuits went on for years and it was to become Epstein's bete noire."
Beatles Halloween Costume
Beatles Magnetic Hair Game
Beatles Board Game
"Brian Epstein's problems with SELTAEB would remain with him until his death on 27 August 1967, from what was ruled an accidental overdose of a prescribed drug. Many investors had missed out on massive profits following the cancelling of contracts, and Byrne would later claim of having received two mysterious phone calls foretelling of Epstein's death. Jacobs was found hanged in his garage on 15 December 1968. Days before his death, Jacobs had asked for police protection, telling a private detective, 'I'm in terrible trouble, they're all after me,' and going on to list six well-known show business people. Nicky Byrne retired to the Bahamas on his yacht." (Wikipedia)
Beatles Comic Books
Beatles Candy Cigarettes
Beatles Talcum Powder
Beatles Trading Cards
Beatles Loot Tray
Beatles Coin Holder
1965 Beatles Novelty Print Striped Full Skirt Dress
Beatles Official Ballpoint Pen
Soon after Epstein's death, The Beatles regained control of their merchandising as they began to pursue their own ideas about Beatles related products as well as taking complete charge of such group projects as the film, Magical Mystery Tour.
By 1968, the group had started Apple, their own corporate conglomerate which included a record label. Apple was not a particularly successful business venture as the members of the Beatles lacked the business skills needed to develop artists and deal with the daily demands of running a record label.
Among the various business ventures the group pursued under the Apple conglomerate during this period was the Apple Boutique in London which only managed to stay in business for 8 months.
"The night before the closing The Beatles, their wives and girlfriends came to take what they wanted. The next morning it was announced that all the remaining stock was to be given away on the basis of one item per person. In his interview on The Beatles’ Anthology George Harrison describes the event: 'We ended up giving the contents away. We put an ad in the paper and we filmed people coming in and grabbing everything.' Word spread quickly and the shop was empty within hours. The public, numbering in the hundreds nearly rioted trying to get their share and the police attended." (Agnaucouture.com)
Another project from 1968 that was part of the Apple corporation was the animated film Yellow Submarine which provided merchandising opportunities such as these figurines of various characters from the film. "It’s about the most 60s thing imaginable. The animation, led by Heinz Edelmann, is in the vein of psychedelic artists Martin Sharp and Alan Aldridge, or graphic design outfits of the era such as The Fool and Hapshash and the Coloured Coat. Flowers and foliage curl and multiply in eye-popping hues. Flat outlined figures look like Aubrey Beardsley drawings on acid. Watercolour shading on landscapes and plants lends an unsettling beauty. Seas of monsters seem drawn straight from the animator’s subconscious. It’s a trip." (BBC.Com)
With the advent of the internet, The Beatles transformed themselves into a merchandising powerhouse with their BEATLES.COM site which features a wide variety of products including newly remastered versions of their albums, kitschy jewelry, casual apparel, kitchenware, collectible knick knacks and limited edition artwork.
From a 2013 article in Rolling Stone magazine: "The Universal Music Group announced that they acquired the rights to the Fab Four's merchandise in North America. The Beatles' business firm, Apple Corps., partnered with Universal's Bravado division to license a new line of the band's products." From the Almost Alone site: "The obvious question is, considering the slew of music merchandise available in the ‘60s, why did it take until the ‘70s for the rock band t-shirt, a staple at live concerts for the past 40 years, to gain prominence? The answer lies less in a lack of marketing savvy and more in the fact that t-shirts had not yet come into common usage. The late ‘60s saw tie-dyed t-shirts pop up across drugged-out festivals across America, while sloganeering political t-shirts had been available in short runs throughout the ‘50s, such as the ‘I Love Ike’ campaign of 1952. As a whole these instances were few and far between, and it took the explosion of arena rock, and the shift from the psychedelic optimism of the ‘60s to the satanic rock overtones of the ‘70s music scene to herald the era of the black rock t-shirt…Merchandise is more important than ever. With record sales plummeting, and piracy rife, merchandise is one of the few remaining physical properties that still has a currency. As Bob Mould from Husker Du said, ‘you can’t download a T-shirt.’”
The Mysterious Beatles Twig
Beatles Christmas Ornaments
Beatles Bongos 1964
Nowadays, a brand new set of Beatles Bongos in their original box will set you back around $12,000!
Beatles Happy Socks
Yellow Submarine Ice Cube Tray 1966
Sgt. Pepper's Salt & Pepper Shakers (circa 1998)
BACK TO ALL BLOG POSTS