The Rise and Fall of Paramount - Volume 2, part 3 - our final tranche

"Radio killed Paramount" 

The decline began around 1928, the year Paramount cancelled Ma Rainey’s contract in spite of her having been their biggest star before Blind Lemon.  It was indication of Vaudeville’s fading out of fashion.  But radio’s impact came on more slowly - “most of our customers of the blues were black, and didn't have money to buy radios in those days, and so it took a year or two,” said Herb Schiele, Vice Prez of Artophone, a Paramount distributor which had forsaken records for Philco radios by 1930. Paramount's previous main distributor, the E.E. Forbes Piano Company of Birmingham, had already turned to Majestic radios.

This loss of ready access into the all-important Mississippi market increased Paramount’s dependence on advertising and mail-order.  But then those mailed orders began to pile up uncollected in post offices, forcing the company to pay postage if the stock was to be reclaimed. The unsold records were taken as a sign that the "race" record business was finished. Because of the fall in mail order revenues, they cut advertising.  Their final Chicago Defender ad was April 26th, 1930.

Paramount executives were reluctant to continue the label in face of the economic collapse which had been accelerated by the stock market crash of ’29.  Their record-presses were scaled back from more than 50 to some 10, reduced to only three five-hour shifts per week and, apparently aiming to divest themselves completely of the record business, they tried to sell-off their masters and failed.

Although between 1930 and 1932, Paramount's production costs were kept so low they had amazingly still managed to break even, the industry-wide sales of $11 million in ’32 were nonetheless only a mere tenth of the figure for 1920.

1932 was when the money ran out for everything – including music.

By 1933, nearly half of U.S. banks had failed, and 30% of the workforce was unemployed – that’s almost 15 million people. Paramount added to that number by firing its lower echelon employees at their Christmas party, and then went quietly out of business, the only record company of the era to fold of its own accord, without bankruptcy or imposed receivership.

The closure decision was based on their belief that the "race" business had been killed by radio. But the real culprit was the Great Depression - which, I guess, helps explain why their passing went by so largely unnoticed. 

"You can’t sell the records if no one has money to buy them"

The Rise and Fall of Paramount Volume 2, Part 3
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