Soul star brought in Allen Klein, an accountant with an attitude
Adapted by the author from his book, Allen Klein: The Man Who Bailed Out the Beatles, Made the Stones, and Transformed Rock & Roll (Houghton Mifflin Harcourt, 2015)
The DEATH in April 2016 of pop star Prince shocked millions. Who was more vibrantly alive than Prince Rogers Nelson, a dervish onstage and in the studio an endlessly inventive artist who worked around the clock? Prince was also intensely private, and his passing brought two revelations. First, that a performer renowned for his abstemious ways depended heavily on painkillers. Second, that Prince died intestate.
That the business-savvy star would die without having written a will was particularly surprising. Prince was a rarity—an artist able and confident enough to manage his affairs himself. Still a teenager in 1977 when he signed to Warner Bros. Records, Prince insisted on producing his own recordings. Later, because the recording company refused to market a series of quickly produced Prince albums, citing market saturation, he rebelled with a campaign that included refusing to use his name. Nelson instead substituted an unpronounceable glyph that further set him apart as an innovator. Prince’s story has many overtones of the life and death of another genius who changed popular music, the way artists think about their careers, and the way the industry compensates talent: Sam Cooke.
As Prince’s did, Sam Cooke’s star rose early: in 1950, age 19, he became lead singer with the Soul Stirrers, one of the best-known groups in gospel music. However, Cooke’s aspirations and appeal far outstripped that form and in 1957 he moved to pop, scoring a number one hit with “You Send Me.” Besides having matinee-idol looks, he was hard-working and earnestly ambitious. When American Bandstand host Dick Clark asked why he had left gospel, Cooke smiled. “My economic situation,” he said. Yet there wasn’t a whiff of calculation in his unfailingly heartfelt music.
Along with Ray Charles, Cooke quickly established himself as an architect of a new style—soul, an emotionally soaring musical mansion built on the rock-solid foundation of gospel. For black churchgoers, soul was familiar; only the words and subjects were new, and sometimes shockingly worldly, with impact that reverberated among white pop music listeners as well.
Initially, some gospel fans chided Cooke for his secular straying, but he proved equally comfortable writing and singing about God in heaven and Cokes in the icebox, finding celebration and salvation in Saturday night as surely as he had on Sunday morning. Cooke created a body of work that influenced generations of singers including Smokey Robinson, Al Green, Rod Stewart, Michael Jackson, and John Legend.
A polished, confident man unwilling to accept less than his due, Cooke also set music industry trends as a businessman far more knowledgeable and sophisticated than most of his professional peers, black or white. He perceived that genuine wealth lay in ownership. Though signed to RCA Records, Cooke started his own label, SAR, to record other performers. Unhappy with his early but enduring songwriting deals, he also started a publishing company, Kags Music, and sometimes sidestepped earlier agreements by crediting songs to his wife.
Sam Cooke’s biggest challenge was obtaining more creative and financial control over the work he was doing for RCA. He had big hits—“Cupid,” “Chain Gang,” “Bring It On Home to Me,” “Another Saturday Night,” “Twisting the Night Away,” to name a few—but he chafed at the way RCA was marketing him. Nor did he trust the record company’s claimed sales figures. In 1962, Sam Cooke met a man who would help him achieve his goals and, in the process, shift artistic and financial power away from record companies and toward artists. Cooke’s new ally was a brilliant and confrontational accountant named Allen Klein.
Klein was born in Newark, New Jersey, in 1931 into a Jewish immigrant family so poor that when Allen’s mother died his father, a butcher, placed the four-year-old and his older sister in a foundling home until the senior Klein remarried six years later. Though a so-so student, the boy was bright and a hard worker. At an after-school job with a magazine distributor, the teenaged Allen got an eyeful of seamy but common practices, watching bosses create false accounts, cheat suppliers and customers, and pad bills. He came away with few illusions about business.
Studying accounting on the GI Bill but never getting a CPA license, Klein worked in the 1950s for a Manhattan accounting firm representing music publishers. He concluded that publishers and record labels regularly shortchanged songwriters and performers, and that a smart fellow could do well doing right on artists’ behalf by using his auditing skills to reveal revenue being hidden from the people who had generated it. Setting up his own company, Klein took a belligerent stance. “He was a sharp, bullying sort of an individual,” said Marvin Schlachter, a co-owner of Scepter Records, whose roster of artists included Dionne Warwick, the Shirelles, and the Isley Brothers.
Klein made no apologies. Indeed, he could sound more gunfighter than bean counter. “I’d go over the books and I’d find that the companies were always short,” he said. “When I caught them at it, I’d take 50 percent of whatever I found for the artists. Which was fine with the artists. But I was making the record companies look like crooks. They hated my guts.” Clients saw things differently.
Singer, songwriter, and bandleader Lloyd Price hired Klein in 1961 to audit ABC/Paramount Records. “Allen found me $60,000,” Price recalls, describing Klein as a lifelong friend. “We just had a great relationship.”
In his early days, Klein also crunched numbers for movies, observing how revolutionary new artist-production deals were shaking that business. Instead of studios controlling every aspect of a film, these arrangements had studios financing and distributing films that an artist and producer, like the pioneering team of actor Burt Lancaster and agent Henry Hecht, made and owned. In 1955, Marty, a Lancaster/Hecht production, not only proved a big moneymaker but was nominated for eight Academy Awards, winning four, including Best Picture. Soon Frank Sinatra, Kirk Douglas, Gregory Peck, Robert Mitchum, and other top stars were following Lancaster’s lead. Allen Klein also took note.
Music led Klein to work with legendary Philadelphia-born R&B disc jockey Douglas “Jocko” Henderson. Well known for on-air rhyming that foreshadowed rap, Henderson was a go-getter who broadcast “Jocko’s Rocket Ship Show” live on WOV and WADO in New York and on Philly’s WHAT and WDAS, shuttling between cities and studios by train. Henderson also hosted concerts and theater shows, emceeing extravaganzas at Harlem’s Apollo Theater by riding onstage aboard a prop rocket suspended from wires. Looking to make a splash in his hometown, Henderson asked Klein to partner on rehabilitating the derelict State Theater at Chestnut and 52nd Streets. Concerts did not particularly interest Klein, but he thought live shows could be a way to meet prospective clients, so he signed on.
In March 1963, the State Theater reopened as a showplace with Sam Cooke headlining—and backstage hearing an enthusiastic earful from Jocko Henderson about Allen Klein. Frustrated with RCA’s accounting, Cooke was eager to meet this numbers man.
“I’ve been calling and calling and calling and I never get a call back” from the label, the singer told Klein, who admired Cooke’s music and found it hard to believe RCA would ignore so important an artist. He urged Cooke to keep at it, and to think specifically about what he wanted. A month later, Klein flew to Tampa where Cooke was performing. The story was the same: RCA executives were stiff-arming him.
“I want you to go after them,” Cooke told Klein.
Cooke wrote an introductory letter that got the auditor in the door at RCA but produced little cooperation. That suited Klein; Cooke’s RCA contract was nearing its end. At the time Cooke was helping his friend, boxer Cassius Clay, make an LP in a studio at Columbia Records. Klein, who thought Columbia a classier company and a better perch for Cooke, let RCA know Cooke would be happy to move to the rival label.
However, RCA brought in a new top executive, attorney Joe D’Imperio, and the tenor of the talks suddenly changed. D’Imperio reached out to Cooke. Emphasizing how much he thought of the singer and how happy RCA was to have him, D’Imperio suggested they forget the past and discuss a new, extended contract. But Klein wasn’t letting RCA off the hook. The label had been giving Sam the runaround for far too long, Klein said, suggesting that RCA owed Cooke as much as $200,000. Expecting RCA to resist, Klein sued on Cooke’s behalf, demanding a detailed audit. D’Imperio complied. Armed with confirmation that RCA had shorted Cooke, Klein went to work on a new approach that would change the relationship between labels and artists.
The concept had come out of Klein’s insights into how movies were now being made, with artists, not studios, at the production helm. Why not do the same with music? If an artist needed a studio—or a record company—only for financing and distribution, couldn’t a Sam Cooke, masterfully able to produce his own records, recast his deal with RCA?
That question was radical in the early 1960s, when record labels dominated pop much in the mode of old-school film studios. Company overseers—artist and repertoire, or A&R, men—matched performers, producers, and material. With rare exception the label, not the performer, dictated what to record and how it sounded. Artistic ambition might lead a star like Frank Sinatra to exert control over his material, but many performers were content to follow their labels’ lead.
Klein envisioned a different strategy for Cooke, who could write, perform, and produce his own records, giving him leverage he had not been exercising. Sam Cooke didn’t need RCA; RCA needed Sam Cooke—and Klein let both parties know that. Klein also knew independent producers like Hecht and Lancaster owned the films they created. Why should RCA own Sam Cooke’s recordings?
As Klein explained the idea, first to Cooke and then to D’Imperio, Cooke would be starting Tracey Ltd., a company named for his daughter. Tracey would produce and own Cooke’s recordings. RCA would pay for recording sessions, and, in return for those outlays and royalty payments, have temporary exclusive distribution rights to the Tracey catalogue of recordings, including Cooke’s. Tracey, not RCA, would press and package the records and sell them to RCA, which would wholesale the product. RCA’s exclusive would run five years, after which all rights would revert to Tracey.
Out of the question, D’Imperio said; RCA wouldn’t agree to less than 30 years.
This startled Klein. He had not expected RCA ever to agree to let Cooke have his rights back. Columbia had granted a few artists reversions at 50 years—a minor concession, since that was nearly the lifespan of a recording copyright, and the material was about to become public domain. Other labels—notably Capitol with Frank Sinatra—had staunchly refused to let ownership revert. Whether out of fairness or doubt regarding the long-term value of Cooke’s oeuvre, D’Imperio, with his 30-year proposal, was letting the singer and his representative open up an area previously closed to negotiation. Equally significant, Klein was proposing that, rather than signing Cooke, RCA contract with an outside company, Tracey, which controlled Cooke’s rights.
The deal went through, giving Cooke more sway over when and how much he was paid and bringing him revenue from pressing and packaging his records and selling them to RCA for distribution. The new arrangement, a three-year contract with two additional option years, put ready money in Cooke’s hands. RCA guaranteed Sam a cash advance of $100,000 per year, plus $75,000 for each option year. Taken to term, the deal was worth at least $450,000.
Structuring Tracey as a holding company with himself as the owner, Klein explained that this approach would shield Cooke from taxes. To that end, Klein had Tracey pay Cooke his first $100,000 in the form of preferred stock. Preferred stock functions like a bond, paying set dividends. Tracey deposited the certificates in Cooke’s California bank account; the singer would have to pay taxes on the sum only when he sold the stock. Cooke was delighted.
On September 27, 1963, Cooke was on tour in New Orleans. Klein was there to go over how they would handle the first $100,000 advance from RCA and to collect his commission. Cooke was more than happy to write the check. And the singer had a surprise for his new advocate.
“Would you manage me?” Cooke asked.
“I never managed anyone before,” Klein sputtered.
Cooke shrugged. “I never wrote a song before I wrote one,” he said.
Klein, who held Cooke in something like awe, needed no more encouragement or validation. He knew he had gotten the job done with RCA—“It was the first time Sam ever saw money like that,” he later said—but had not been angling for or even anticipating such an invitation. He said yes, began managing Cooke, and soon was looking for and finding other artists to manage.
The artistic and financial latitude Cooke gained by owning Tracey enabled the singer to do some of his best work, including the American psalm, “A Change is Gonna Come,” and to assume pride of place among a new generation of artists and singer/songwriters who took themselves and their work more seriously than preceding pop artists had.
But in December 1964, Sam Cooke, 33, perished. In a bizarre incident, the singer, half-naked, was shot by the desk clerk at a Hollywood fleabag motel after a woman Cooke had met at a party ran off with his pants and money. Like Prince, Cooke died without a will, effectively leaving his music to Allen Klein as owner of the holding company that controlled Tracey and eventually many of Cooke’s recording and publishing holdings.
In addition, Klein was representing or doing audits for a string of acts, including the Animals, Herman’s Hermits, and the Yardbirds. In 1965, he landed the Rolling Stones, negotiating a contract worth a guaranteed $2.4 million. At the time, the Beatles were splitting a one-pence (1/240 of a pound) royalty on sales of their singles—a circumstance Klein radically altered a few years later when he added that quartet to his management roster.
However, hiring Klein had a price. He made clients rich, but along the way frequently found a way to profit personally. Some, like the Rolling Stones—who upon ending their contract with him spent 19 years battling him in court—would come to believe Klein had enriched himself at their expense. Paul McCartney literally went to court and dissolved the Beatles to avoid having Klein as his manager. Klein’s professional nadir came in 1980 when he served two months behind bars for a misdemeanor tax conviction stemming from illegal sales of records.
Klein’s innovative methods reverberated through popular music, indirectly improving conditions for many performers. In time, as Cooke and Klein had anticipated so long ago in their pitch to RCA, reversion of masters became a lucrative bargaining point for artists, with term lengths shrinking to favor the work’s creator. One deft negotiator was Mick Jagger, who had apprenticed with Klein when polite society was still reviling the Rolling Stones as delinquents.
Over the decades, Klein proved a thoughtful custodian of Cooke’s work, not exploiting but guarding and expanding his catalogue and boosting the late singer’s popularity and stature. In 1981, with Cooke dead 26 years, he licensed “Wonderful World” to Levi Strauss for a British campaign so successful that a re-issued single rose to No. 2 on the U.K. charts. In short order, Cooke was selling millions of record throughout Europe, winning over a new generation of fans.
Another episode that involved Cooke revealed Allen Klein in all his complexity. One evening in late 1984, a producer at Paramount Pictures in Manhattan urgently invited Klein to a showing of a new film. A mystified Klein agreed. Sitting impatiently the next morning in a darkened screening room, he scratched his head through the first half of a fish-out-of-water drama starring Harrison Ford as a Philadelphia detective assigned to protect an Amish child who had seen a murder take place. The plot propelled Ford’s character, wounded in a shootout, into hiding in Lancaster County, Pennsylvania, with the boy, his widowed mother, and his grandfather, Old Order Mennonites who scorned modernity. The story did nothing for Klein until a scene in a barn where Ford has hidden his VW. He is fiddling with the car radio when the widow, played by Kelly McGilllis, enters. A song begins, and to its staticky rhythms Ford whirls McGillis in a forbidden dance. Klein shot up in his seat as he recognized “Wonderful World,” performed by a Sam Cooke sound-alike. No one had asked permission to use the song.
Film and TV producers paid so stingily for synchronization rights—licenses for musical content—that Klein usually avoided sync deals. But watching Ford sing along with a song he owned, Klein realized that “Wonderful World” was integral to a key scene in a major motion picture—whose producers had no sync license. The studio could restage and reshoot using another tune, but that would wreck the release schedule for Witness. All the studio could do was ask Allen Klein what he wanted for “Wonderful World.” Two hundred thousand dollars, Klein said. Paramount anted up.
This unique moment showed that, when pressed, studios would pay dearly for music. By the 1990s, MTV’s popularity had Hollywood eager to exploit popular song. Licensing and sync fees went wild; movies commonly had seven-figure music budgets. Once again, Allen Klein had seen his faith in Sam Cooke’s untapped value borne out, and the result echoed across the entertainment industry.
