Elvis and Entrepreneurship

I have just returned from the Shrine. The acolytes have prepared the grounds for holy week. The Porta-Potties are lined up and ready to go.

August 16 marks the 30th anniversary of the death of Elvis Presley. Memphis entrepreneurs have arranged lots of promotional events, all of which are sold out.

It is too late to make a reservation at Heartbreak Hotel, which is within walking distance of the Shrine.

My front door is exactly 7.9 miles from the Shrine. On the 16th, sometime around 2 p.m., I shall drive a little under two miles down Goodman Rd. to Highway 51, where I will turn north. Highway 51 becomes Elvis Presley Boulevard 2.3 miles north of Goodman, when I cross into Tennessee. I shall continue driving another 3.7 miles.

There will be busloads of disciples visiting on this holy day. I want to see how many bus-loads.

Elvis bought Graceland for $102,500 in 1957. It carried a mortgage of $37,000. It will probably bring in more than this on the morning of the 16th. Then it will do it again in the afternoon. Even discounting for price inflation, this is a good rate of return. Then there are the shops. The Shrine gets 600,000 visitors a year, second only to the White House.

Graceland is legally located inside the city limits of Memphis, but this part of town is officially known as Whitehaven, which no doubt brings chuckles to local residents. It is not 1957 any more.


A lot of entertainers are referred to as America’s icon. If you count the sale of paraphernalia, there is only one contender. Lisa Marie Presley sold 85% of these rights, excluding Graceland, for an estimated $100 million in 2005.

As my friend Jimmy Napier would say, “When someone puts $100 million in your hand, close your hand.”

The question is: “Why Elvis?”

When Sun Records’ mastermind, Sam Phillips, started recording black blues, rhythm and blues, and gospel singers, beginning in 1950, he had a very small market. The number of radio stations that played these records was minuscule. Phillips recorded, though did not release, what is generally regarded as the first rock and roll record, “Rocket 88,” in 1951.

The rock and roll phenomenon became a cultural force outside of the black community in late 1953 or 1954, depending on who is making the assessment. Phillips was present at the creation.

What made Elvis was an audience of teenagers, mainly girls, who had disposable income. This was the first teenage generation in history that did. The record industry in the 1930’s was heavily supported by young adults, but Glen Miller and Benny Goodman also appealed to older people who had money. Goodman’s famous concert at Carnegie Hall in 1938 was not a phenomenon of teenagers.

The screaming teenage girls at Frank Sinatra’s performances from 1942 through 1944, during and after his time with Tommy Dorsey’s orchestra, were a herald of things to come. But the war years were still tight economically. It took the full economic recovery of the early 1950’s to put so much money into the pocketbooks of tens of millions of teenagers that they could finance their own subculture.

Elvis walked into Sun Studios in July, 1953, to pay to cut a two-side record for his mother. He recorded another one, also at his expense, the following January, 1954.

Phillips asked him to record at Sun’s expense the following July.


He had heard another man singing a song he liked, and he was reminded of the truck driver who had paid to record four songs. He had his secretary look up his name in the files and then call him. He also had two studio musicians schedule him for an audition. They were not too impressed, but did not veto Elvis. Then Phillips invited him to do a session.

I once saw an interview with Phillips about the July 5 recording session. He said that Elvis and the two sidemen were playing standard country music songs at first. Phillips was not impressed. He let them take a break. During the break, Elvis and the other two started horsing around with Arthur “Big Boy” Crudup’s blues song, “That’s All Right (Mama).” Phillips said he heard this, went back into the recording room, and told them this was what he was looking for. Could they do it again? They did. Then they did a similarly upbeat version of Bill Monroe’s “Blue Moon of Kentucky,” a waltz.

His first record was released in August. Elvis was so nervous that he went to a movie theater to hide. It was played by a local DJ, also named Phillips — no relation to Sam. The phones started lighting up. Kids wanted to hear it again, so he played it again.

When Elvis came out of the theater, he had begun phase one of his career as a musical icon.

The initial hit was his version of “Blue Moon of Kentucky,” formerly a bluegrass song. It was number 3 or 4 for weeks in Memphis. Close behind was the flip side, “That’s All Right (Mama).” Both songs got air play across the South for the rest of 1954.

Here was the key: Elvis took a bluegrass song — a white backcountry genre decidedly not highly commercial, even in the South — and a black blues song, and combined both artistically into something entirely new. He made them hits in the white teenagers’ world.

Phillips now had what he wanted. He had either signed or would soon sign other locals who had crossed over musically: Carl Perkins, Johnny Cash, Jerry Lee Lewis, and west-Texan Roy Orbison. From 1954 to 1958, Sun Records transformed the tastes of millions of teenagers, males and females.

The picture you get in Walk the Line (2005) is accurate. It took only four years to create a new subculture that defined itself in terms of its music, and Phillips was the single most important taste-changer in this transformation project.

This subculture had money to spend. A two-song 45-rpm record in 1955 cost 89 cents. In today’s purchasing power, that is $6.90. We buy a dozen songs on a CD for $15 today.

Popular music had been dominated by crooners and harmonic groups like the Ink Spots and the Four Lads in 1953. In 1955, rock and roll was becoming dominant, with rhythm and blues close behind. Sun Records’ style was called rockabilly, but not by the kids who bought the records.

No one could have predicted this. No one did. Elvis got there very early because of a highly improbable series of events.

Phillips sold Presley’s contract to RCA for $35,000 in November, 1955. What is astounding in retrospect is that this was considered at the time to be to be a lot of money to pay for an untested performer’s contract. In addition, RCA paid Elvis $4,500 and his manager $1,500. There is no doubt that his manager persuaded RCA’s executives to become entrepreneurial.

RCA released “Heartbreak Hotel” in late January, 1956. By April, it was number-one nationally. It sold a million copies in that initial run. RCA got its money back, and a lot more.

I went to work at a southern California record store in 1956, my first real job. My memory tells me that Presley was the dominant singles-seller that year. If there was one artist whose single records we would have not wanted to forfeit, it was Presley.

Elvis remains the entertainment world’s master money-generating singer half a century later. Why else would a company pay his daughter $100 million for 85% of his name? As the head of the company said, he thought the name was under-marketed. It will not fade in his lifetime, he said. I think he is correct.

Sam Phillips by 1959 was no longer a cultural force. He proved to be a musical shooting star. The sound inside his head and then on his audiotapes was shared for about 48 months by millions of teenagers, who were never quite the same again. Then the shared connection ended. He disappeared. But shed no tears. He got rich anyway.

Phillips was one of the original investors in another Memphis resident’s entrepreneurial venture: Holiday Inn. Almost no one in Memphis believed in Kemmons Wilson’s vision in 1952: a national chain of middle class motels. He invited local builders to join him. They were not interested. Phillips bought in as an investor shortly after the company went public in 1957. The economic effect of Holiday Inns on hotels around the country soon created a lot of industry-wide heartbreak.

[Note: a hotel gives you room access only from inside the lobby. A motel gives you access from the parking lot. Wilson thought the country needed a standardized motel chain for the middle class. He was regarded as a crackpot by his peers in 1952, just as Phillips was.]

Sam Phillips was an entrepreneur: a man who sees the future in a new way and who then puts money on the line to take advantage of this perceived future. He was there when a teenager walked into his studio to record two songs, at his own expense, and then two more about six months later.

What if Phillips had just let it go at that?

Just letting it go at that is what entrepreneurs do not do.


No one knew in January, 1955, that Presley was 18 months away from becoming a national sensation. He had recorded several records that were popular in the South, songs in a new format — not country, not bluegrass, and not blues. That was it. His only attempt to get on television was on “Arthur Godfrey’s Talent Scouts” on March 23, 1955. Godfrey turned him down.

Elvis spent the first half of 1955 on the road, playing junior high schools, high schools, and local lounges. If you want to see an exhausting exercise in seeming career futility, take a look at Elvis’ performance schedule for the first half of 1955.

In January, a promoter in the country music field, “Col.” Tom Parker (Andreas van Kuijik), heard about him. Parker began going from performance to performance in different towns. He saw the screaming girls. He perceived that Presley could be much more popular.

Elvis’ schedule was being handled by Elvis’ manager, Bob Neal. Parker convinced Neal and Phillips to let him take over running Elvis’ appearances. This was on June 17. By mid-July, Elvis was playing at municipal auditoriums. Things got better.

Neal pulled out of the deal in September because he disagreed with Parker about Elvis’ career strategy. This left Parker as sole manager.

Parker negotiated the $35,000 buy-out by RCA in November. What is rarely discussed is that RCA had offered Phillips $12,000 for Presley’s contract earlier in the year. Phillips had turned down the offer. Parker got Phillips a much better deal. For this, Parker was paid $1,500 — paid directly by RCA, not by Phillips.

“Heartbreak Hotel” was released on January 27, 1956. Parker had already scheduled Presley on the “Dorsey Brothers’ Stage Show.” This was Presley’s first TV appearance. The show preceded Jackie Gleason’s show, The Honeymooners, on Saturday nights, which was great positioning. To land Presley a guest appearance on this show was no small feat prior to “Heartbreak Hotel.” That first appearance was all it took: on January 28. The Dorseys invited him back on February 4, February 11, February 18, March 17, and March 24.

Independent of Parker’s efforts, “Heartbreak Hotel” sold 300,000 copies in the first week. Elvis sang it on the Dorsey shows on February 11, March 17, and March 24. Sales continued to soar.

In March, RCA released his first album, “Elvis Presley.” This was an emergency move. Elvis’ career was taking off like a rocket after just five weeks. Management had to do something, fast, to cash in on its own property. The album would sell a million copies before the end of 1956. It was the first RCA album to sell a million copies. It was the first rock and roll album to sell a million copies.

Only in March did Parker re-negotiate the contract, getting 25% of Elvis’ income. Elvis did not have to sign it. He did anyway.

Elvis appeared in April on Milton Berle’s TV show. In that same month, “Heartbreak Hotel” made it to number one.

Also in April, Parker negotiated a seven-movie contract with Paramount. Who could have known in April, 1956, that Elvis Presley could act? He was not a great actor, but he was no embarrassment. Who could have known that these films and many more would find huge audiences over the next decade? These low-budget, high-profit movies made Presley and Parker much richer, even though these movies were generally much worse than he was.

He appeared on Berle’s show again in June. That appearance caused a sensation: his swivel hips when performing “Hound Dog.” NBC cancelled Berle’s show that month, despite the high ratings when Elvis appeared. This ended “Mr. Television’s” television comedy career. To see the video, click here.

On July 1, he was on Steve Allen’s TV show. Allen made him wear a tuxedo. No swiveling. On September 9, he was on Ed Sullivan’s TV show, although Sullivan was absent that night. It drew about 60 million viewers. He appeared twice more on the show. His television appearances are remembered mostly for Sullivan’s show.

In short, when Parker took over as Elvis’ manager in September, 1955, Elvis was a regional performer on the country music circuit. Six months before, he had been performing at junior high schools. One year later, he was the biggest pop music icon in the world, a position he retains until today.

What percentage was that worth?

Parker re-negotiated his contract in 1967 for 50%. This was at Elvis’ musical nadir in terms of quality. Parker then got him a contract to do a 1968 NBC television special in front of a live audience. It was broadcast on December 3. The “Elvis” special re-established his career as a live performer. It was a true one-man show (no guests), probably the first in television history, and surely the most successful. It was the highest-rated television special of 1968. Much of the success was the result of the director, but Parker was still the career ramrod.

Parker then negotiated Presley’s appearance at Las Vegas. In a series of 58 consecutive shows, 130,000 ticket-buying fans showed up to see him — the largest crowds in Las Vegas’ history, before or since. Elvis there demonstrated beyond any doubt the versatility of his talent, doing country music, ballads, rock, gospel, and seemingly everything else except opera. Nobody before him had done anything like this. Only Linda Ronstadt would match this versatility, beginning in 1967. There are no other examples of singers generating equal sales in so many different fields.

People forget this chronology when assessing Parker’s influence. He is dismissed as a money-grubber. He was in fact a value-creator on a massive scale.

Parker ran Elvis’ career with a heavy hand, but he left a legacy that continues to generate huge amounts of money.


In terms of his career, Elvis’ death launched the next phase, which has been more profitable than what had preceded it. His fans never saw him grow old. This added to his legend. “The king is dead. Long live the king!”

Priscilla Presley, another entrepreneurial genius, understood the potential of what her daughter owned in 1978, and she created an empire. Anyone looking at Mrs. Presley’s wedding photos would not have guessed what was underneath that bouffant hairdo.

We all know the rumors. Elvis is in hiding. He has not really left the building.

A few years ago, the topic of his death came up in a group of church members where I attended. “Do you think Elvis is alive?” someone jokingly asked.

One lady in the group had a direct answer: “I gave him his last bath, and then I tagged his toe.” That statement pretty much ended the argument. She had been the person on duty at the facility where his body had been transported.

I dropped her husband a note two weeks ago, asking him to ask her to write a brief article on this. I thought you might like to read it. I know I would. He wrote back to say he had asked her to do this for years. She just does not want to do it.

So far, I have not received a manuscript. Sorry about that.


I was never a big Elvis fan. I have discussed this elsewhere.

I don’t think anything he recorded ever equalled his first record, “Blue Moon of Kentucky.” That song and “That’s All Right (Mama)” were acts of artistic entrepreneurship on Elvis’ part, the creation of a new musical style which caught the attention and money of millions of teenagers. He reinvented his music repeatedly over the next two decades. His voice changed. His style changed. His audience changed. But still he met consumers’ desires. He was an entrepreneur.

He had a great back-up band in the 1969—71 era. He had good artistic taste, outside of his movies ($100 million gross), which he did not control and despised, and their songs, which he was forced to record: 100 million albums.

Sam Phillips told the story of how his friends warned him about Bill Monroe’s reaction. After all, Elvis had taken a fine bluegrass classic, written and performed by the man who literally invented bluegrass, and turned it into rock and roll. “Bill will eat you alive if he ever meets you.” Phillips really did worry about this.

Some time later — I forget how long — he was backstage at Grand Ole Opry. There was Monroe, who played there for decades. Monroe came over to him. “Are you the man who released Elvis Presley’s version of my song?” Phillips had to admit that he was. “Well, I just want to thank you. I made more money in royalties from his version of that song than anything I ever wrote.”

Lesson: royalties covereth a multitude of musical sins.

Phillips is laughed at as the man who sold Elvis’ contract. But he probably could not have provided the setting Elvis needed to become an icon within a year.

Parker is hated by the fans because he got 25%, then 50%, of Elvis’ income. But he brought Elvis to the attention of his audience. He gave Elvis the venue that made Elvis into an icon. There was no indication that Elvis would escape the country music circuit until Parker took over as manager in September, 1955.

It is not good enough to have raw talent. You need access to an audience. The entrepreneur brings talent and market together for the sake of profit.

Elvis wound up like the anonymous man whose suicide in a hotel room inspired Mae Axton and her partner to write “Heartbreak Hotel.” Sometimes the full results of entrepreneurship are not what the entrepreneur plans. Elvis could not handle the results of incomparably successful entrepreneurship, including his own. That was an ethical defect on his part, not a marketing defect. He failed to understand the Book of Ecclesiastes on the nature of vanity. In this, he was not alone.

August15, 2007

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 19-volume series, An Economic Commentary on the Bible.

Copyright © 2007 LewRockwell.com