PolyGram - Philips Phonografische Industrie (PPI), 1950-1962

Philips Phonografische Industrie (PPI), 1950-1962

In the 1940s, the record business was spread out within Philips — research in the Eindhoven labs, development elsewhere in Eindhoven, recording in Hilversum, manufacturing in Doetinchem, distribution from Amsterdam and exports from Eindhoven. During the late 1940s, Philips combined its various music businesses into Philips Phonografische Industrie (PPI), a wholly owned subsidiary.

PPI's early growth was based on alliances. A merger was first proposed with Decca of London in late 1945, but was rejected by Edward Lewis, Decca's owner. (PolyGram finally acquired Decca in 1979.)

In the early 1950s, Philips set itself the goal of making PPI the largest record company in Europe.

PPI's second attempt at a merger was with Deutsche Grammophon Gesellschaft (DGG). DGG, owned by Siemens AG and well known for its classical repertoire, had been the German licensee for Decca from 1935. DGG also owned Polydor Records. Shortly after PPI was founded it had made a formal alliance with DGG to manufacture each other's records, coordinate releases and not to poach each other's artists or bid against each other for new talent. PPI and DGG finally merged in 1962.

The alliance with DGG still left PPI without repertoire in Britain or the US. But in 1951, after Columbia had failed to renew its international distribution agreement with EMI, PPI agreed to distribute Columbia recordings outside the US and have Columbia distribute its recordings inside the US. This agreement ran until 1961, when Columbia set up its own European network, PPI signed a worldwide distribution deal with Mercury Records in 1961. Ironically, PPI's parent company Philips, through its U.S. affiliate Consolidated Electronics Industries Corp (a.k.a. Conelco), acquired Mercury in 1962.

PPI built or bought factories in smaller countries. In 1962, PPI had a large factory in Baarn and factories in France, Britain, Denmark, Norway, Spain, Italy, Egypt, Nigeria and Brazil.

PPI played an important role in the introduction of the long-playing vinyl record to Europe. Columbia introduced their LP record in 1948 and Philips presented its first LP at a record retailers' convention in 1949. Philips' commitment to LP technology was an important factor in its 1951-1961 deal with Columbia.