K-tel

K-tel International is the original "As-Seen-On-TV" company, famous for its hard-selling commercials marketing compilation music albums, such as The Super Hits series, The Dynamic Hits series and The Number One Hits series and consumer products, such as The Record Selector, Veg-O-Matic, Miracle Brush, and The Feather Touch Knife. The company has sold more than half a billion units world wide.^[1]

History

K-tel's founder and CEO Philip Kives,^[2] a demonstration salesman who had previously sold cookware door-to-door and in a department store, used television advertising in 1962 to sell Teflon-coated frying pans to a large-scale audience.^[3] Kives bought and marketed a number of other products from Seymour Popeil, father of Ronco founder Ron Popeil. Products such as the "Dial-O-Matic" (a food slicer that allowed the user to "dial in" to control the thickness of slices), the Veg-O-Matic, and the "Feather Touch Knife."[1] The combination of inexpensive goods and a simple but hard-selling pitch were a novel combination in television advertising in the early 1960s. It was the birth of the infomercial. In August 1965, Kives took his "Feather Touch Knife" on the road to Australia and by Christmas had sold one million knives, netting a dollar profit per knife.[1] Initially, his main U.S. supplier was Seymour Popeil, the father of Ronco founder Ron Popeil. Yet as K-tel grew, Popeil pulled out, forcing Kives to source his own products. His best selling one was the miracle brush, selling 28 million units.^[4]

Kives was born on a small country farm near Oungre, Saskatchewan, Canada.^[5] Like the other farmers in the area, Kives’ family struggled and was on welfare for many years. After leaving the farm he tried his hand at a variety of jobs including cab driver, cook and food truck operator. He eventually found his talent in door-to-door sales. Within two years, he was trying his luck in Atlantic City, New Jersey working the carnival circuit on the Boardwalk, where he learned the art of the sales pitch. He re-located back to Canada and made the first of many deals with Eaton’s Department Store in Toronto Wanting to pitch to a larger market, he realized TV was the answer. With no cash to fund his venture, he cut a deal that would later evolve into his trademark two-part formula.^[6] He first agreed to pay for television advertising if a store like Eaton’s would agree to stock the product then he would offer television stations a “per inquiry” or PI deal whereby they would receive an upfront down payment (representing the guaranteed sale of a minimum number of products) and then a percentage of every product sold beyond that number. The twin set of incentives ensured that the stores and stations were on his side, and the formula worked brilliantly. Although in the case of the first Eaton’s deal the pan itself was a disaster – because the Teflon came off with the eggs – Kives realized that the pitchman style he had perfected on the boardwalk of Atlantic City was a winning formula for TV.

K-tel was formally incorporated in 1968. After a successful decade in the 1970s, the company expanded rapidly both through acquisitions in its core area of business and diversification into other areas. Kives' cousin Raymond Kives worked as president of the K-tel USA division from 1967 to 1977, and the K-tel Europe division from 1977 to 1984. In the five years prior to 1981, K-tel sold more than $150 million LPs in 34 countries. Its sales jumped from a respectable $23 million in 1971 to $178 million in 1981.^[7] The company diversified, forming subsidiaries in areas such as real estate and oil exploration[1 and also acquired rival Candlelite Records in 1980. K-tel lost $15.9 million^[8] when Candlelite’s customers refused to pay for their shipments. The company experienced a reversal of fortune when the high-risk ventures went bad, and in 1984 the publicly traded U.S. entity, K-tel International, filed for Chapter 11 bankruptcy protection.[2] In 1986, moreover, the Bank of Montreal foreclosed on the K-tel Canadian subsidiary, at the very moment of the USA Chapter 11 filing.^[9] Advised by Minneapolis-based Sullivan Associates, K-tel turned itself around, negotiating settlements with banks and other preferred and unsecured creditors. Six years later, after all the legal battles, a settlement was reached with the Bank of Montreal, and in 1991, Kives got his Canadian company back.^[7]

Phil Kives died in Winnipeg on April 27, 2016.

The comeback gained speed in the 1990s. By 1994, the company ranked #7 on BusinessWeek’s annual Hot Growth List, for earning a $2.7 million profit on sales of $56 million in 1993.^[10] Mickey Elfenbein, Kives' nephew, was appointed CEO of the K-Tel International division in 1993,^[11] until the late 1990s. K-tel achieved a resurgence in worldwide sales, primarily of music-related products, and had a successful NASDAQ IPO trading under the symbol KTEL.

Music business

In 1966, Philip Kives released the company's first compilation album, a collection of 25 country songs entitled “25 Country Hits.”^[12] Every copy was sold.^[13] His second release, “25 Polka Greats,”^[14] sold 1.5 million copies in the United States alone^[13] Kives never intended K-tel to be a music business, saying "I had to do something else. I thought why not do a music album? I thought it'd be a one-off. Everybody said 'that won't work.' Now all the major labels do compilation albums, but mine was the first."^[12]

K-tel recruited Australian Don Reedman (twin brother of Peter Reedman, who was already working in the Australian office) to set up the UK-based division of K-tel Records in the early 1970s. Ian Howard was the Managing Director of operations.

The company built the business of releasing compilation albums that combined material from a number of popular artists onto a single theme album using the tag line "20 Original Hits! 20 Original Stars!".^[3] The company negotiated directly with artists and labels for the rights to reproduce their original recordings, in the process also securing a long-term asset through adding those recordings to their catalog.^[15] The compilation albums largely relied on the pop charts of the time but concentrated on a specific musical genre: 20 Power Hits, for example, released in 1973, mostly concentrated on rock, though it had "Yesterday Once More" by The Carpenters on it. Some compilations were made for the disco music market (Night Moves, 1979), whereas others featured older music (Summer Cruisin' , made in about 1976, featured mostly 1950s music).

The company also created original records, the most notable of which was the Grammy-nominated Hooked on Classics series of classical recordings with the London Symphony Orchestra.

Films

In 1970 the company briefly began distributing foreign films in the US beginning with Mr. Superinvisible^[16] They produced their own Pardon My Blooper based on one of their best selling records.

Dot-com bubble's effects on K-tel

In mid-April 1998, during the Dot-com bubble, news that the company was simply expanding its business to the Internet sent the thinly traded stock shooting from about $3 to over $7 in one day (3:1 split adjusted). The short interest of the stock swelled. The price of the stock peaked at about $34^[17] in early May, and began to decline, reaching $12 in November and eventually pennies. The remarkable upswing was fueled mainly by a massive short squeeze. Traders with short positions either "bought in" or were forced to cover positions at very high prices because of the great losses.^[18]

In 2007, Philip Kives took K-tel private again. The company completed a 1-for-5000 reverse split on July 18, 2007, reducing the number of public shareholders to under 300 and allowing the company to delist.^[19] It changed its symbol to KTLI and moved from the NASDAQ to the Over-The-Counter market.

K-tel today

The company now leverages its significant catalog of Billboard-charting hits, by the original artists. The library’s strengths lie in songs from the 1950s through the 1980s. Tracks include “The Twist” by Chubby Checker, “What I Like About You” by The Romantics, “Tutti Frutti” by Little Richard, “Surfin’ Bird” by The Trashmen, and “Help Me Make It Through The Night” by Sammi Smith.

K-tel distributes more than 200,000 songs worldwide per year on digital platforms like Amazon and iTunes, and licenses songs from its catalog for use in commercials (e.g., Nike, Fiat, Coke and KFC), films (e.g., Spiderman, The Dallas Buyers Club and Hotel Transylvania 2) and television programs (e.g., Ray Donovan, Breaking Bad, Californication, Mad Men and Transparent).

K-tel has also had success with its Mini Pop Kids series, in which a group of kids aged 9 to 13 sing current, family-friendly pop hits. The series sold millions when it was originally distributed in the 1980s. K-tel brought the series back in 2004, and the franchise has been going strong ever since. The latest album, “Mini Pop Kids 13,” reached #19 on the Billboard charts and #1 on the iTunes Kids Chart. A touring group travels to sold-out shows across the country.

K-tel has been in business since the late 1960s and is based in Winnipeg, Manitoba. It has subsidiaries or other controlled entities in the U.S. and the UK. In the UK, the company is known as "K-tel UK Limited." In the U.S. and Canada it is known as "K-tel International," with U.S.-distributed compilation albums distributed from Plymouth, Minnesota.^[20]

Phil Kives died in Winnipeg on April 27, 2016.

Effect on Pop Culture

K-tel helped define the way people purchased music in the 1960s and 1970s. In 2013, Forbes wrote a piece on K-tel, entitled “K-Tel Records: The Spotify of the 70s,” pointing out the way people discovered new music in the 70s was through K-Tel compilations, in the same way that Spotify playlists are now used to find related artists.^[21]

In 2013, Dave Grohl, founding member of Nirvana and front man of the Foo Fighters, gave a keynote speech at SXSW, praising K-tel for exposing him to music early in his life, specifically "Frankenstein" (instrumental) by The Edgar Winter Group: “Grohl told the crowd earnestly that the song's inclusion on a 1975 K Tel Records Blockbuster compilation – the first album he ever owned – was "the record that changed my life." ^[22]

K-Tel infomercials were spoofed on late night television, giving inspiration to skits such as Dan Aykroyd’s famous “Bass-o-Matic” Saturday Night Live performance, and The Simpsons cartoon series, where the fictional B-movie actor Troy McClure promotes widgets on a show called I Can’t Believe They Invented It!.^[23] K-tel’s large catalog of re-records and original hit recordings can be found in today’s modern soundtracks such as commercials (e.g., Nike, Fiat, Coke and KFC), films (e.g., Spiderman, The Dallas Buyers Club and Hotel Transylvania 2) and television programs (e.g., Ray Donovan, Breaking Bad, Californication, Mad Men and Transparent).

See also

• Arcade Records
• List of record labels

References

External links

• Official site
• K-tel International, Inc. Company Profile at biz.yahoo.com
• NY Times article - K-tel spinoff