Rainbow Products

From rack-jobbed budget records to one of Australia’s largest music and home-video distributors
Rainbow Products Ltd was one of Australia’s most successful budget-music and home-entertainment distributors. Although the Rainbow name emerged in 1979, the company inherited a business developed by John Avakian over more than a decade through Basic Books, Budget Records, Summit Records Australia and Music for Pleasure. By combining licensed catalogue recordings, economical packaging, extensive retail distribution and carefully judged pricing, Rainbow helped take budget records—and later compact discs and sell-through videos—far beyond the specialist record shop.
The origins of the business
Rainbow’s origins can be traced to the growth of “rack-jobbing” in Australia during the mid-1960s. Under this model, a distributor supplied and regularly replenished display racks in bookshops, department stores, newsagents, service stations and other outlets that did not traditionally specialise in recorded music. Retailers needed only to provide the floor space, while the distributor selected, delivered and replaced the stock.

John Avakian became involved in this emerging market through Basic Books (A’Asia) Pty Ltd. From early 1966, Basic Books began importing low-priced records from Britain and the United States and placing them alongside its books in retail outlets. Generally selling for $2.50, the records provided an inexpensive alternative to the full-priced albums available through conventional record shops.

Basic Books initially relied heavily upon imported finished product. As the business developed, however, John began obtaining repertoire from Australian and overseas record companies for local manufacture. In 1970 he introduced the short-lived Budget Records imprint, which accompanied the company’s expansion into recordings licensed locally from the Australian Record Company, Festival Records and RCA. Repertoire acquired directly from overseas licensors was also increasingly pressed in Australia.

These arrangements gave the business greater control over its catalogue, manufacturing quantities and supply. They also reduced its dependence upon imported finished records and laid the foundations for a larger Australian budget-record operation.
From Basic Books to Summit Records
The next stage came in mid-1970, when Basic Books combined its record activities with the Universal Record Club to form Summit Records Australia. Summit inherited the distribution network created by Basic Books along with the Universal Record Club and expanded its catalogue through further licensing arrangements.

Its business model was straightforward but effective. Recordings that were no longer being actively promoted by their original companies—or which had never previously been made available in Australia—could be licensed, repackaged and returned to the market at an affordable price. The catalogue included popular music, country, jazz, classical recordings, children’s titles, instrumental collections and locally licensed Australian repertoire.

In addition to the Summit label, the company distributed recordings carrying the trademarks of the original repertoire owners. Summit was therefore not simply a record label in the conventional sense. It was a licensing, packaging, marketing and distribution operation capable of supplying a wide selection of inexpensive recordings to a broad retail network.

By June 1971, Summit had been acquired by Paul Hamlyn Pty Ltd and integrated with its existing Australian Music for Pleasure operation, until then one of Summit’s principal competitors. Music for Pleasure had commenced operations in Australia in October 1968 and had quickly become one of the country’s best-known budget labels.

John was appointed to manage the combined record business. The acquisition brought together two operations pursuing similar markets and allowed Summit and Music for Pleasure to share repertoire, administration, warehousing and distribution. John continued to develop a model based upon licensing older or underused recordings, presenting them attractively and distributing them in large quantities through both conventional and non-traditional retailers.

Around the end of 1972, Summit Records Australia relocated from 21 Atchison Street, St Leonards—its address dating back to the Basic Books operation—to 176 South Creek Road, Dee Why West. These were the publishing, warehousing and distribution premises occupied by Paul Hamlyn Pty Ltd since October 1968.
The creation of Rainbow Products
Rainbow Products Ltd appears to have been incorporated around March 1979. Over the course of the year, Paul Hamlyn’s Australian record operations transitioned to the newly established company. The change encompassed the wider record division led by John Avakian—including Summit Records Australia, Music for Pleasure and the associated licensing, rack-merchandising and distribution business.

By February 1980, the record business was functioning principally under the Rainbow Products name, while its recorded-music operations were generally identified as Rainbow Record Products. The Summit name continued in parallel as a record imprint, but Music for Pleasure was retired from the Australian market.

Rainbow initially operated from 7 Boola Place, Dee Why West, close to—but physically distinct from—the Paul Hamlyn premises at 176 South Creek Road. Around 1990, the company relocated to Unit 4, 19 Rodborough Road, Frenchs Forest.

A leading budget distributor
The early Rainbow catalogue continued the model developed through Summit and Music for Pleasure. The company licensed recordings from Australian and international record companies and issued them on LP and cassette, sometimes under the Rainbow or Summit names and sometimes retaining the original licensor’s label identity.

Its releases encompassed rock and roll, country, easy listening, jazz, classical music, children’s recordings and compilations by well-known performers. Rainbow was therefore more accurately described as a budget-record specialist and distributor than as a conventional record company seeking to discover and develop new artists.

Its particular skill lay in identifying recordings with continuing public appeal, acquiring the necessary rights and finding a price and presentation capable of returning them to the mass market. Although many releases were familiar compilations, others assembled recordings that had become difficult to obtain in Australia.

By 1982, Rainbow had become one of Australia’s leading rack-oriented budget-music companies. A later Billboard account reported that it was licensing repertoire from every major record company by this time. Its products could be found not only in record shops but also in department stores, newsagents, discount outlets and other high-volume retailers.

Rainbow benefited from the substantial catalogue and licensing relationships accumulated during the Summit and Music for Pleasure years, but it also established new arrangements of its own. Many releases paired recognisable artists with simple, direct titles and economical packaging designed to attract the casual buyer.

The company’s success demonstrated that “budget” did not necessarily mean disposable or anonymous. Rainbow frequently issued recordings by internationally recognised performers, relying upon the enduring appeal of the artist rather than the expensive promotional campaigns normally associated with new releases.

Record manufacture in Australia and New Zealand
Rainbow did not operate its own record-pressing plant, and its manufacturing arrangements varied according to the release and licensor. Some records were manufactured in Australia, while a considerable quantity of vinyl was pressed by PolyGram Records in New Zealand for distribution in both Australia and New Zealand.

New Zealand manufacture became particularly common during the 1980s. Australian-made sleeves were sometimes paired with New Zealand-pressed records, meaning that an ostensibly Australian Rainbow issue could contain components produced in both countries.

The use of New Zealand manufacture continued until PolyGram ceased pressing records there in mid-1986. These arrangements were not peculiar to Rainbow: several Australian record companies supplemented or replaced local manufacture with New Zealand pressings during periods of changing demand and declining vinyl production.

Times Publishing takes control
Rainbow’s growing position in the Australian budget market attracted the involvement of Singapore-based Times Publishing. Times already held a 30 per cent interest in Rainbow before September 1982.

In September 1982, through its wholly owned subsidiary Times Enterprises (Australia) Pty Ltd, Times Publishing acquired the remaining 70 per cent interest in Rainbow Products. The transaction involved the purchase of 35,000 shares and made Rainbow a wholly owned subsidiary.

The acquisition placed Rainbow within a larger international publishing, printing and distribution group and provided additional support for its expansion. Nevertheless, the Australian operation remained closely associated with the Avakian family. John Avakian continued to lead the company, while Ara and Andrew Avakian later occupied senior management positions.

Rainbow was therefore able to combine the resources of an international parent company with the local licensing knowledge, merchandising experience and retail relationships developed by John since the 1960s.

Times Publishing later came under the majority control of Singapore-based Fraser and Neave in 2000. Rainbow and its associated Australian businesses consequently became part of the wider Fraser and Neave group.

From vinyl to compact disc
During the late 1980s, Rainbow successfully expanded beyond LPs and cassettes into compact discs. The introduction of the CD presented both a challenge and an opportunity. Compact discs entered the Australian market as premium-priced products, commonly selling for more than $25. Budget and mid-priced discs were available, but they seldom approached the price of an LP.

Rainbow recognised that many consumers wanted the new format but remained reluctant to pay full price for older catalogue material. The company began issuing well-presented pop, rock, country and easy-listening CDs for $12.99 and, in some cases, $9.99. John later claimed that Rainbow had been the first Australian company to market compact discs at prices comparable with vinyl records.

This was not simply a matter of transferring old LP compilations to a new format. Rainbow adapted its established budget-record principles to compact disc: familiar repertoire, economical production, large distribution and prices low enough to encourage an impulse purchase.

By 1991, the strategy had made Rainbow a substantial Australian entertainment company. A contemporary Billboard profile reported that Rainbow Products was turning over more than $30 million annually, with approximately half coming from its aggressively marketed range of budget CDs, cassettes and videos.

John explained that Rainbow concentrated on mainstream music and video, which other companies believed had reached the end of its commercial life. By returning that material to the market at a value-for-money price, Rainbow was able to operate on margins that larger companies might not have considered worthwhile while developing a substantial new market.

The expansion into home video
Rainbow’s greatest growth during the late 1980s came from sell-through video. At a time when much of the Australian video market was still based upon rental, Rainbow concentrated on tapes priced cheaply enough for consumers to buy and keep.

The company developed specialist ranges of children’s programs, cartoons, fitness instruction and feature films, generally priced between $9.99 and $19.99. As with its records, Rainbow’s approach relied upon large-volume sales, mainstream subject matter and narrow profit margins.

The results were remarkable. By 1991, home video accounted for approximately 40 per cent of the $18 million generated by Rainbow’s principal music-and-video business, despite the company having entered the field only three years earlier.

One series of fitness videos reportedly sold a combined 165,000 copies, while 30 different cartoon titles achieved combined sales exceeding 200,000 copies. These results were particularly notable at a time when the wider Australian retail market was performing poorly.

In 1989, Rainbow reached an agreement with CIC-Taft Video to distribute feature films from the Paramount and Universal catalogues. The company increasingly supported its products with television advertising, although its campaigns remained more modest than those of large television-marketing companies such as Dino, Concept and J&B Records.

Rainbow’s success rested upon the same principle that had guided John’s budget-record activities: recordings and programs that major companies considered to have reached the end of their normal commercial life could find a new audience when repackaged, widely distributed and offered at an appropriate price.

Musicway and further diversification
Also in 1989, Rainbow Products acquired Musicway Corporation, a major Australian distributor of blank audio and videotapes, hi-fi accessories and related consumer products. The acquisition gave the Times Publishing group an additional Australian distribution business and extended Rainbow’s reach beyond pre-recorded entertainment.

Rainbow’s music activities later appeared under the Rainbow Music Group name, while Rainbow Products continued to distribute CDs, DVDs and other media. Musicway increasingly concentrated on blank media, storage products, lifestyle accessories and consumer-electronics supplies.

By 2009, Fraser and Neave still described Rainbow Products as a wholly owned Australian subsidiary engaged in the distribution of CDs, DVDs and media products. Musicway Corporation was separately described as distributing lifestyle accessories and storage products.

Rainbow’s active distribution business appears to have ended around December 2009. By the following reporting period, Rainbow Products was classified as dormant, while Musicway continued as the group’s active Australian distribution operation.

Rainbow subsequently entered voluntary liquidation and was deregistered on 24 October 2012, bringing the corporate life of the company to an end more than 33 years after its establishment.

Rainbow and The Beatles
Rainbow’s direct connection with The Beatles came through its 1985 reissue of Rock Legends – The Beatles. The album contained the familiar recordings made in Hamburg in June 1961 by Tony Sheridan with The Beatles, who were originally billed on the recordings as The Beat Brothers.

German label Polydor controlled the recordings and repeatedly repackaged them following The Beatles’ rise to international fame. They had previously appeared in Australia as The Beatles in Hamburg, first through Karussell in March 1970 and then through Summit Records Australia in November 1970.

PolyGram Australia launched its Rock Legends budget series in August 1980. Packaged in a uniform sleeve design and priced at $5.99, the series was an immediate success, reportedly selling more than 150,000 units during its first ten months. The Beatles volume, numbered 17 in the series, was first released on 17 October 1980.

In 1985, Rainbow licensed and reissued the album, retaining the established Rock Legends title and basic sleeve design while adding its own company identification. Australian-manufactured sleeves were used, but most surviving copies appear to contain records pressed by PolyGram in New Zealand.

The release typified Rainbow’s business model: proven repertoire licensed from a major company, familiar artwork, economical presentation and distribution aimed at returning an established title to the budget market.

It also completed a curious circle in the history of the recordings. Summit had issued the same Hamburg material in Australia in 1970, and 15 years later Rainbow—the corporate successor to the record operation under which Summit had developed—returned it to the Australian market once again.

Legacy
Rainbow Products represented the culmination of more than four decades of Australian budget-record merchandising. Its development can be traced from Basic Books’ first imported records, through Budget Records and Summit, the integration with Music for Pleasure and finally the expansion of Rainbow into LPs, cassettes, compact discs and home video.

John Avakian’s achievement was not simply to sell old recordings cheaply. He recognised that catalogue material could have a long commercial life if it was properly selected, repackaged, priced and placed before consumers. Rainbow brought recorded music into outlets far beyond the traditional record shop and later applied the same approach to compact discs and pre-recorded video.

The company also adapted successfully to repeated changes in consumer technology. Its business began in the era of inexpensive vinyl records, expanded through the cassette boom, embraced the compact disc and then entered the rapidly developing sell-through video market.

At its height, Rainbow was turning over more than $30 million annually and had become a significant participant in Australia’s music and home-entertainment industries. Its history reflects the broader transformation of the budget market: from racks of imported LPs in mid-1960s bookshops to inexpensive CDs and videos available through mass-market retailers at the beginning of the 1990s.

Although the Rainbow company eventually disappeared, its lineage—from Basic Books through Summit and the Paul Hamlyn record division—made it one of the longest-running and most successful Australian enterprises devoted to bringing recorded entertainment to the public at affordable prices.