PhonoJack wrote:To eliminate some of the confusion here, remember that Berliner was the patent holder (acting much like a virtual company) who exclusively purchased the machines from Johnson (paying Johnson’s very profitable mark-up) and sold them to Seaman (National Gramophone) for an additional 40% mark-up an incredibly profitable (perhaps unfair) arrangement as Johnson shipped directly to Seaman. So Berliner had no manufacturing, very limited engineering (most was done by Johnson) no distribution and no marketing and sales, what we might today call a virtual company that outsourced is operations.
You have nicely and appropriately summarized the historical background and I completely agree with what you say about Seaman. Let me add some details and correct a few things.
By contract, Seaman was obliged to pay Berliner the
actual manufacturing cost, b) a markup of 40% of that cost, and c) the royalty which Emile Berliner was required to pay the United States Gramophone Company in the amount of 10%. By the way, the same is true for the disc records.
From this it follows that, if Berliner allowed Johnson a profitable markup, he had to pay it out of his own pocket! Nevertheless, the arrangement remains very profitable.
PhonoJack wrote:Berliner’s battles were really with the American Graphophone Company (who owned the Bell and Tainter patents) and the Columbia Phonograph Company who ultimately was granted an injunction against Berliner, which essentially shut down Berliner’s attempt to manufacture and distribute the Berliner branded gramophone in the United States. So Berliner (really Tom Parvin, president and the Berliner directors) made two serious business errors, 1) fix prices unusually high so that Seaman (National Gramophone) Berliner’s primary US channel could not survive profitably and 2) launch the patent infringement attack on American Graphophone which Berliner ultimately lost.
Berliner did not personally battle against the American Graphophone Co.; the Columbia Phonograph Co. was only marginally involved; and the Berliner directors did not launch the patent infringement attack on American Graphophone.
However, after fully establishing the validity of Bell-Tainter Patent 341,214 in a suit brought against the “Metaphone”, the American Graphophone Company, in October 1898, filed
two separate suits alleging infringement of Patent No. 341,214: 1) in New York against the National Gramophone Company and Frank Seaman personally; 2) in Philadelphia against the Berliner Gramophone Co., Thomas S. Parvin and E. R. Johnson personally.
In short, after winning the suits, the Graphophone Company intended to consolidate the whole talking machine industry under one head.
PhonoJack wrote:Remember, Victor Talking Machines had not yet been established as Eldridge Johnson who owned the manufacturing facilities and large number of employees continued to manufacture and sell (again after losing to National Gramophone) Berliner’s patented machines under the name Consolidated Talking Machine Company. Then after the dust settled, he began operating under the name Eldridge R. Johnson Company.
It is not generally known that Johnson intended to sell his factory in early 1900 to the Gramophone Company in London. Surprisingly, the Gramophone Co. did not buy out Johnson although the offer was repeated in later years.
PhonoJack wrote:Johnson and Berliner later collaborated to form the Victor Talking Machine Company. At the time (VTM) was organized, Berliner was richly rewarded earning more reasonable patent royalties (even though Johnson, Montross and engineers) could have reasonably argued their next generation machines were substantially different that Berliner’s original design. In addition, Berliner earned sufficient equity (shares of stock) in Victor that he could retire from the gramophone business.
Johnson and Berliner did not collaborate to form the Victor Talking Machine Company. Berliner participated, I would say.
The Berliner Gramophone Company licensed Johnson in September 1901, although Johnson did not need the Berliner patents to manufacture; he took it rather as a matter of insurance in the event that the Courts should decide the patents to be valid. (They became valid a short time after.)
After successful conclusion of an all important manufacturing contract with Gramophone & Typewriter Ltd. in September 1901, Johnson transferred his patents, the personal license from the Berliner Gramophone Co. and also his factory capacity to a new company, the Victor Talking Machine Co.
But when the Gramophone & Typewriter Ltd. attempted to buy out Emile Berliner's holding company, the Consolidated Talking Machine Company of America, owner of the Berliner patents, Johnson responded and offered Consolidated a 40% interest in the Victor Co. Consolidated accepted and received 8,000 shares of common for the Berliner patents, and paid $50,000 for 500 shares of preferred with a bonus of 1,000 additional shares of common.
PhonoJack wrote:Berliner and his sons enjoyed a very profitable relationship with Johnson’s VTM for many years. Ultimately the Berliner operation in Canada was acquired by Victor.
Jack Whelan
No, not really "for many years". In 1906, to settle differences concerning payment of dividends, Victor paid Consolidated off with $800,000 for the 8,000 shares of Victor stock.
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but listen you young, flat bellied, 20/20 eyesight, no need for 'readers' glasses, wicked smaht kid, some of us older folks appreciate the large 
typeface, yes you can call it Reader's Digest style. Some of us have enough trouble managing the keyboard and mouse, let's make it easy to read the monitor. 
