Songwriter Johnny Mercer founded Capitol Records in 1942 with financial help from songwriter and film producer Buddy DeSylva and the business acumen of Glenn Wallichs, owner of Wallichs Music City. Mercer raised the idea of starting a record company while golfing with Harold Arlen and Bobby Sherwood and with Wallichs at Wallichs's record store. On February 2, 1942, Mercer and Wallichs met DeSylva at a restaurant in Hollywood to talk about investment by Paramount Pictures.
On March 27, 1942, the three men incorporated as Liberty Records (not the unrelated label Liberty Records). In May 1942, the application was amended to change the label's name to Capitol Records.
On April 6, 1942, Mercer supervised Capitol's first recording session where Martha Tilton recorded the song "Moon Dreams". On May 5, Bobby Sherwood and his orchestra recorded two tracks in the studio. On May 21, Freddie Slack and his orchestra recorded three tracks in the studio; one with the orchestra, one with Ella Mae Morse called "Cow-Cow Boogie" and "Air-Minded Executive" supervised by Mercer. On June 4, 1942, Capitol opened its first office in a second-floor room south of Sunset Boulevard. On that same day, Wallichs presented the company's first free record to Los Angeles disc jockey Peter Potter. On June 5, 1942, Paul Whiteman and his Orchestra recorded four songs at the studio. On June 12, the orchestra recorded five more songs in the studio, including "Trav'lin' Light" with Billie Holiday, On June 11, Tex Ritter recorded "(I Got Spurs That) Jingle Jangle Jingle" and "Goodbye My Little Cherokee" for his first Capitol recording session, and the songs formed Capitol's 110th produced record.
The earliest recording artists included co-owner Mercer, Johnnie Johnston, Morse, Jo Stafford, the Pied Pipers, Tex Ritter, Tilton, Paul Weston, Whiteman, and Margaret Whiting Capitol's first gold single was Morse's "Cow Cow Boogie" in 1942.
Capitol's first album was Capitol Presents Songs by Johnny Mercer, a three disc set with recordings by Mercer, Stafford and the Pied Pipers, all with Weston's Orchestra. The label's other 1940s musicians included Les Baxter, Les Brown, Jimmy Bryant, Billy Butterfield, Nat King Cole, Sammy Davis Jr., Dinning Sisters, Tennessee Ernie Ford, Mary Ford, Benny Goodman, Skitch Henderson, Betty Hutton, Stan Kenton, Peggy Lee, Billy May, Les Paul, Alvino Rey, Andy Russell, Smilin' Jack Smith, Kay Starr, Speedy West, and Cootie Williams. Musicians on the Capitol Americana label included Lead Belly, Cliffie Stone, Hank Thompson, Merle Travis, Wesley Tuttle, Jimmy Wakely, and Tex Williams.
Capitol was the first major west coast label to compete with labels on the east coast such as Columbia, Decca, and RCA Victor. In addition to its Los Angeles recording studio, Capitol owned a second studio in New York City and occasionally sent mobile recording equipment to New Orleans and other cities.
In 1946, writer-producer Alan W. Livingston created Bozo the Clown for the company's children's record library. Examples of notable Capitol albums for children during that era are Sparky's Magic Piano and Rusty in Orchestraville. Capitol also developed a noted jazz catalog that included the Capitol Jazz Men and issued the Miles Davis's album Birth of the Cool.
Capitol released a few classical albums in the 1940s, some of which contained a heavily embossed, leather-like cover. These recordings appeared on 78 rpm format, then released on the 33 format in 1949. Among the recordings: Brazilian composer Heitor Villa-Lobos' Choros No. 10, with contributions from a Los Angeles choral group and the Janssen Symphony Orchestra (1940–1952), conducted by Werner Janssen; Symphony No. 3 by Russian composer Reinhold Moritzovich Glière; and César Franck's Symphony in D minor, with Willem Mengelberg and the Concertgebouw Orchestra.
In 1949, Capitol opened a branch office in Canada and purchased KHJ Studios on Melrose Avenue adjacent to Paramount in Hollywood.
By the mid-1950s, Capitol had become a huge label that concentrated on popular music. The label's roster included the Andrews Sisters, Ray Anthony, Shirley Bassey, June Christy, Tommy Duncan, Tennessee Ernie Ford, the Four Freshmen, the Four Knights, the Four Preps, Jane Froman, Judy Garland, Jackie Gleason, Andy Griffith, Dick Haymes, Harry James, the Kingston Trio, the Louvin Brothers, Dean Martin, Al Martino, Skeets McDonald, Louis Prima, Nelson Riddle, Dinah Shore, Frank Sinatra, and Keely Smith.
Capitol began recording rock and roll acts such as The Jodimars and Gene Vincent. There were comedy records by Stan Freberg, Johnny Standley, and Mickey Katz. Children listened to Capitol's Bozo the Clown albums. Although various people played Bozo the Clown on television, Capitol used the voice of Pinto Colvig, who was also the voice of Goofy in Walt Disney cartoons. Don Wilson also released children's records. In June 1952, Billboard magazine contained a chronicle of the label's first ten years in business.
Ownership under EMI
Capitol logo from 1969 to 1978. Revived in 2017.
In 1955, the British record company EMI ended its 55-year mutual distribution agreement with RCA Victor and acquired 96% of Capitol's stock for $8.5 million. EMI built a studio at Hollywood and Vine to match its state-of-the-art Abbey Road Studios in London.
In 1957, EMI's classical label Angel was merged into Capitol. Some classical recordings were issued in high fidelity and stereophonic sound. These included William Steinberg and the Pittsburgh Symphony Orchestra, Leopold Stokowski with various orchestras (including the Los Angeles Philharmonic Orchestra) and Sir Thomas Beecham and the Royal Philharmonic Orchestra, as well as light classical albums by Carmen Dragon and the Hollywood Bowl Orchestra and albums of film music conducted by Hollywood composers such as Alfred Newman.
The Capitol of the World series introduced in 1956 and active into the 1970s encompassed German Beer Drinking Songs, Honeymoon in Rome, Australian Aboriginals, and Kasongo! Modern Music of the Belgian Congo. Many were produced by Dave Dexter Jr. This series contained over 400 albums.
In 2001, Andrew Slater took over as president.
Ownership under Universal Music Group
In 2012, the recorded music operations of EMI were sold to the Universal Music Group and the world headquarters were re-established in the Capitol Tower in Hollywood as part of the subsequent reorganization of the Capitol Music Group. Steve Barnett, previously an employee of Columbia, was hired as Chairman and CEO of the division.
Capitol filed a lawsuit against Vimeo, an online video-sharing website, for audio copyright infringement. Capitol filed the claim after users were visibly lip-synching to some of their tracks.
Following a legal action by Capitol against the ReDigi.com online company in April 2013, the latter was found to be in violation of copyright law. Capitol Records claimed that ReDigi was guilty of copyright infringement due to a business model that facilitated the creation of additional copies of Capitol's digital music files, whereby users could upload the files for downloading or streaming to the new purchaser of the file. ReDigi argued that the resale of MP3/digital music files is actually permitted under certain doctrines ("fair use" and "first sale") but the court maintained that the doctrines' application "was limited to material items that the copyright owner put into the stream of commerce."
In 2014, PGH Live Music joined the team and Katy Perry founded the record label Metamorphosis Music, starting a label venture with Capitol. The name of the label was later changed to Unsub Records in 2016.
Also that year, Capitol rose to number two market share and won four categories at the Grammy Awards for music by Beck and Sam Smith.
In 2018, Capitol's electronic division Astralwerks relaunched with a new team and moved its entire operations to Capitol's tower in Los Angeles.