Alan R Pearlman started thinking seriously about electronic instruments after he heard the popular "Switched-on Bach" recording around 1968. He founded ARP Instruments in 1969 and in 1970 produced the ARP 2500 (originally labeled "Tonus, Inc"). But, like most early synthesizer manufacturers, ARP was plagued by a corporate machine and bad management. "Alan Pearlman...was opposed to the Avatar project (1976; one of the first guitar synths). In a memo to the board he declared, 'There are formidable technical problems... and we have an unknown amount of R&D to produce an acceptable model.' Despite his objections, he was overruled, and the $7,000,000 company sank $4,000,000 into an untested product. ARP only sold $1,000,000 worth of the Avatars over two years." The company incurred an enormous debt.
In 1981, after a desperate attempt to keep the company alive (Mr. Pearlman had already lent ARP $168,000) the company folded. ARP's inventory was bought by CBS, who also purchased the manufacturing rights the the Chroma and the electric piano that was currently being developed.
[excerpted with permission from the book Vintage Synthesizers by Mark Vail, copyright Miller Freeman, Inc]
"From a music business standpoint, ARP was innovative in two important
"One, they gave away free product to recording artists by the truckload.
Everybody with a major recording contract got a free Oddessy if they'd
allow ARP to use their name on a user's list. Those that really put the
stuff to use (like Townsend and Stevie Wonder) got every damn box that ARP
made for free. Pretty soon there were ARP sounds on hundreds of major
"Two, they discounted heavily to the dealers. Most keyboard products (like
Moog) gave a 40% discount off retail to the dealer. ARP's was 50%. Both
the MiniMoog and the Oddessy had the same retail price (US$1995.00) but
the Oddessy was cheaper to the dealer, and therefore made a better profit
when sold for the same price (or the dealer could give a better discount
on ARP's). This resulted in a lot of ARP's being pushed by dealers over
other brands."----[Joseph Swails, a former ARP