History of LGBT: Businesses

Jeffrey Escoffier. Encyclopedia of Lesbian, Gay, Bisexual, and Transgendered History in America. Editor: Marc Stein. Volume 1. Detroit: Charles Scribner’s Sons, 2004.

The development of LGBT communities after the Stonewall Riots of 1969 spurred the growth of commercial institutions to serve and reach those communities. Compared to what came later, relatively few businesses or other economic institutions catering to sexual and gender minorities existed before 1969. Such businesses were usually marginal and often illegal, operating under “black market” conditions. The LGBT community mostly consisted largely of informal networks of friends who socialized in private homes, at cruising sites, and in LGBT bars. After Stonewall, the number of businesses grew rapidly and provided an increasingly wide range of goods and services—although growth took place unevenly between various segments of LGBT communities, who were differentiated by gender, race, class, and erotic preferences.

LGBT Businesses before Stonewall

Before Stonewall, the large but relatively invisible character of the LGBT population made it difficult for LGBT businesses to emerge. The necessary secretiveness of much of LGBT life limited the information necessary for economic markets to operate efficiently and for businesses successfully to identify and reach their customers. The desire to avoid public identification often meant that LGBT bars, bathhouses, bookstores, and other businesses, especially those that catered to middle-class clientele, sought to be as inconspicuous as possible—their outside appearances were often muted, their signs cryptic or insignificant. Bouncers often “screened” customers in order to minimize the intrusions of hostile outsiders or undercover police. These businesses often were located in neighborhoods that were segregated from everyday business and residential activities—for example, in industrial areas, in red light districts, or on isolated roads in rural areas. In addition, the prevalence of secrecy frequently encouraged different forms of “extortion” in LGBT economic life, ranging from crude efforts at blackmail to the refined “protection” provided by LGBT bar payoffs to police and organized crime.

The business and economic life of LGBT people developed sporadically and unevenly before 1969. Nevertheless, starting approximately in the 1880s, the center of gay communal life, and therefore of its economic life as well, was the drinking institution, whether it was bar, saloon, or dance hall. Public bathhouses, a staple of immigrant urban communities living in tenement housing without running water, also served gay and bisexual men. These commercial venues provided institutional contexts for homosexual and transgender socializing, sexual activity, and the establishment of relationships. LGBT people also congregated in certain urban neighborhoods where there were rooming houses, female boardinghouses, and low-cost hotels.

In Gay New York (1994), George Chauncey shows that in the late nineteenth and early twentieth centuries “fairy resorts” in specific city districts (including Times Square) often served as centers of social life for both neighborhood men and homosexuals from other areas of the city. Some male homosexuals earned income from prostitution and from live performances in sex and drag shows. LGBT people gathered together in cafeterias, coffee shops, and restaurants. In the 1920s and 1930s, Greenwich Village and Harlem showed more visible signs of the presence of LGBT communities—speakeasies, bars, social clubs, theaters, drag balls, and nightclubs that catered to homosexual and transgender clientele. These were well known among the public; in fact, straight tourists came to see the fairies and other oddities.

New York was not alone. From as early as the 1880s, red-light districts in large cities like Chicago, Boston, New Orleans, Philadelphia, Denver, Los Angeles, and San Francisco, with their concentrations of prostitutes, burlesque theaters, peep shows, and stores selling erotic literature, erotic apparel, and other sexual merchandise, featured enclaves of businesses, especially bars, that catered to LGBT customers. The number of these businesses appears to have grown significantly during World War II, although they catered more to men than to women before, during, and after the war. In part this was due to men’s higher incomes and their greater presence in public space.

After World War II, concentrations of LGBT people in certain neighborhoods of larger cities, such as New York, Los Angeles, Chicago, Philadelphia, and Washington, D.C., helped support increased LGBT business development. Bars, clubs, restaurants, and coffeehouses continued to be the most significant commercial establishments serving LGBT communities in both large and smaller cities. Despite their economic significance, however, they provided few jobs and little income to LGBT people and therefore did little to develop a more diversified LGBT commercial sector.

Gay or lesbian bars were rarely owned by gay men or lesbians, although the pattern of bar ownership varied from one region or city to the next. In the Northeast, bars were often owned and controlled by organized crime, “the Mafia,” while in cities like San Francisco, perhaps 25 to 30 percent of the gay bars in the mid-1960s were owned, according to Bob Damron (founder of Damron’s Travel Guides), by gay men or lesbians. The Tavern Guild, an association of LGBT owners of LGBT bars was founded in San Francisco in 1962, was the first LGBT business association in the United States. The Stonewall Inn in New York, one of the most famous businesses in LGBT history and the site of the 1969 police raid and riots that launched the gay liberation movement, was owned by three small-time Mafia figures. Through the 1950s and early 1960s, it had been a local Greenwich Village bar. In 1966 three young men associated with the Genovese crime family, “Mario,” Zucchi, and “Fat Tony” Lauria, opened the Stonewall Inn as a gay club. Lauria was not known to be gay when he and his partners opened the Stonewall; soon after, however, he began to have sex with men. In most cities, the profits and income generated by LGBT customers went to straight owners and was never reinvested in LGBT communities.

Bars both helped and hurt LGBT people economically. Although bars were often raided, they afforded their customers some protection against entrapment, physical assault, and blackmail. In many cities, owners paid the police and organized crime for “protection,” which reduced the risks of police raids and criminal violence. However, owners justified charging extra for drinks, food, and other refreshments, to recover the costs of payoffs.

LGBT business development was encouraged by the emergence of homophile organizations and publications in the 1950s and 1960s. LGBT publications of various types were among the first and most important ways that LGBT people were able to communicate with one another outside of face-to-face relationships. Periodicals such as ONE, published by ONE Inc.; the Mattachine Review, published by the Mattachine Society; the Ladder, published by the Daughters of Bilitis; and Drum, published by the Janus Society, carried small-scale advertising for various types of businesses. Their notices of books and mail-order advertisements, for example, helped to develop niche markets for LGBT people. Cultural goods, clothing, and erotic literature were also marketed to the LGBT community through these publications. Meanwhile, homophile activists created a set of publishing and distribution companies, some of them quite large, oriented to the LGBT market. These included Pan-Graphic Press, founded by Hal Call and Donald Lucas in San Francisco; Guild Press, founded by H. Lynn Womack in Washington, D.C.; and Trojan Book Service, founded by Clark Polak in Philadelphia.

Several of these operations functioned primarily as mail-order businesses, which were able to reach a self-selected LGBT market. One mail-order business that emerged in this period was able to adapt itself and survive after Stonewall, producing the Damron Travel Guide. In 1964, businessman Bob Damron published a small book listing all of the LGBT bars that he encountered on his extensive travels in the United States. He claimed to have visited each bar personally and briefly characterized it. At the beginning of the twenty-first century, the company was still operating and publishing men’s and women’s travel guides, maps, and city guidebooks.

Another early gay mail-order business was the publication and distribution of male nude and erotic photographs (both individually and in magazines). Guild Press and Trojan Book Service specialized in these types of business activities. Almost everyone who published or distributed these publications faced arrest or persecution at one time or another. Even ONE, a somewhat staid homophile periodical, was declared obscene and banned from the mails by the U.S. Post Office, merely because it was a homosexual publication. It won a landmark 1958 decision in the U.S. Supreme Court, which recognized its redeeming cultural value. Bob Mizer, the founder of the Athletic Model Guild, served a short term in jail in 1954, but afterward protected his business by marketing erotic photographs in the guise of “artistically” posed seminude male models. Magazines such as Physique Artistry, Grecian Guild Pictorial, MANual, and Trim also published photographs of semiclad and nude male models. The many court battles of the 1950s and 1960s that focused on obscenity gradually made possible more explicit representations.

Bookstores also played a significant role in the pre-Stonewall period. Before Stonewall, calling a bookstore “gay” usually implied that it sold pornography. But Craig Rodwell, who founded New York’s Oscar Wilde Memorial Bookshop in 1967, decided to sell only real “literature.”

Meanwhile, many LGBT professionals, including physicians, dentists, psychologists, and lawyers, were self-employed and operated businesses that, to some degree, served LGBT people. In addition, certain occupations were defined in the pre-Stonewall era as stereotypically gay or lesbian. Male interior decorators, hairdressers, librarians, and nurses and female gym teachers are among the most prominent examples. In part because of the stereotypes, some LGBT people were attracted to these occupations, which seemed to offer a safe haven.

After Stonewall, 1969-1989

After the Stonewall Riots, LGBT economic life changed dramatically. The politics of visibility, based on the gay liberation principle that enjoined homosexuals to “come out of the closet,” established the basis for political organizing and community building, but it also had economic consequences—helping to create a visible population of LGBT consumers. Many small businesses, including nonprofit spin-offs from LGBT organizations, such as bookstores, publications, coffeehouses, bathhouses, and counseling services, opened to serve LGBT customers and clients.

Businesses that provided cultural goods, including newspapers, music recordings, books, magazines, pornography, and erotica, found profitable niches very quickly. The Advocate (published by Liberation Publications) started out as a local Los Angeles newspaper in 1967 and became a national publication after Stonewall. Bookstores specializing in gay, lesbian, and women’s literature opened in many large and medium-sized cities across the country. For example, in Philadelphia, Jay’s Place opened as a “homophile” bookstore in 1970, and in Washington, D.C., Lambda Rising Bookstore, which opened in 1970 as a “head shop” (for psychedelic and drug paraphernalia), soon transformed itself into a gay bookstore.

In the 1980s and early 1990s, Publishers Weekly and other book trade publications announced the “gay publishing boom.” Mainstream publishers together with newly founded gay, feminist, and lesbian presses published an unprecedented number of books on LGBT topics. By 1991, there were more than four hundred gay and lesbian publishers of books, magazines, and newspapers. Alyson Books in Boston became a leading lesbian and gay publishing house in the 1980s. Initially the offshoot of a bookstore and a book and magazine distributor, it was purchased by Liberation Publications in 1995.

The new visibility of LGBT communities in the years after Stonewall attracted large numbers of sexual and gender minorities to large and medium-sized cities, with significant economic ramifications. San Francisco, Los Angeles, Chicago, and New York became “gay meccas” with large and diversified communities. Between the early 1970s and the early 1980s, thousands of LGBT people migrated from suburbs, towns, and small cities to these urban meccas and to regional centers like Houston, New Orleans, Atlanta, St. Louis, Philadelphia, and Boston. By 1993, Overlooked Opinions, an LGB marketing research firm, claimed that 45 percent of lesbians and 53 percent of gay men lived in urban areas. Many of these gay men and, to a lesser extent, lesbians moved into comfortable and inexpensive neighborhoods, where they purchased houses and apartment buildings, renovated them, and started businesses to support the process of gentrification. Among these businesses were real estate brokers, housewares companies, hardware stores, contractors, and providers of financial services.

The growth of LGB-owned small businesses was reflected in political developments. In 1976, for example, Harvey Milk, the owner of a camera shop on Castro Street in San Francisco, was elected to the city’s Board of Supervisors. His election represented, in part, the consolidation of the Castro district as an LGBT neighborhood (through the process of gentrification during the 1970s) and was financed in part by many small business owners in the community.

The economic development that took place in this era was not equitably balanced between lesbians and gay men. Generally, lesbians had fewer economic resources at their disposal than gay men did. Lesbians and gay men also often specialized in different kinds of businesses and lived in different neighborhoods. Lesbian community building and economic development reflected different needs and agendas. In the mid-to late 1970s lesbians entered a separatist phase, partly in their effort to build women’s communities and partly because gay men were no less chauvinist than straight men. During the 1970s many businesses founded by lesbians were inspired by the vision of developing goods and services that would uniquely satisfy the needs of lesbians. There was a desire also to establish lesbian workplaces based on lesbian-feminist principles. One of the most successful of lesbian businesses was Olivia Records, founded in 1973 by a group including singers Meg Christian and Cris Williamson. In the 1990s, Olivia evolved into Olivia Cruises and Resorts when founder Judy Dlugacz organized a concert at sea. The challenge of starting a lesbian-owned business organized around lesbian-feminist business principles is explored by Kathy Weston and Lisa Rofel in their 1997 essay on Amazon Auto Repair. They found that workplace stresses could not always be easily dealt with within a lesbian feminist context, and eventually Amazon underwent a crippling and debilitating strike by its employees. While the business survived the strike, the shared lesbianism of owners and workers did not facilitate the resolution of workplace conflict.

One of the thriving businesses that emerged from its early origins as an underground business was the production and distribution of gay pornography. During the 1980s, the gay pornography industry experienced a boom when video production became cheaper, VCRs allowed for porn videos to be viewed privately at home, and, in response to the AIDS epidemic, many gay men turned to viewing pornography as a substitute for casual sex. Some companies, such as San Francisco’s Falcon Studios, were extremely successful. Falcon’s founder, Chuck Holmes, funded many LGBT political campaigns and charities and donated more than one million dollars to San Francisco’s Lesbian, Gay, Bisexual, and Transgender Community Center, which has been renamed in his honor.

The AIDS epidemic, in addition to the grief engendered by the loss of life, has also imposed a huge economic burden on LGBT communities, and on society as a whole. Individuals who developed more advanced HIV-related illnesses often lost income through the loss of full-time jobs or through a necessary reduction in work hours. Moreover, they have experienced massive increases in healthcare expenses. The AIDS epidemic has also drained economic resources from LGBT communities more generally. The mobilization of LGBT communities to provide support for people with AIDS and the creation of institutions for education, care, and research about AIDS have diverted resources from other activities such as non-AIDS-related education, leisure, investment in small businesses and careers, and real estate improvement. In the years between 1985 and 1995, probably the largest economic institutions in many LGBT communities were nonprofit AIDS organizations, such as Gay Men’s Health Crisis in New York City and the San Francisco AIDS Foundation, and LGBT community centers, such as the Los Angeles Gay and Lesbian Community Services Center, which provided social services for people with HIV and AIDS.

The development of LGBT communities is the result of a simultaneous process of cultural identification and economic development. Identification as LGBT is built on cultural reinforcements such as LGBT popular culture, consumer goods specifically developed for LGBT people, residence in LGBT neighborhoods, and participation in LGBT activities, such as lesbian softball teams or gay choirs. In the early days of LGBT liberation, the community’s small businesses supplied LGBT cultural and consumer needs in the form of commodities and encouraged community leaders to think of the LGBT community as an “ethnic group.” In this respect, LGBT people have followed in the footsteps of the Irish, Italians, Jews, Poles, and Scandinavians in the United States—the construction of communities and the development of political machines and economic resources eventually leading to the achievement of “assimilation.” LGBT people have also followed in the footsteps of other groups by developing businesses that serve a growing and increasingly diverse population. There are now businesses that cater to the needs and interests of African American, Latino, and Asian American LGBT communities.

The LGBT Marketing Moment, 1990-2000

In the early 1990s, the gay and lesbian market emerged as a major consumer market, one worth “untold millions,” according to business writer Grant Lukenbill (1995). Large companies like AT&T, Miller Beer, Continental Airlines, and Calvin Klein developed marketing campaigns that explicitly targeted gay and lesbian communities. A growing number of mainstream companies advertised in gay magazines, sponsored TV shows with gay and lesbian characters, and customized their products and services for lesbian and gay men’s needs.

Studies by market research firms projected lucrative LGBT market segments. According to data from Over-looked Opinions, the average household income for lesbians in 1992 was $45,827; for gay men it was $51,325. In comparison, the 1990 average household income in the United States was $36,520. One newsletter, Affluent Marketers Alert, estimated that gay men spend two out of every three “queer dollars”. Other aspects of lesbian and gay lifestyles are revealed by the fact that more than 80 percent of gay men dine out more than five times per month. Lesbians who own their homes make up 43 percent of the lesbian community; gay male homeowners represent 48 percent of their community. Together, lesbians and gay men took more than 162 million trips in 1991.

Amy Gluckman and Betsey Reed (1997) have argued that the gay marketing moment obscures the economic disparities caused by race, class, and gender differences in the gay community. Unfortunately, as Gluckman and Reed point out, the LGBT marketing bonanza has encouraged corporations to cultivate a narrow definition of gay identity (white, male, affluent) as a marketing tool. In addition, while mainstream corporations provide some consumer benefits and spend more money in LGBT communities than previously, the LGBT market effort of mainstream corporate America has led to increased competition with existing LGBT businesses (driving some of them out of business). This means that most LGBT dollars continue to end up in the coffers of “straight” businesses.

The flourishing economic and commercial life of LGBT communities also has given rise to the mistaken belief that all gay men and lesbians are more affluent than heterosexuals are, that they are more engaged in conspicuous consumption, and that they enjoy a more self-indulgent lifestyle. But in fact, LGBT people continued to endure economic discrimination on many different levels (for example, lack of access to tax and inheritance benefits for married couples, prejudice in hirings, denials of promotions and salary increases, and restrictions on health-care). Despite these many challenges, the market process continues to play an important role—both negative and positive—in the development of LGBT communities.