The song tells the story of a street vendor who sells pencils and paper on the streets at Christmas. Nelson was inspired to write the song after remembering a man he often saw while he lived in Texas. The man had his legs amputated and moved with rollers, selling paper and pencils in front of Leonard's Department Store.To attract the attention of passers by, the man would shout "Pretty paper! Pretty paper!"
In October 1963, Nelson sang "Pretty Paper" for Monument Records boss Fred Foster. Bill Justis arranged the song and the demo was sent to Roy Orbison in England. The track was recorded at Decca Studio 2 in London with music director Ivor Raymonde, who made last minute arrangements with his orchestra. Each musician was provided with microphones newly designed by Decca Records' engineers. The microphones were worn around the neck to amplify the strings. Orbison attended the session with a 102-degree fever, not that you'd know it, since he puts in a sterling vocal turn on the song.
Orbison died 40 years ago in December 1988, aged 52.