always 403 Forbidden with Nginx .htpasswd

From looking at tutorials such as this it seems relatively easy to set up .htpasswd authentication.

Here's my HTTPS block which is how I'm accessing my site:

 server {
      listen 443;
      server_name potato;
      root /var/www/html;
      ssl on; 
      ssl_certificate      /srv/ssl/cert.pem;
      ssl_certificate_key  /srv/ssl/key.pem;  

      location / {
        auth_basic "Restricted Content";
        auth_basic_user_file /usr/local/nginx/.htpasswd;
      }

  } 

I've gathered from here the following snippet to create the .htpasswd file:

 USERNAME=admin
 PASSWORD=password
 sudo printf "$USERNAME:$(openssl passwd -crypt $PASSWORD)\n" >> .htpasswd

This initially failed with a permission denied error, which I resolved by first creating an empty .htpasswd then granting myself permission via sudo chown max:max .htpasswd.

When I visit the website, I do see the Auth prompt, but I get a 403 error even I type in the correct password.

I have been fiddling with this for a while and am continuing to dig through google searches. But I'd appreciate any tips toward a likely source. It'd also be great if someone could show me a dependable way to diagnose the cause of the Auth failure.

In my access.log file I have entries like this:

73.170.238.232 - admin [05/Sep/2016:12:03:34 -0700] "GET /musicker/dist/ HTTP/1.1" 403 571 "-" "Mozilla/5.0 (X11; CrOS x86_64 8350.68.0) AppleWebKit/537.36 (KHTML, like Gecko) Chrome/52.0.2743.116 Safari/537.36"

but I don't see much useful information in there. You can see I'm trying to access the website at /musicker/dist/, and in Nginx my location / block is catching this and adding auth_basic.