Independence Days

by Alex; Ogg

  “When Rough Trade said that was it,” McLean continues, “I had to see my accountant. He said I had to do ‘an orderly realisation of assets on a pro-rata basis’ – that phrase is ingrained on my brain. It basically means paying off creditors on a proportional basis. It meant playing with a straight bat with the funds that came in. Most people got paid off, but a few labels got bumped here and there. But I was able to keep my house, and that was the main thing.”

  Nightshift, a Scottish record label cum distributor founded by Brian Guthrie [brother of Robin Guthrie of the Cocteau Twins] to release the first Lowlife record in 1985, tried to pick up some of the slack, but faced a hangover of suspicion. Guthrie acknowledged as much in an interview with Lindsay Hutton. “We do handle a small number of the labels, but the majority [of ex-Fast Forward clients] are not dealing with us. Some because they’re not carrying on due to financial constraints and others who, simply, in the wake of Fast and Red Rhino going down the tubes, don’t trust the Cartel set-up.” Those suspicions would ultimately prove well-founded.

  “Brian Guthrie was working in the office for Fast Forward,” says McLean. “He worked there for two years before we closed the office. He also had the freedom to put out his own stuff. He had this band, Lowlife, that his brother Robin produced. They sold really well, to the continent, and they probably did 10,000 copies of every album; decent money coming in. Brian kept in touch with Rough Trade, because he’d been going to the meetings. I couldn’t, I couldn’t be seen to be doing any distribution work at all, so I was just concentrating on wholesale to the shops.”

  The Cartel’s problems were exacerbated by what was becoming a top-heavy hierarchy that wasn’t necessarily any more efficient at decision making. “It had become unsustainable,” says Boon. “There was a whole shift in attitudes to labels. I remember when Clive Selwood came to Rough Trade with the idea for Strange Fruit [a label dedicated to reissuing classic John Peel sessions]. Basically he wanted an advance. And there was a point where advances were things people didn’t get. And he went to Pinnacle with Strange Fruit because Steve Mason [who had bought the ailing distributor in 1984 after its second crash] offered him money. And Simon Edwards and I spent a lot of time with Clive Selwood, and we had to go to the main board with details of all the meetings we’d had, and all the things we’d discussed. Basically what went wrong was that they wanted money, and Rough Trade wasn’t offering any. A similar thing happened with Creation.”

  An acceleration in senior staff turnover hardly helped. Powell had gone by April 1989. Ex-Pinnacle general manager Dave Whitehead, who had headed up distribution since 1986, gradually taking over Richard Scott’s role, lasted till December. By that time Simon Edwards was also out the door. A new MD was found in George Kimpton-Howe, previously right-hand man to Mason at Pinnacle, who arrived in June 1990 as Sales & Product Director. His opening gambit, proclaimed in the pages of The Catalogue, was that he intended “to stabilise the company by creating a broader and firmer base catalogue sale, and in so doing introduce new and exciting styles of music – not to mention video – and break down some rather antiquated attitudes which have surrounded Rough Trade as a company.” It was an impressively pompous start. Not entirely coincidentally, an unspoken turf war broke out between RTD and Pinnacle, his former employers, for top dog status as the country’s foremost independent distributor.

  It’s widely perceived that the collapse of Rough Trade Distribution in 1991 ‘did for’ the independent community as then was, and that’s largely true. But the end of The Cartel had already destroyed much of the original camaraderie and spirit. Despite rude health in terms of sales in the independent sector, here were clearly underlying problems, the biggest being ‘centralisation’.

  “We were all just called to Birmingham,” recalls Sandy McLean, “after George Kimpton-Howe had taken over. That was pretty controversial on its own – Pinnacle had always been the enemy since day one. There was a whole business style that everyone found abhorrent. The Pinnacle style wasn’t ours, and this guy was running the show – it just got more gruesome. It wasn’t a huge surprise when we got called to the meeting in Birmingham – oh God, everyone knows what happens in Birmingham. Everyone knew – don’t take the company car keys! We got statutory redundancy. So yes, everyone was pretty pissed off at that point.”

  The Music Week headline in its 7 July 1990 edition was “Cartel folds, Rough Trade takes control”. Boon, in his August editorial for The Catalogue, did his best to dampen the anxiety. “This ‘Cartel’ thing was and always has been a marketing exercise, a profile-building hype for a bunch of UK regional (if not at the time – 1982 – when they decided to operate in concert – marginal) independent distributors, sharing a common sales structure. And it was the sales structure which, if anything, was The Cartel. Those guys ‘n’ gals on the phone or in the dealer’s face hustling the new Go-Go Frogs album on Hope In Hell Records. The real ol’ mechanics. And all that’s happening… in real terms, is that the regional telesales people that constituted (formally and formerly) ‘Cartel Wholesale’ are coming under one centralised roof… Rough Trade Distribution’s, who owned ‘Cartel Wholesale’ anyway, and the Cartel name is consigned to history and the record sleeves of back catalogue from labels who can’t afford the plate and artwork changes…” However, Boon’s following statement would prove to be unduly optimistic. “So we can all rest easy. No-one’s going out of business – not for the foreseeable future and fingers crossed, the incomprehensible spanking new computer system and building Rough Trade have now established will prevent that – and labels large and small will continue to be serviced successfully, it not better.”

  Of course, there was a lot more to it than that, but then Boon, while far too conscientious to play Lord Haw Haw for the new regime, was duty bound to look at his glass as half full. “Well, that was the PR spin,” says Sean Mayo of Revolver. “For quite a while all the telesales operations working out of regional offices were reporting directly to sales management in London at Rough Trade, to a guy called Jeremy Boyce. It all came to a head when George Kimpton-Howe came along. He was a completely different beast to anyone in the company at that point. He was ruthlessly conservative and commercial. He didn’t seem at all music orientated. Within months there was an ultimatum. They wanted to close all the regional telesales operations and relocate them all to London. Everybody was offered redundancy or relocation, and I took redundancy. That was the end of an era. A number of people will tell you now that once that happened, the heart of the whole thing was ripped out of it. A lot of really good people were lost from the industry at that point.”

  “Sean Mayo and I, when we got paid off in Birmingham,” recalls McLean, “went on the tear together. We drank all the champagne in all the mini-bars; we were bad boys that night. He lost his contact lens cleaning equipment and went mental at the desk clerk, who wouldn’t come up and let us in his room after he lost the key. We threatened to break the door down, and to call 999, and eventually he came up and let us in. We then drank the fizz in HIS room’s mini-bar.”

  In retrospect, it seems hard to quantify just how bad a decision the centralisation of the sales force was. Telesales is a job that comes loaded with negative connotations, but the vast majority of the Cartel’s team were primarily music fans who knew their markets, could spot trends and had developed strong bonds with local retailers. Where once The Cartel could claim to have its ear to the ground throughout the UK, now the whole operation was becoming as remote and centralised and London as the major labels.

  That rush for centralisation wasn’t confined to the sales team. “It had all worked very well for a long time,” says Derek Chapman of Backs.

  “Previously, each member of the Cartel had to have a warehouse in their own area, servicing the shops in the area. In the late 80s, it all went to a centralised warehouse in London, at which point the balance shifted, and it all started to go pear-shaped, as the costs involved changed. The releases were still coming in from all over
the country, it was just the practical matter of running a very large, cumbersome warehouse in London, really. And the costs involved in all that. The way the Cartel worked throughout the 80s was six or seven companies working together to form a network of distribution. For various reasons, bit by bit, an arm of the Cartel changed, moved, or collapsed and broke.”

  One of the few personnel to virulently oppose the ‘centralisation’ had been John Loder at Southern – never a Cartel member but a sympathetic partner on many levels. “John said, I don’t trust centralisation,” recalls Penny Rimbaud. “He was the only one who said no. And that ultimately made Southern a very powerful distribution outfit. It was an incredibly wise decision. I remember talking to him about it, and I said, it seems to make sense to centralise. But he was absolutely resolute, and came under a hell of a lot of criticism for that.” Richard Scott concurs. “John was always an outsider – but I personally liked him. We tried very hard to sell stuff for him, but he had such a complicated way of dealing with things that it wasn’t easy. He was a loner. He came to see me in Hastings before he died, and he was very proud of the fact that he’d sold his millionth Crass record. He was awkward, but I always enjoyed dealing with him.”

  Others, however, could see the benefits of centralisation. “The central distribution model was very contentious,” admits Robin Hurley. “My view was that it was emotionally a difficult thing to grasp. But if you think about shipping a Billy Bragg album from London to the Midlands, and from the Midlands to HMV Birmingham, it clearly would be a more economic move to go from London straight to Birmingham, with Nine Mile just being the selling company.”

  Revolver, too, decided to break away from The Cartel. Within months of taking redundancy rather than relocate to London, Sean Mayo found himself back manning the phones in Bristol. “I was doing exactly the same job. And it felt like doing it for the right reasons again. Then Revolver and APT, which was the remainder of Red Rhino, merged. Several of their people relocated to Bristol.” Revolver’s push for independence (in relative, but contextually rather loaded terms) proved astute. Mike Chadwick eventually formed Vital Distribution in 1993, which would become the largest independent music distributor in the UK by the turn of the century.

  Meanwhile, the prophecy that Rough Trade Distribution could seamlessly fill the hole left by the Cartel’s collapse proved flawed. “Distribution made some terrible, terrible mistakes,” says a rueful Geoff Travis. “The ones I always talk about – the purchase of a computer system that didn’t work for a few months, having a lease on King’s Cross and then getting a new lease on a new building – like having two flats without being able to afford it. Then credit control failed to spot big debts from other companies that maybe they should have picked up earlier. Those were the three things that crippled us. Those three things were what brought the company down.”

  It’s worth putting some flesh on those bare bones. In July 1989 vast new premises of 31,000 square foot were secured off Seven Sisters Road in Finsbury Park. A new computer system was installed to look after the increased inventory and invoicing (another 15 labels were to be added to the existing 55). It would cost more than half a million pounds, and was chosen despite advice from other distributors about their own arrangements (there were suggestions RTD were trying to install untested but potentially more efficient technology to try to get the jump on Pinnacle). It simply didn’t work for several months, fraught attempts at its installation spanning the attempted move from King’s Cross to Finsbury Park, a costly location secured in haste. To the extent that RTD had overlooked the fact that, in addition to saddling themselves with a new £350,000 pa warehousing commitment, the lease on the King’s Cross property had yet to expire and they would have to continue to shell out more that £50,000 pa on that. Meanwhile, eyes strayed from credit control. One client in particular, Parkway Video, owed the company a figure in excess of £500,000. There were knock-on problems with VAT not being paid. And that all added up to a cash flow crisis.

  With the enormity of these problems, Travis attests that any attention focused on his activities, and the apparent largesse he was expending on running Rough Trade the label and its American arm (an investment estimated to be £100,000 per month) were entirely spurious, or possibly diversionary. He remains adamant that they should have had no impact whatsoever on the sister company’s operations and it was simply bad business discipline that created problems. “Some of the distribution people would argue that the cash strain of investing in America was a liability,” he says. “I would argue that the American business plan was totally on point and we were working very steadily towards break even. I thought we had a really good company in that period in America, we had Lucinda [Williams], we had Mazzy Star, we had Galaxie 500. Some really good records. We were selling records and doing well, so I don’t accept that argument. So it was really down to the personalities. It’s a flaw in my character in that I wasn’t really interested in fighting for control of the board, and all that kind of stuff. I’m not interested in having a battle for power.”

  Robin Hurley, who oversaw the American enterprise, backs Travis’s analysis, though he does admit that the commitment stretched Rough Trade. “I think what most pleased Geoff is that we were slowly beginning to have an A&R base out of America.” He proffers the same three artists as evidence; Williams, Mazzy Star and Galaxie 500. “We were starting to have an impact. But there was a huge investment in the States, which definitely drained the reserves of the UK mothership.” In addition to the three crucial factors Travis points to (computer problems, a double lease and credit control), Hurley also identifies a fourth. “At the time we had huge growth in Germany. The German government reviewed the tax the company paid over the growth period, and levied Rough Trade Germany with a big retroactive tax bill. Those things hit just about all at once. I think Geoff’s right, it may not have been overnight, but we were definitely making the right strides in America. I’d be the first to say though, when I came over here, I should have gone to work for SST for a year or something; observe from the inside the pitfalls and problems the American market would present to us. Rather than the sort of arrogance – we’ve done so well in England and so well in Germany – we can do it here. The size of this country means there’s nothing that’s comparable.”

  One by one, dismayed at the bottleneck, independent labels closed their accounts with RTD. There were 40 lay-offs and redundancies announced just before Christmas; the house of cards tumbling fast. As if the group didn’t have software problems aplenty, disgusted and soon to be jobless staff further sabotaged the computers. Kimpton-Howe received a human faeces in a record box as a festive thank you. Elements of the warehouse team affiliated to Class War took to vandalism and writing graffiti on the walls. By the start of 1991 One Little Indian (who had not long since borrowed funds from Travis to finance The Sugarcubes album) had transferred its accounts to Pinnacle. Creation had made the same switch just a few months before due to Alan McGee’s growing disenchantment with Rough Trade. A board meeting was held, and the larger creditors informed of the urgency of the problems (not that many hadn’t already guessed) and a corporate recovery team, led by David Murrell of KPMG accountants, appointed.

  What happened next, though, was extraordinary, if ultimately futile. It says as much about the best aspects of the UK independent music community as any ‘winning runs’ any of them might have achieved in their heyday. In February 1991 an emergency meeting was called. The assembled throng of concerned creditors and affiliates and staff were informed that the company owed £3.6 million. Mute, 4AD, Situation 2/Beggars Banquet and Big Life were among the companies owed six-figure sums – Mute alone accounting for £800,000, while the Rough Trade label itself was owed more than a million. The aforementioned bigger players, rather than pushing for an immediate liquidation petition, which would have been the norm, elected to put forward an action plan. They formed a negotiating committee. The settlement they worked out – which relied on nobody breaking rank a
nd pushing for receivership – meant that any prior debts to this point would be classed as historic. They would be paid off through income generated from the sale of the Rough Trade label itself, the Smiths catalogue and the US and German branches of the company. Other contingencies included a ‘fire-fighting’ fund for the smaller, more vulnerable labels, and an escrow account to pay out incoming monies and receipts more quickly, to help restore faith.

  It didn’t work out like that. Asset sales are tricky things at the best of times; when the world and his wife knows you need the money quickly, you are at a distinct disadvantage. The Smiths catalogue, for example, would eventually go to Warners, but only after protracted discussions with the band and a sequential lowering of the headline fee expected. Rhythm King signed a new deal with Sony (at least for their most commercial acts) and Big Life moved to PolyGram. They had their own artists to pay and mouths to feed and suddenly the law of the jungle overtook the spirit of camaraderie.

  A second meeting was scheduled for 14 May 1991. The negotiating committee was able to report back that 26% of historic debt had been repaid. But the asset dispersal would require further time. The committee offered two ways forward. One allowed RTD to continue trading with debts written off, in the hope that it could eventually recoup monies owed. It was a leap of faith and there were complications over the percentage of money that would go to the labels and separate creditors such as pressing plants. They rejected the offer on that basis. The alternative was to create a new company, RTM (Rough Trade Marketing), that would liase with established distributors to get their records out, securing advances in the process that would be significant enough to take a healthy bite out of the debt mountain. Two offers were investigated and considered. The first was for £2 million from PolyGram, the second of £1 million from Steve Mason at Pinnacle.