Right from the start Simon and I tried to position Virgin as an international company, and the second thing we always insisted on was incorporating worldwide copyright to the artist’s work in our contracts. We would argue that there was less incentive for us to promote them in Britain if they then used their success here to sell well overseas with someone else.
Our last negotiating point was to ensure that Virgin owned the copyright in the individual members of the band as well as the band itself. It was sometimes difficult to define a band: for example, The Rolling Stones clearly comprised Mick Jagger, Keith Richards, Bill Wyman and Charlie Watts, but a number of other people came and went. The record industry finally defined The Rolling Stones as ‘Mick Jagger plus three others’. Some bands split up and became individually successful. Genesis is perhaps the prime example, as Peter Gabriel and Phil Collins both became bigger stars outside Genesis than they had been within the band. We had to ensure that Virgin didn’t sign a band only to be left with an empty shell while the lead guitarist went on to succeed as a solo artist on another label.
The only other great truth we found was that, if we wanted a band enough, we had to sign them almost no matter how high the bidding went. An artist on another label remains just that: nothing to do with us. Part of the secret of running a record label was to build up momentum, to keep signing new bands and to keep breaking them into the big time. Even if a high-profile band lost us money, there would be other, intangible, benefits, such as attracting others to sign with us, or opening doors to radio stations for our newer bands.
With these principles in our minds, Virgin began to sign up new bands on the back of Mike Oldfield’s success. The bulk of these would inevitably fail. We still paid ourselves tiny wages; we still all lived in each other’s pocket, and we reinvested all the money we earned from Tubular Bells in new artists and building up the company.
Kristen and I had been married for two years but we were having too many difficulties together and, eventually, we decided to divorce. As well as my marriage breaking up in 1974, Virgin Music was beginning to have some problems. In August 1974 Mike Oldfield’s next album, Hergest Ridge, went straight to number one. Since Tubular Bells was still at number two, money kept coming in. But Virgin was in danger of being seen as just Mike Oldfield’s label. In spite of refusing to do any promotion himself, Mike’s sales were so large that he eclipsed anyone else.
During that rather awkward patch between 1974 and 1976 when Mike Oldfield was our only superstar, Virgin failed to sign 10cc, The Who and Pink Floyd, despite fighting hard for them. It seemed that we were destined to be forever the second choice, and in music as in so many other things the second choice means nothing. At the end of 1975 I pitched for The Rolling Stones. Word had got about that we had been prepared to pay £350,000 for 10cc: it astonished our rival record labels like Island. When I called up The Stones’ manager, Prince Rupert Loewenstein, he was prepared to listen to me seriously, having heard about our 10cc offer.
‘How much are you asking for?’ I asked him.
‘You’ll never be able to afford it,’ Prince Rupert told me sympathetically. ‘It’ll be at least $3 million. And, anyway, Virgin is just too small.’
I knew that the only way to get his attention was to considerably better that offer.
‘I’ll offer $4 million,’ I said. ‘As long as there is some back catalogue available.’
Buying the back catalogue would enable Virgin to release a greatest-hits album and would be a good insurance policy if the new record failed.
‘I’ll send you round the list of the back catalogue that’s available,’ Prince Rupert said. ‘If you can bring a bank guarantee for $4 million to my office by Monday then I’ll look at it very seriously. Best of luck.’
It was Friday. Prince Rupert assumed that he had set me an impossible task.
That weekend I travelled around the chain of Virgin distributors we had set up across Europe in France, Germany, Italy, Holland, Sweden and Norway. As I travelled I was constantly on the telephone to those in the rest of the world. I was looking to raise about £250,000 from each distributor. By the end of the weekend I had tracked them all down and asked them to send telegrams to Coutts in London confirming that they would provide the money. By Monday morning I was back in London but still some way short of the $4 million I had promised Prince Rupert. After adding up all the different commitments from the distributors, Coutts promised to make up the difference. I drove round to Prince Rupert’s house in Petersham just before eleven o’clock with a bank guarantee for $4 million.
Prince Rupert was dumbfounded. I had caught him completely off guard. He fingered the $4 million cheque but then gave it back.
‘You’ll have a chance to match the highest offer,’ he promised. ‘But you’ve started an auction.’
In the end EMI won the auction with a bid of $5 million and signed The Rolling Stones. I couldn’t raise any more than the $4 million. Although I was disappointed to have failed, I knew that I had done The Stones a good turn by increasing the asking price from the $3 million Prince Rupert would have been happy to accept.
By 1976 the necessity of signing the really big bands was beyond frustration. Virgin had two albums in the top ten: Gong, and Mike Oldfield’s Ommadawn. These were the days of Genesis’s Trick Of The Tail and Bob Dylan’s Desire. Our trouble was that we had spent most of Mike Oldfield’s royalties on signing up new bands and, with the exception of Tangerine Dream, had had no major breakthroughs. Tangerine Dream’s Phaedra had become a top-selling album across Europe, and greatly enhanced Virgin’s reputation. Our catalogue was full of wonderful, credible music, but we did not have enough really big sellers. More immediately, we were running out of cash.
On top of that, Mike Oldfield wanted to renegotiate his contract. We were happy to renegotiate but, after we agreed a second version with an increased royalty to him, he instructed another lawyer who began to push for an even higher royalty. Simon and I decided that Virgin couldn’t go any higher. We pointed out that Virgin Music as a company was making less money than he was personally. When he asked how this was possible, I made the mistake of being completely honest with him. I told him that we needed successful artists like him to pay for our unsuccessful ones. His sympathy evaporated.
‘I’m not giving money away for you to blow on a whole load of rubbish,’ he said. ‘I’m going back to my lawyer.’
Eventually we agreed another contract and Mike stayed with us. But it was a close-run thing.
In the summer of 1976 we had a crisis meeting with Simon, Nik and Ken Berry. Ken had started in the Notting Hill record shop as a clerk. It was his job to check the shop’s takings, but soon he took over a whole range of other jobs. We all found that whenever we needed to know anything – the sales of Pink Floyd that week, the staff wages due, the depreciation on the old Saabs we ran – Ken knew all the answers. Ken became indispensable. He was quiet and unassuming but, as well as dealing with the numbers, his great skill was dealing with people: he was utterly unfazed by negotiating with top rock stars and their lawyers, and soon he became involved in working through the contract negotiations. Simon and I watched him and, as we realised that he would never lose a deal by throwing his ego around and trying to score points off the other side, so we gave him more and more responsibility. The original trio – me, Nik and Simon – made room for Ken, and in many ways he became the link that held us all together.
At that crisis meeting, we went through the figures of the shops, which were trading well but not very profitably. I knew that Nik was pushing them for all he was worth, and we were loath to criticise anything he was doing. Then we started going through the Virgin roster. One by one we debated whether we could afford to keep acts like Hatfield and the North or Dave Bedford that cost us money to promote and looked unlikely ever to break into the big time.
‘It’s clear to me,’ Ken Berry said, adding up a column of figures. ‘We have to seriously consider scrapping all our bands apart
from Mike Oldfield.’
We looked at him in amazement.
‘All our other bands are losing us money,’ he went on. ‘If we sacked at least half our staff, then we could cope very well, but at the moment Mike Oldfield is bankrolling the entire company.’
I have always believed that the only way to cope with a cash crisis is not to contract but to try to expand out of it.
‘What about if we found ten more Mike Oldfields?’ I asked, teasing him. ‘How would that do?’
Ultimately, we had two options: either tuck away a little money and eke out a living without taking any more risks, or use our last few pounds to try to sign up another band that could break us back into the big time. If we chose the first option, we could get by: we would be running a tiny company, but we could survive and make a living without any risks attached. If we chose the second, Virgin could be bust within a few months, but at least we would have one last chance to break out.
Simon and I wanted to have one last go at breaking a new band. Nik and Ken eventually agreed with us, although I could see that they were reluctant to bet the entire company on a breakthrough. From that night, we were on an emergency footing, desperately searching for The Next Big Thing.
In the meantime we cut back on whatever we could: we sold our cars; we closed down the swimming pool at the Manor; we cut down on the stock in the record shops; we didn’t pay ourselves; we dropped a few artists from the record label and made nine staff redundant. This was the most difficult of all, and I shied away from the emotional confrontation and let Nik do it.
One of the artists we reluctantly dropped was Dave Bedford, who was a brilliantly gifted classical composer. Dave reacted very well to the bad news: he wrote a long letter to me saying how much he understood the decision, that he appreciated his records had not sold, that he would have done the same if he had been in my shoes, that he bore Virgin no grudges and wished us all the best for the future. At the same time he wrote a letter to Mike Oldfield in which he described me as a complete shit, an utter bastard, and a vile, tone-deaf, money-grabbing parasite on musical talent. Unfortunately for Dave, he then put the letters in the wrong envelopes.
9 Never mind the bollocks
1976–1977
BY AUGUST OF 1976 VIRGIN was in real trouble. We were trying to sign some of the aggressive punk bands which were coming on the scene, but we seemed to keep missing out. For instance, we missed getting the Boomtown Rats because I insisted on including the music publishing rights, which they wanted to sell elsewhere. We were unable to find a new band that could lift us out of our rut or dispel our image as a rather hippie label.
Among our other worries we were in the middle of a dispute with Gong over some recording rights. Some of their followers came into the Vernon Yard offices to stage a protest. Our offices were invaded by a host of benign, bearded, long-haired and very peaceful activists wearing kaftans and sandals and smoking joints. They had the appearance of a wandering band of druids and wizards. After an enjoyable afternoon spent slouched on the sofas listening to Gong, Henry Cow and Mike Oldfield, and trying to talk me into signing some petition, they decided to leave. We stood by the front door and thanked them for coming. As they left we gently relieved them of their pickings – mainly records they were trying to conceal in the flowing folds of their kaftans, but one or two of them were making off with posters, tapes, staplers, and even a telephone. They all smiled when they were caught and left in the best of spirits. I followed them out into Portobello Road and watched them wander away through the fruit stalls. One of them stopped to buy some dates. As the stallholder sold him the fruit a man with his hair shaved into a mohican and dyed pink and green walked by.
The kaftaned followers of Gong looked uncomprehendingly at the punk, picked up their dates and walked off, munching slowly.
‘I’m going to be out for ten minutes,’ I told Penni, my assistant.
I went up Portobello Road and found somewhere to have a haircut.
‘How much off?’ asked the barber.
‘I think it’s about time I got some value for money,’ I said. ‘Take about a foot and half off and let’s see what I look like underneath.’
In place of names like Hatfield and the North and Tangerine Dream, a string of new bands had taken over the poster sites. They were called names like The Damned, The Clash, The Stranglers and, most notorious of all, The Sex Pistols.
In the last week of November I was working in my office when I heard this extraordinary song being played in Simon’s office directly below me. I had never heard anything like it. I ran downstairs to see him.
‘What was that?’ I asked.
‘It’s The Sex Pistols’ single. It’s called “Anarchy In The UK”.’
‘How’s it doing?’
‘Very well,’ Simon admitted. ‘Very well indeed.’
‘Who’s signed them up?’
‘EMI. I turned them down a couple of months ago. I could have made a mistake.’
There was something so raw and powerful about the song that I was determined to see whether we could win them back. A few days later, I called up Leslie Hill, the managing director of EMI. He was far too busy and important to take my call, so I left a message with his secretary saying that if he ever wanted to get rid of his ‘embarrassment’, then he should contact me. Half an hour later she called me back to say that EMI were quite happy with The Sex Pistols, thank you.
That very evening, 1 December, at 5.30p.m., The Sex Pistols caused a national furore. They were being interviewed on Today, an afternoon television show hosted by Bill Grundy. Bill Grundy had rolled back from a good lunch at Punch and realised that the four lads in his studio were fairly drunk as well. He started to mock them, talking about other great composers, Mozart, Bach and Beethoven. It was all a bit silly, until Johnny Rotten spilt his drink in one corner and quietly swore: ‘Shit.’
‘What did you say?’ Grundy asked. ‘What was that? Didn’t I hear you say a rude word?’
‘It was nothing,’ Rotten said.
‘Come on, what was it?’
Grundy got what he asked for.
‘I said, “Shit”,’ Rotten told him.
‘Really?’ Grundy said. ‘Good heavens, you frighten me to death.’
Then Grundy turned to Siouxsie Sioux, who was the other guest, and asked her whether she would meet him afterward. Steve Jones, one of The Sex Pistols, laughed and called him a dirty old sod. Grundy then turned to him and goaded him into saying more swear words. Jones called him a ‘dirty fucker’ and a ‘fucking rotter’, and that was the end of the show.
The next day the national press were once again outraged by The Sex Pistols’ behaviour. Nobody criticised Bill Grundy for baiting them into swearing. As I was having my breakfast and reading an article about how someone had kicked in their television in disgust at the show, the telephone rang. It was not yet 7.00a.m. In a wonderful role reversal, the managing director of EMI was now personally calling me.
‘Please come and see me immediately,’ he said. ‘I gather that you’re interested in signing The Sex Pistols.’
I went straight round to EMI’s offices. Leslie Hill and I agreed that EMI would transfer The Sex Pistols to Virgin, conditional upon Malcolm McLaren, the group’s manager, agreeing. We shook hands. Then Malcolm McLaren was ushered in from the next-door room.
‘Virgin have offered to take The Sex Pistols on,’ Hill said, trying unsuccessfully to keep the relief out of his voice.
‘Excellent,’ McLaren said, offering me his hand. ‘I’ll come to your offices later this afternoon.’
I normally make up my mind about whether I can trust somebody within sixty seconds of meeting them. As I watched Malcolm McLaren, with his tight black trousers and pointed boots, I wondered how easy it would be to do business with him. He never showed up at Vernon Yard that afternoon, and never returned my phone calls the next day. I stopped ringing him after four attempts. He knew how to get hold of me, but he didn’t call.
On 9 March 1977 McLaren signed The Sex Pistols to A&M records. The ceremony was staged outside Buckingham Palace, where the four punks lined up and screamed abuse at the royal family. The band were just four regular lads, but they were being whipped up by Malcolm McLaren.
I sat at my desk and wondered about Malcolm McLaren. I knew that he had a bestseller on his hands, a band which would transform Virgin’s image. If Virgin could sign The Sex Pistols, it would, at a stroke, remove the hippie image which was hanging over us. EMI sneered at Virgin and called us ‘The Earl’s Court Hippies’. Never mind that we lived nowhere near Earl’s Court: the name stuck and I didn’t like it. We were stuck with the image of Gong and Mike Oldfield. The royalty cheques were impressive, but I feared that none of the new punk bands would take us seriously if we only had a number of hippie bands. Virgin Music needed to change and to change quickly, and The Sex Pistols could do it for us.
‘Every band is a risk,’ Derek Green, managing director of A&M, airily told the press. ‘But in my opinion The Sex Pistols are less of a risk than most.’
A&M hosted a party to celebrate the signing of The Sex Pistols. Since A&M were ‘capitalists’ making money out of bands by ‘exploiting’ them, The Sex Pistols hated them as they hated all record companies – or at least they pretended to. Sid Vicious, then the band’s bassist, excelled himself immediately after the signing by wrecking Derek Green’s office and being sick all over his desk. As soon as I heard this I reached for my telephone to try one last shot. To my delight, Derek Green told me he was dropping them.
Losing My Virginity: How I Survived, Had Fun, and Made a Fortune Doing Business My Way Page 13
