Travis’s American signings were proof that, if the politics and internal arguments were destabilising the business at Collier Street, his A&R radar was still at its sharpest. The label hit a purple patch of critical approval and strong sales as Galaxie 500’s Today and She Hangs Brightly, Mazzy Starr’s debut, were both rapturously received in 1990.
Despite the label’s successes Travis was becoming aware that the company’s ongoing problems were getting more and more serious, though the extent of the seriousness and the lack of leadership within Distribution to address the problems was being kept from him. ‘From my point of view I was running the label,’ says Travis. ‘Although we had a proper distribution board, I was pretty much marginalised because the distribution people had an issue with the record company. They were jealous because I think they thought the record company was glamorous and my profile was the highest for whatever reason.’
Rough Trade had severely underestimated the running costs of a bicoastal American distribution and record company. Hurley was watching Rough Trade Inc. haemorrhage money and was continually having to call London to wire more and more funds to keep Rough Trade’s American division in business.
‘We were the biggest drain on Rough Trade trying to grow in America,’ says Hurley, ‘trying to get over a certain point where sales would take care of themselves. The year we closed a distributor went under owing us a million dollars. Generally, in England people pay their bills, or in Germany they’re legally obliged to pay their bills. I would pick up the phone to London and say, “I think we’ve had our best month ever. We’ve just shipped x thousand records,” not realising that we might have to wait months to get paid. As our business grew the cash flow became crippled.’
In London a solution was found. The most successful of the Rough Trade distribution companies, Rough Trade Deutschland, would channel their payments to America rather than head office in London. What seemed like a good idea in the now permanently occupied Rough Trade meeting room was in fact illegal and illustrated the lack of technical expertise on the Rough Trade Distribution board.
‘There was a lot of money moving from Rough Trade Deutschland,’ says Hurley, ‘but the German government took a different view of it. Rough Trade Distribution was also suddenly hit by a big tax penalty, so those three things all hit at once. But Rough Trade America was the biggest single factor.’
Whatever the structures that had been put in place and the adherence, or not, to the critical path, the management’s lack of business skills ensured that the company was heading towards an inevitable conclusion. A sense of panic started to grip Collier Street, but in the short term the company, in a typical act of Rough Trade internalisation, was keeping its problems to itself.
‘I would go across every four months and sit in rather depressing meetings,’ says Hurley. ‘The writing was on the wall. There was a naive belief that we could pull through and we lost months with that sort of hope that something would come through. Warner Brothers showed an interest – they wanted 51 per cent and that was rejected. Arrogance is the wrong word. It was never arrogant, but it was a proud company that believed we had better music than other companies and the cultural philosophy was better. You were supposed to have a sabbatical after five years and as the company grew and got bigger that became harder – all those great ideas fell by the wayside.’
Many of those ideas had come from Richard Scott, who had left in 1988, dispirited that the idea of providing an alternative structure to the mainstream, which functioned around such ideas like de-centralisation and mutuality, had long been ceded to market share and competition. The Cartel, his lasting legacy, was disbanded in the summer of 1990. Two of its members, Red Rhino in Leeds and Fast Forward in Scotland, had already ceased trading. ‘I think I felt doomed,’ says Scott. ‘I felt that I was sort of, in a way, past my sell-by date. The actual structure that was evolving was one that I didn’t feel particularly comfortable with, which is why I decided to leave.’
The growing fiscal crisis at Rough Trade was finally starting to become common knowledge outside Collier Street. The production and release schedules of the smaller labels the company distributed were put on hold. Rough Trade’s biggest clients – Mute, KLF, 4AD, Beggars, Rhythm King and Jazz Summer’s Big Life, the latter being two dance pop labels with singles permanently on the radio and in the charts – were starting to realise the severity of the situation: Rough Trade had begun the long drawn-out process of going bust.
John Dyer was a young marketing executive at Mute who handled much of the label’s day-to-day dialogue with Rough Trade and became Daniel Miller’s eyes and ears as the situation at Collier Street started to unravel. ‘We were the last ones to know in a strange kind of way,’ he says. ‘There was an indie politeness. All these smaller labels were not getting paid and our frustration was that we were getting paid. If we’d have known a bit earlier about the problems that were mounting up, maybe we could have gone in and actually taken control of it more. It’s all hindsight. I don’t think anyone would’ve run off to the majors at all. There was a system and that was the only system: there was Pinnacle and Rough Trade and Pinnacle was a very different sort of headspace for our little crew of labels.’
The endless meetings at Rough Trade – for so long a withering characterisation of the company – were now no longer populated by members of staff mediating each other’s in-house difficulties. An emergency committee was set up by Rough Trade’s biggest-label clients who were, they now realised, the company’s biggest creditors. Rather than Geoff Travis or the recently departed Richard Powell, a new face was chairing the meetings for Rough Trade: Powell’s replacement George Kimpton-Howe. Formerly of Pinnacle, Kimpton-Howe was a man, most of the staff at Rough Trade was convinced, who had been promoted well above his capabilities. As events started to take their course, it became clear he was not someone well equipped to handle a crisis.
‘We were suddenly presented with a cataclysmic moment rather than a moment that we could have all managed a bit better,’ says Dyer. ‘Suddenly Mute were faced with millions of pounds of losses as were The KLF, as were Beggars, as were Rhythm King. And from Rough Trade we were just encountering pretty fucking awful business strategy. There was a guy called George Kimpton-Howe, who felt the need to drive to work in a BMW, and people had trusted him because he took a Pinnacle philosophy into a bunch of indie kids and he was out of his depth.’
To make matters worse Rough Trade were in the middle of moving offices. A large open-plan office and warehouse building spread over five floors had been secured on Seven Sisters Road in Finsbury Park. Compared to the GLC-financed fit-out of Collier Street, the Finsbury Park premises were a backwards step. The building was rickety and in disrepair. Once the workforce was relocated to Seven Sisters Road, while the lease was still to run on Collier Street, the first task Kimpton-Howe had to face was the process of dismissing them.
Travis, while present at the emergency comittee meetings, was keeping away from the increasingly tense winding-down processes of Rough Trade Distribution. The label still had a release schedule to honour and, while he had to make some of the record company staff redundant, he also hired a new label manager, Andy Childs. A former A&R who had signed Wire to the EMI subsidiary Harvest more than ten years previously, Childs was well versed in the realpolitik of the music industry. ‘As I was joining, loads of people had been made redundant,’ he says. ‘Geoff was just letting everyone go but at the same time he was looking at what he saw as the next phase of the label. My first week there I made myself scarce, because it was really an awkward situation. Everything moved to that big place in Finsbury Park, which was only temporary, while all the distribution side of it went into administration.’
Rough Trade now had to meet the running costs of two warehouses, Collier Street and Seven Sisters Road. Remarkably, a decision was taken to open a third warehouse in Camley Street, Islington, to accommodate all the overstocks of unsold vinyl that had accrued throughout Rough Trade’s tra
ding history.
‘There’s this thing that label owners hate,’ says Dyer, ‘which is that they don’t like to destroy the stock … “Oh man, we might sell it next year … you know someone in Russia might buy it.” It’s absolute bunkum. What you end up doing is taking this stock around with you everywhere. So Rough Trade started paying for a multistorage warehouse, storing all our crap which we were too wimpy to destroy, because it’s sacrilegious to destroy vinyl. So, suddenly, from having one warehouse they’ve got three, then it all catches up with them.’
As a metaphor for the failings and naivety of the independent sector, a warehouse leased purely for the purpose of housing its unsold and, by the outside world at least, unloved stock, is entirely apposite. The piles of records stacked up by employees working for cash-in-hand and a few guest-list favours are testament to the passion and folly and eternal optimism of the music obsessives who try and swim in the shark pools of the entertainment industry.
‘Kimpton-Howe didn’t realise about the housekeeping that was necessary,’ says Dyer. ‘It was all, “Let’s keep this going,” instead of thinking, “Let’s get rid of the warehouse and have a purge.” The sort of thing that’s common sense to a twelve-year-old was not being exhibited.’
Andy Childs was also aware that he was entering a company in its death throes that was being severely mismanaged. For someone who had experienced the manufacturing schedules and tightly controlled production capacities of a major label, the endless overflow of vinyl at Rough Trade was startling to witness. ‘Whoever was doing stock control was on another planet. That warehouse was full of unsold records and unwanted records, it was unbelievable. You’ve got this cavernous huge space and records had just been dumped. There was no business going on. It had just been frozen. It was like walking into this huge subterranean cavern with records put up and you’d walk around the corner and there’d be people in the dark, sifting through records. It was really odd, thousands and thousands of records, just dead stock lying there.’
A further, fatal, blow was delivered to Rough Trade when a new computer system was installed. For an international distribution company that was still reliant on unreliable and often illegible handwritten orders and delivery notes, a computer system was doubtless a good idea. Unfortunately the system Kimpton-Howe installed at a cost of well over half a million pounds malfunctioned from the beginning. The switch to computer ordering meant that retailers were without several weeks’ worth of new deliveries and had their cash flow put into crisis; the demise of the independent record shop was being accelerated by Rough Trade’s attempt to upgrade the quality of its service.
The board of trustees at Rough Trade, whose exact number and identity has never been agreed upon, decided to call in the administrators and appointed accountancy firm KPMG Peat Marwick to undertake an audit and exert some financial controls over the company. For the first time in its history, Rough Trade’s offices were bustling with men in suits. Travis was now sharing his space with the kind of people whom he had spent his working life trying to avoid. Rough Trade’s layer of middle management had dispersed and it was left for the emergency management committee of Mute, KLF, Beggars and the other labels to reach a settlement with the auditors.
‘It grew too big. Other people were too egotistical, they were too inexperienced,’ says Travis. ‘They didn’t really know how to run that business and yet they didn’t put their hands up and say, “We don’t know what we’re doing any more, we’re out of our depth,” and that’s what went wrong, and they made a lot of fatal errors. And then they all ran away and left me holding the baby to try and deal with it along with these horrendous administrators from the City, which was awful.’
Of all the creditors, Mute was owed the greatest amount and Daniel Miller, Dyer and their head of finance, Duncan Cameron, entered into prolonged negotiations with the auditors on behalf of the emergency committee. ‘Rough Trade Distribution was hugely successful,’ says Miller. ‘The KLF were massive, we’d just had Violator, one of our biggest albums ever, Erasure was huge. In theory things should have been going well. And it all went wrong at that point, endless things, classic NHS things. They spent a fortune on a computer system that didn’t work, everything just went wrong. There were a lot of people who felt very strongly about RTD. And we had to try and fucking rescue the company, partly because of the ethos and partly because loads of labels were owed a fortune by Rough Trade.’
‘We were in for the most money,’ says Dyer. ‘I think it was around a couple of million plus. This was all revealing itself among the panic stations stuff. KLF were in for a million and the guy who worked for KPMG could try and tell everyone what to do. But it’s a very fluid situation, a company in administration rather than liquidation – they were reliant upon our co-operation, they needed all of our co-operation to keep trading through.’
While the tortuous audit of Rough Trade continued to try to differentiate between the companies’ assets and its liabilities, one of its chief creditors, KLF Communications, which had only one artist with a release, The KLF, were attempting to finish recording their next single. In a remarkable demonstration of multitasking, Bill Drummond was dividing his time between attending the emergency committee and finalising plans for ‘Justified and Ancient’. Jimmy Cauty remained in the studio collaborating with Drummond via the phone. ‘Bill And Sally would be there working out how much money we were owed and I’d be in the studio trying to finish the track,’ says Cauty, ‘and trying not to think about the studio bill.’
‘We were all having to put our records out still,’ says Dyer, ‘so in the middle of a meeting we’d say, “You agree to that Bill? KLF represents 13 per cent of the debt, don’t you?” And he’d say, “Yeah, just a minute,” and then he’s on the end of the phone going, “Yeah, bit more bombastic Jimmy, bit more bombastic,” so he’s having to do a mix-down with Jimmy Cauty who’s in the studio at the other end on the phone. Then he’d ring up Pinewood and would spend a hundred grand on the video. He was hiring the sound stages saying, “No, we don’t need the submarine stage today.” Incredible, visionary behaviour.’
As well as Mute and KLF, the Beggars Group, particularly 4AD, were also owed substantial monies. Halfway through negotiations Big Life and Rhythm King cut their losses and withdrew from the discussion, leaving a core of stalwarts of the independent sector who had started almost simultaneously with Rough Trade. Ivo Watts-Russell had attended a few meetings, but his natural reticence made him uncommunicative. ‘I sat there,’ he says, ‘and didn’t say very much. In fact I don’t think I said anything at all, so Martin Mills went along instead and was incredibly helpful – he was a rock, really.’
‘It was a very painful period, obviously,’ says Mills. ‘We got caught pretty badly in it. I think a Cocteau Twins album had just come out and we hadn’t been paid. Also, the first Charlatans album, which was on Situation Two and was a no. 1 album, was also in a position of having just come out and not been paid for. It was a pretty big surprise to us. It hadn’t really occurred to us that it could happen. To be honest, if we’d been closer to the inside we might have realised where the seeds had been sown.’
While Mute, 4AD, The KLF and a few smaller labels like Fire were in a position to negotiate with KPMG, the remaining smaller labels, the kind that had thrived and been created under Rough Trade’s off-the-street production and manufacture deals, were forced into closure along with Rough Trade. Many of them were bedroom operations with few overheads and several hundred copies of their singles piled up on the shelves in the overspill warehouse in Camley Street, but the dream of starting a label for no other reason than releasing some music that might turn the heads of John Peel and his audience was over.
‘Mute’s existence wasn’t threatened by it, because we didn’t have a big release out and also we were doing extremely well overseas,’ says Miller. ‘But it was nevertheless a big thing, and it did threaten the existence of a lot of labels. Duncan Cameron did an incredible job fighting for all t
he labels’ survival. Some people had some kind of insurance, some people didn’t, so in the end a number of labels did go under or just decided to stop.’
Andy Childs had spent an uncomfortable few weeks when he started at Rough Trade. The phone was constantly ringing as smaller labels with no representation at the emergency committee and a never-ending stream of shops, suppliers, courier companies, repro houses – the whole supply chain of Rough Trade’s extended networks – were trying to get an answer about developments at Seven Sisters Road. Their only access to the situation was the weekly music press stories which ran a commentary on the number of job losses and published whatever reassuring but meaningless statements it could produce out of whoever was left in the offices and had the strength to answer the phone.
‘Rough Trade Distribution was incredibly important to a lot of labels and a lot of them went bust,’ says Childs. ‘A lot of people lost money and only the big ones really survived properly, Beggars and Mute and those people. There was a general flow of people all the time, going back and forth. People would leave without you realising – you’d come in one day and there’d be a different set of people, usually wearing suits shaking their heads and looking at figures.’
*
Once the due diligence had been done by KPMG Peat Marwick (whose fees were over £10,000 a week), the one agreed asset that Rough Trade had for sale was The Smiths back catalogue. Travis had little say in what could happen to the jewel in his label’s crown. The Smiths’ recordings were owned not by Rough Trade Records but by Rough Trade Distribution; as the first band to be signed to Rough Trade on a long-term deal, Travis had had to ask Distribution for the resources to make the band a serious offer. ‘The Smiths were signed to Rough Trade Distribution,’ says Childs, ‘which was one of the reasons why the label was in trouble, because they didn’t own The Smiths. When he wanted to sign The Smiths, Geoff probably didn’t have the money to sign them with the label account so he went to Distribution and got them to sign them, and Distribution needed that money from The Smiths income to try and prop up all the other disasters that were going on. So in the end they sold The Smiths to Warners. It’s hard to say why it did go wrong. You can’t have a big band like that and lose money easily: you’ve got to be doing something really badly wrong.’
How Soon is Now?: The Madmen and Mavericks who made Independent Music 1975-2005 Page 39