THE
RECESSION: A COMPANY IN PROFILE
It's a right Rough Trade, is the entertainment business!
For the Final Year Project of my A Level equivalent course (BTEC National Certificate in Business and Finance) which I completed at what was then Huddersfield Technical College (now Kirklees College Huddersfield Centre), I submitted an assignment entitled: "The Recession and Rough Trade", which involved me investigating and examining the impact of the economic decline of the time in 1991 on an iconic record label. I was required to relay my findings by means of a presentation, which I was able to achieve with the aid of some significant props. These were vinyl releases (from my personal collection) by The Smiths, by a considerable distance the biggest success story in the "indie" music scene in which the label founder Geoff Travis, who signed the band to Rough Trade before they split in 1987, played a huge part.
The legendary Geoff Travis, founder of the Rough Trade Empire
I updated this piece after the sale of The Smiths' back catalogue to WEA in 1992, when I had moved to Manchester and commenced on my Foundation Degree equivalent course (BTEC Higher National Diploma in Business and Finance) at University College Salford (formerly Salford College of Technology, now part of the University of Salford), which turned out to be the first year of my full honours degree!
Recession: An appropriate definition of this word
in economic terms would be a "Slackening
of Trade and Industry", or alternatively, a "Decline in Consumer Spending". Fundamentally speaking,
this means that thousands of companies have either ceased trading and/or gone
into receivership, and thousands of jobs are being lost every day. The
country’s morale is, as would be expected, very low at this moment in time,
with unemployment rising rapidly, and not a day goes by without yet more
companies running into trouble.
For my part, I thought that it would be
of some interest if I was to concentrate on one company in particular which has
had a great deal of trouble with the recession. The Rough Trade Group (now Rough
Trade Recordings), an independent Record Company, ran into trouble at the
beginning of 1991, and have only recently, with great difficulty, managed to solve
its problems.
The history of the Rough Trade Group is
of some importance, in order for you to understand the set-up of the company.
16 years after Geoff Travis created
the beginnings of an empire in 1976, with a small West London Record Shop, it
has managed to remain at the centre of the UK "Indie" industry, in
spite of its many difficulties of late. A vital component of the Punk Boom of
the late 1970s, Travis's shop quickly expanded into Mail Order and Wholesale
Supply to other chains, until the summer of 1977 saw French drum-machine band Métal Urbain become the first release
on RT's Record Label (in the guise of “Panik”).
The following year, the company became a fully-fledged distributor, and in
1979, Stiff Little Finger's first
album reached Number 14 in the National Chart, proving that the company was
more than capable of competing with the majors. The Rough Trade Music
Publishing Company reinforced this step up, along with the establishment of
Promotion, Tour Management and Production Services in 1980. The Group went
international at the same time, attempting to mimic the UK formula in the US,
by opening a shop in San Francisco, together with small-scale distribution.
When "The Cartel" was
formed by RT in 1982, with five regional distribution offices to create a
nationwide distribution service for small independent specialist shops, the
Group headed the biggest indie distribution service available within the UK.
Panik by Métal Urbain, the first release on the RT label
The debut album by Stiff Little Fingers, the first long player released by RT to chart nationally
But in February of 1991, Rough Trade,
before admitting that they were in trouble, was attempting to seek cash aid, in
the guise of a substantial loan. The loan was needed to resolve serious
cash-flow problems, which had left RT owing money to several Record Labels. The
planned deal followed a series of blows for the independent group, and added to
the uncertainty of its future. RT had been plagued with problems over recent
months, culminating in the withdrawal of Revolver,
a successful record label, from its distribution network, and vandalism by
disgruntled ex-employees. When George
Kimpton-Howe, who was previously a major force of RT's main rival Pinnacle, became Managing Director of
the distribution sector, RT was accused of moving away from its
"indie" roots. Teething troubles began when RT moved to a new
Computerised Warehouse in North London in the summer of 1990.
Distributed by The Cartel
Later on in February of 1991, RT were forced
to lay off 40 employees, as part of a survival plan. Accountants from KPMG were called in to manage the
group's affairs, to save it from collapse. The acting Group Managing
Director, David Murrell, stressed that, contrary to wide-spread
speculation, the company was not in the hands of receivers, and the
redundancies were vital to secure the future of the company. Over the last
year, "mismanagement" had seen the company move to new premises,
which increased overheads while the turnover was down. Because management had
refused to reduce overheads, the company had been losing money every week for
the last year, leaving the company owing money to its labels, as well as facing
other costs. According to Murrell, the company was in the bizarre position of having
money in the bank, but was refusing to pay any of its creditors unless it
could pay them all at once, and clear its debts.
A later photo of Geoff Travis with The Queen Is Dead backdrop, courtesy of Martyn Goodacre
KPMG was brought in, after a meeting of
the Employees’ Trust, which owned
the group, with the Board of Directors, and also the labels under RT's
distribution sector. They had failed to secure a loan, and had lost faith in
the management. A prospectus was to go out to potential buyers, once the
group's assets had been assessed. In May of 1991, RT's arch-rival Pinnacle arranged
a deal to take on the majority of RT's distribution. RT's distribution sector
ceased trading in June of 1991, and a new company was set up, temporarily named
RTD2. This change meant that:-
i:
The new company would offer only sales, marketing and label management.
ii:
Its distribution warehouse would have to close, causing approximately 70
redundancies.
iii;
All shipping out would be contracted to rival Pinnacle and Rough Trade
Marketing (RTM).
The new plan, designed by the Group
Board as Rough Trade's last hope for survival, was backed by most of its labels
at the meeting. The 10 biggest labels, including Rough Trade Records, Mute, 4AD, Situation Two and KLF Communications - which were owed
about 80% of the group's 3 million pound debt - gave the plan their consent.
Had the bigger labels not given their support, the future of the RT Group would
have been in serious doubt, according to accountants at KPMG.
The layout of the company, after it had
been structured down, is outlined in the diagram below.
RT after Restructure in 1991
In May of 1991, it was also decided by
the RT Group to sell its biggest asset, The
Smiths' back catalogue. Geoff Travis, Managing Director of the RT group,
flew out to Aberdeen to discuss the matter with Morrissey (who was touring at the time), who was, as well as being
the vocalist with The Smiths, the co-writer of all the group’s material. The
Smiths were signed to Rough Trade on a 2-Single deal in 1983, and signed a
long-term deal later on. The Smiths were the first indie artists to have
consecutive National Top 40 hits, with smash singles such as "How Soon is Now?", "Panic", "Sheila Take a
Bow" and "Girlfriend in a
Coma". Their albums were greatly successful also, with classics such
as "Hatful of Hollow",
"The World Won't Listen" and
"Strangeways, Here We Come". Rough Trade was acknowledged as
having the most successful independent group in the history of Pop Music signed
to them, with the band scoring RT's
first Number 1 album, in the form of "Meat
is Murder" in 1985.
Meat Is Murder, RT's first Number 1 Album
The success of The Smiths was largely
due to their enigmatic vocalist and lyricist, Morrissey, as well as their massively talented guitarist and
composer, Johnny Marr. Releases by
The Smiths were very memorable affairs, and their sleeves were a virtual
iconography of Morrissey's idols. Terence
Stamp, Viv Nicholson, Elvis Presley and
Yootha Joyce were just a few of the many established cult figures who
graced the covers of The Smiths' records, all helping Rough Trade to become a
much respected and well-known independent Record Company, who were quite
willing to take risks (such as when Morrissey decided to name The Smiths' 1986
album "The Queen is Dead",
which caused quite a lot of fury!).
Viv Nicholson, one of the many Cover Stars on releases by The Smiths
But the relationship between The Smiths
and their label was always a turbulent one, and Morrissey often, in music press
interviews, slated Rough Trade for not having enough faith in the group's
material. He even went as far as saying that some of the group's singles were
"deliberately allowed to stall", that is, were not marketed very well
by Rough Trade's promotions department. 1985 in particular was a quiet year for
The Smiths in terms of singles, with none of the four singles released managing
to reach the Top 20. The previous year had been a very successful one, with all
the singles released in 1984 reaching AT LEAST the Top 20. All of this resulted
in leaving Morrissey and Marr incredibly frustrated and disillusioned with RT,
and indeed, this was the beginning of the end for the company.
The Smiths at the RT Offices in London in happier times
Morrissey and Marr hanging out at RT
When The Smiths, totally dissatisfied
with Rough Trade's management, signed up with EMI in 1986 (although they were still under contract to RT for
another year and subsequently disbanded before becoming part of the EMI
"institution") Rough Trade was understandably concerned at the
outcome, as the band had been RT's biggest and best ever earner. 1987 came
along, and by September, The Smiths ceased to be after Johnny Marr left the band earlier that year.
UPDATE: In the early months of 1992, Rough
Trade sold off The Smiths' back-catalogue to the songwriters of the group,
Morrissey and Marr. They in turn sold it on to WEA, a major label, who have released a number of singles and
compilation albums in the past few months. The first single, the re-released "This Charming Man" reached
Number 8 in the National Top 40, which is higher than ANY of the Rough
Trade-released singles managed (previous best was Number 10, which both "Heaven Knows I'm Miserable Now"
and "Sheila Take a Bow" achieved
as Rough Trade releases in 1984 and 1987 respectively).
Poster for re-issue of This Charming man on WEA in 1992
So, all in all, the Rough Trade Group
had to shed a lot of skins in order to survive. RT could have become another
victim of the recession, another statistic. But they fought to survive, and
have managed to surface as Rough Trade Recordings. Such bravery is customary
for many companies, all fighting to survive the stifling grip the recession has
on them. But for many, this is to no avail, and it’s estimated that 20,000
companies have already ceased to exist since the start of the recession, with
this figure rising every day…..
The cover of my original Final Year Project from 1991
ANGIE J. LEWIS
With the help of Music Week Trade Magazine
Just to note that, although unfortunately Rough Trade did indeed sadly
succumb to receivership in the 1990s after I had written my essay, it was
thankfully resurrected and reborn in the year 2000. As of 2007 going
forward it is now part of the Beggars Group. It is trading
as Rough Trade Records once more, and has reclaimed its
rightful place as an integral part of the music scene both in the UK and beyond
with notable acts on its books such as Gruff Rhys, Jarvis
Cocker and Starcrawler.
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