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Roster cuts at Virgin Records in 1980
03-23-2013, 02:58 PM, (This post was last modified: 03-23-2013, 03:00 PM by Miguel.)
#1
Roster cuts at Virgin Records in 1980
Richard Branson is a billionaire. He has written a book about his businesses experiences.

Branson started a youth-oriented magazine called Student when he was sixteen that often interviewed musicians and sold music by mail at a discount. In 1971 he opened a record store. In 1972 he launched Virgin Records.

In 1979, due to a poor economy, record sales in Britain dropped for the first time in twenty years and the company's chain of record shops "lost a lot of money." By 1980, stung by the collapse of The Sex Pistols and a lack of industry interest in the new artists on their roster, Virgin was in financial trouble.

Quote: I wrote to the Virgin staff and told them that we had to tighten our belts urgently: "The good news is that Ian Gillan's new record has gone straight in at Number Three in the charts. But the bad news is that's it's only sold 70,000 copies, which is just half of what a Number-Three record would have been last year. Our profits have been reduced by more than half since we have the same overhead.

By Nik's calculations, Virgin was heading for a 1 million pound loss in 1980.

"I can't sell my shares to a merchant bank," he told me. "Virgin is losing one million pounds this year. The shares are worthless."

"But what about the brand name?" I asked.

"Virgin? It's worth minus one million pounds," he said. "They won't recognize any value in a brand name. What's the worth of British Leyland as a brand name?"

Virgin was in desperate trouble. The 1980 recession caught us with the unexpected ferocity of a small squall. For the second time, we had to make some staff redundant: nine people, who represented a sixth of the worldwide staff of Virgin Music. This was proportionately less than the cuts being made at other record companies at the time, but it was a gut-wrenching blow blow for us.

Nik, Simon, Ken and I spent hours arguing over what we should should do. With no major rock star on the roster to release a hit record, Virgin had no predictable future income.

Once again we went through our catalog of bands and made several cuts. We had to abandon most of the reggae bands we had signed in Jamaica since a military coup in Nigeria had banned all imports and destroyed our sales.

Tension between Nik and Simon rose at they argued over which bands Virgin should keep. Nik argued that Virgin should drop the Human League, a young band from Sheffield who played synthesizers.

"Over my dead body," Simon told him.

"But they're so marginal," Nik argued. "We can't afford to keep supporting them."

"The Human League is exactly why I'm in this business," Simon said, fighting to keep his temper.

"You just spend all the money I make in the shops," Nik said, wagging his finger in Simon's face.

"Look here," Simon snapped, rising to his feet, "Never, ever, wag that fucking finger in my face again. And the Human League are staying."


I watched Simon and Nik fight it out, knowing that something would have to be done. Nik had been my main partner, my closest childhood friend, and we had worked together since Student when we were sixteen. But he was obsessed with cutting back and saving money at a time when we were admittedly in deep trouble. And once again I felt that unless we did something dramatic, which meant spending money, we would never get out of trouble.

Nik and Simon reached an angry stalemate and turned to me to arbitrate between them. To Nik's fury, I backed Simon. This marked a turning point in our triangular relationship, which had worked so well up to this point. I felt that Simon's taste in music was the only thing that could pull Virgin out of the hole we were in. Without Simon's new generation of bands, we would be stuck treading water. Nik thought that we were throwing good money after bad, and he went back to the record shops determined to squeeze even more savings out of them.

At another meeting, we argued over another recent signing, the drummer from Genesis. In September 1980 Simon wanted to spend 65,000 pounds to sign up Phil Collins as a solo artist. Once again Simon was supremely confident this was the right move, and he stood up to all the doubts and criticisms that Nik threw at him.

...Nik made Simon do all kind of sales analyses to try to work out how many copies of a solo album by Phil we could sell. Nik was worried that Genesis fans would not buy him, but Simon proved that even if just 10 percent of known Genesis fans bought Phil's debut album , we would make money. As we stared with dismay at our overdraft and the wretchedly low sales figures of our other bands, we knew the gamble we were making. To his credit Nik agreed that we should sign Phil Collins, even taking cash from the tills to make up enough for the advance. Phil proved to be an extraordinarily gifted musician and singer. His voice was haunting and his lyrics poignant: he was destined to become more successful than Genesis itself.

This stood out to me:

"With no major rock star on the roster to release a hit record, Virgin had no predictable future income."

It stood out to me because it seems like American Idol is featuring more former Idols than Interscope recording artists this season. Is it possible Interscope is experiencing something of a lull this year as their major artists just recently finished releasing new albums and touring? And that's why they cut their roster last fall?
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03-24-2013, 01:18 AM,
#2
RE: Roster cuts at Virgin Records in 1980
(03-23-2013, 02:58 PM)Miguel Wrote: This stood out to me:

"With no major rock star on the roster to release a hit record, Virgin had no predictable future income."

It stood out to me because it seems like American Idol is featuring more former Idols than Interscope recording artists this season. Is it possible Interscope is experiencing something of a lull this year as their major artists just recently finished releasing new albums and touring? And that's why they cut their roster last fall?

They might also be hoping that bringing back some of the old Idolers will bring back some of the viewers they have been losing. Casey was a good choice for Beatles night, but Haley would have been better.
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03-24-2013, 02:50 AM,
#3
RE: Roster cuts at Virgin Records in 1980
(03-24-2013, 01:18 AM)john Wrote: They might also be hoping that bringing back some of the old Idolers will bring back some of the viewers they have been losing.

I thought that the other day. But it doesn't seem like AI has done much to publicize the return of the old Idols.

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