The stock may be insured, but what about labels with cashflow problems or record stores awaiting stock? We talk to them ...
A few days after the Sony DADC warehouse was set on fire during the riots in London, destroying a catastrophic amount of records, the independent music industry is counting the cost. The warehouse held stock to be delivered by independent distributor Pias, and for some labels, artists and retailers the future looks unsure.
Dance label Ninja Tune lost 120,000 records in the fire, including vinyl. "We're hoping our stock was insured, but we don't know at the moment," says the label's CEO, Pete Quick.
But even if a label's stock is covered, getting the insurance money may take a long time, which is a big problem for labels operating on a shoestring budget and therefore obliged to contend with cashflow issues. "The bigger labels and DVD companies will be taken care of first," says the director of Full Time Hobby, Wez (he goes by one name only). He sounds completely devastated when I speak to him. "We're probably number 250 in line ... not only did we lose all our stock, we've also lost our entire distribution network, which means we can suffer the effects of the fire for eight to nine months," he sighs. The label lost 100,000 units in the fire, including vinyl and special editions, worth �500,000 in retail value.
Full Time Hobby is largely reliant on physical retail. This, of course, is the case for almost all labels, but most indies have a majority of acts who are more album-oriented. They also tend to have more fans who are vinyl junkies than the majors. The cost of producing vinyl records can be as much as seven times what a CD costs to produce. Moreover, they are usually limited editions of 500-1,000 copies, which adds to the expense even more. The fact that pressing 5,000 copies of a CD costs more per unit than pressing 50,000 also means that smaller labels are worse hit than bigger ones. If the insurance companies decide to pay per-unit compensation, instead of considering the difference in the cost of production, these labels will be in real trouble.
"Our artists have been incredibly supportive," says Wez. "The Leisure Society, Erland and the Carnival, We Are the Ocean, Turbowolf and The Blitz Kids have put posts on Facebook and Twitter asking fans to buy downloads to keep the cash flow going for the label." This initiative is echoed by the Association of Independent Music, and the campaign LabelLove.
The chairman of Beggars Group (which includes Adele's label, XL), Martin Mills, says they've lost around 750,000 units in the fire, but points out that the label group has warehouses around Europe and will be able to cope. He says Sony and Pias have been amazing, and have rapidly put contingency plans in place. However, he worries for the smaller labels and says discussions are in progress about creating an emergency fund to help them through these difficult times.
But the fire doesn't only affect the labels. Wez also predicts that printers and manufacturing staff will lose their jobs. And there will be other knock-on effects.
The Piccadilly record shop in Manchester did not get looted, yet that doesn't mean the shop hasn't been hit. "Vinyl must've not been that interesting to the looters," laughs Darryl Mottershead, who runs the shop. "They probably already nicked the music online years ago." But in a week, he says, the shop will be without back catalogue ? and it's likely that most of the smaller indies won't re-press those records due to the cost.
The Rise record shop in Bristol operates on a "long tail" basis, stocking thousands of records by smaller indies (including DVDs by the BFI and Artificial Eye, whose stock was also stored at the Sony warehouse), and now they won't be able to source any of that stock for at least two weeks. Owner Lawrence Montgomery understands the importance of encouraging fans to download music while stock gets replenished, but worries that such people won't bother buying physical records once stock is replaced. "It's important for us that the majority of labels come out fighting," he says. "Working in retail is hard at the moment, working in music retail even harder ? and now this!"
Some indie labels may wonder if distribution of their output is cursed. Less than three years ago, Pinnacle Entertainment ? responsible for the distribution of more than 400 labels ? went bust, leaving many of its clients unable to recover their stock. The labels that managed to survive switched to Pias for distribution. "We may be the only small label to survive the Pinnacle crash and this fire," says Michael Morley, co-owner of Imagem Music, who lost around �40,000 due to the Pinnacle crash. But their survival may also be due to a bit of luck: had the artwork for their upcoming Caged Animals release not been delayed, all the albums would've been in the Sony/Pias warehouse.
Ninja Tunes artist Toddla T, on the other hand, has had quite a bit of bad luck with his upcoming album, Watch Me Dance (one of the label's biggest releases this year). Two months ago it was leaked online by a German journalist. But that was just the start. "When I saw this burning building on TV I didn't put two and two together," says Toddla. "I called my manager, asking if he'd seen it [the footage]." His manager realised the magnitude of what was going on and got on the phone to the label right away. They confirmed that all the stock was in that warehouse.
The album release has now been pushed back a week. "It's a pain ? but watching what else is going on, I think it's minor," says Toddla. "For me, there's a way around it. I feel for those people who don't have the back-up I have. That's when it becomes really sad. I was more pissed off about the leak by the journalist. It was a bit more contrived, and felt more personal. These people didn't go: 'Let's burn down that building that's got Toddla T's albums in it'."
Montgomery is less empathetic. "I don't understand it," he despairs. "How does it help? We're all businesses who strive to survive, employ people and give them opportunities."