The UK indie sector amassed on the HQ of the Association Of Independent Music in West London yesterday to discuss the implications of indie distributor Pinnacle going into administration. Of concern to the labels which used the services of the distributor are both unpaid revenues and unsold stock still in Pinnacle's possession.
About sixty labels attended the meeting, along with mechanical royalty collecting society MCPS, iTunes and a representative from Pinnacle's digital management partner Consolidated Independent. Corporate insolvency specialist Philip Flower was also in attendance to offer advice to those who face losing owed revenues, and who have valuable stock sitting in the Pinnacle warehouse.
By all accounts there was a sombre mood at the gathering, though Cooking Vinyl MD Martin Goldschmidt told Billboard: "It's a horrible time but the meeting was very productive". One big issue was the offer made by Pinnacle's administrators regarding the return of indie labels' stock. They are asking for 10p per unit plus payment of a storage fee for the return of CDs and DVDs currently in Pinnacle's possession. Labels who face losing up to three months of sales revenues due them from the distributor aren't very happy with that offer.
Goldschmidt told Billboard he was owed payments for October and November as well as a part payment for September. Asked how much of those monies he expected to see, Goldschmidt said he could only speculate, but that it could be just pennies per pound owed.
In a statement to the media this morning, AIM boss Alison Wenham said: "It is quite clear that this is an extremely serious situation for the labels caught by the sudden collapse of Pinnacle. The meeting this morning was conducted in the presence of a barrister, Mr Philip Flower, who is a specialist in corporate insolvency. He has been able to provide the labels with excellent advice on their options with [Pinnacle's] administrators BDO Stoy Hayward".
She continued: "In the run up to Christmas everyone is acutely aware of the need to move as quickly as possible to resume trading and to restore confidence in the retail market. AIM will continue to advise labels on both an individual and on a collective basis to ensure that losses are mitigated, and trading can recommence as quickly as possible. In the meantime, AIM has received many offers of help for the labels affected. It is a unique feature of the independent sector that, in troubled times, competitors can take steps to help each other out. We are sure that, although this is bad news, the effect on labels can and will be minimised as much as possible by the support of AIM and the community".
Despite Pinnacle's 94 employees having been made redundant, the aforementioned BDO Stoy Hayward say the company is continuing to trade and they are looking for a buyer. Many of the labels affected, however, are already looking for alternatives.
Goldschmidt says he hopes he can help labels other than his own through his other company Essential, which offers sales, distribution and marketing services to indie labels. Although Essential has in the past used Pinnacle to actually sell and distribute physical product, Goldschmidt says they have already put a new distribution deal in place with Cinram, a major distributor who distribute Warner Music's product amongst others things. Meanwhile, in order to offer the kind of independent music sales expertise that Pinnacle would have once provided, Essential has set up a new sales division that will launch later this month, headed up by Lance Meade, formerly Sales Manager for Sanctuary.
Explaining why Essential had already put deals in place to circumvent Pinnacle from its distribution offer, Goldschmidt concluded: "We had anticipated this [Pinnacle going under], we just didn't think it would happen now, we thought it would happen next year".
Finally, what about the 94 staff of the collapsing distributor? They are reportedly angry at the way they have been treated, with some claiming little was communicated to them about the firm's situation until an unknown man in a suit came in and told them all to sign a form, hand over their mobiles and the keys to the company cars, and to go home. Happy Christmas everybody.