Tempo Can't Keep Time with their Bills
Leading Distributor Rips Off Thousands of Recording Artists
It started several months ago with a sound-bite in Billboard: major labels
were "concerned" with the bankruptcy restructuring of the nation's third
largest one-stop, Pacific Coast, who is responsible for delivering records
for over 4000 labels as well as the "big five" to over 2000 mom and pop
"Concerned" is putting it mildly. If you are an artist being distributed on
one of the labels listed at the end of this piece, there is an excellent
chance that your records are being sold illegally and you won't be paid a
thin dime for it. Here's why:
One-stops, for those new to the game, are middle-men who "buy" records from
the major labels and "sell" them to smaller record stores. They are typically
responsible for about half of an artist's sales on a major labels and over
90% of sales on independent labels.
Pacific Coast One-Stop is considered the third largest but, is actually a
shell (or dba) for Tempo One-Stop, based in Simi Valley, California, and
formally owned by Steve Kall. Steve has faced a number of problems in recent
years, including accusations of fraud and not paying his bills to the majors
after selling hundreds of thousands of their records by top artists.
In June of 2000, he was approached by Marvin Wilcher and Ralph Johnson. If
those names sound unfamiliar to you, that's because they are new to the
record industry. In fact they have virtually no experience running a
one-stop, but that's okay because what Steve was interested in had less to do
with selling records and more to do with getting out of debt.
Marvin describes himself as "a highly regarded merger and acquisitions
specialist." Omitted from his resume is the fact that, according to the
Freedom of Information Act records, he served four months for credit and mail
fraud in 1990. He's also a "restructuring" veteran of sorts, surviving
personal bankruptcy once in 1988 and again 1997 when a court required him to
pay six-figure judgments to angry vendors.
Marvin and Ralph started a company registered in Nevada (where tax laws are,
to say the least, a bit more liberal) and called it the Tempo One-Stop
Nevada. The name sounds virtually identical for a reason. Tempo One-Stop
Nevada bought the original Tempo One Stop but the fact that the name is
identical does not mean they have to pay Steve's old bills. Billboard
reported that Tempo One Stop Nevada bought the original Tempo but neglected
to discover that they didn't buy their debt, only their assets. Meaning that
the debts from the old Tempo are not to be adsorbed by the new one.
The "big five" have suspended their flow of product pending the hopes that
the new and improved Tempo can pay the old Tempo's bills as well as any new
product. But indies like Navarre, claim they are owed over $2,000,000 by
Tempo. Tempo claims they owe them nothing and has instructed employees not
to expect any more product from them.
With questionable assets, Tempo will find it hard to get bank loans to
continue their business. Especially, when according to those familiar with
the company, they seem to be using the cash from old receivables to "buy
themselves cars and expensive things," instead of paying back the labels. No
loans, no inventory and no sales equals no royalties to artists.
All major label recording contracts specifically state that artists are only
paid on records for which money is actually collected. Therefore, these
cutout units that are sold will not translate into royalties for the artists.
Nor will the fresh inventory that will be sold at auction when the company
goes belly up (a strong likelihood). The one stop will see revenue but the
major label who owns the product will not see a dime, which means that the
artist will not see a penny.
In an attempt to raise cash, Marvin and Ralph claimed in a press release that
they had over $20 million in inventory, but according to this same source, $4
million are cutouts, (old records that are no longer returnable for a credit)
and another 7 million are phantom inventory. Efforts to audit the company by
banks have met with stalls and excuses. But, according to one report, as of
June of 2000 the company owed almost $2,500,000 more than it claimed it was
expected to earn in that year.
Unable to obtain financing, Tempo is now claiming that they are going to
become a distributor and compete with the "big five." They are actively
trying to secure pressing and distribution deals with several smaller labels.
To give the company legitimacy they hired Brent Gordon to be their president.
For those who are a bit out of the loop, Brent was West Coast Branch Manager
of WEA and was asked to retire amid sexual harassment charges and other
allegations of fraud. He has been saddled with spearheading the events that
bankrupted Platinum PED, and took their stock from $4.87 a share down to
$0.0001 cents. (Way to go!) The Harry Fox Agency has filed complaints
against PED for non payment of mechanical royalties. Currently, he has set
up a new one stop, Magic Music Makers and will, in conjunction with Marvin
and Ralph's new and improved Tempo, attempt to position themselves as an
Rumor has it that they are trying to get Ron Nicks, former president of North
East One-Stop to run the company and instill confidence in the majors that
Tempo is still viable.
We at MosesAvalon.com wish Tempo One-Stop Nevada and Magic Music Makers well
in their new endeavor. We hope that they can learn from their past mistakes
and contribute to this industry in a meaningful and everlasting way.
Below is a list of companies distributed by Tempo that are owed money:
Universal Music and Video Distribution
WEA Music Distribution
Sony Music Distribution
EMI Music Distribution
Bertelsman Music Group
AND SOME TOP INDIES:
RED Music Distribution
Alternative Distribution Alliance
Ryko Distribution Partners
Distribution North America
Tommy Boy Records
Tee Vee Tunes
Proper Sales and Distribution
City Hall Records
Welk Music Group
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