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Tempo Can't Keep Time with their Bills
Leading Distributor Rips Off Thousands of Recording Artists
By Moses Avalon
(more articles from this author)
2001-03-12
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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 record stores.

"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 "urban distributor."

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:

MAJORS:

Universal Music and Video Distribution
WEA Music Distribution
Sony Music Distribution
EMI Music Distribution
Bertelsman Music Group

AND SOME TOP INDIES:

RED Music Distribution
Navarre Corporation
Priority Records
Caroline Records
Alternative Distribution Alliance
Koch Records
Ryko Distribution Partners
Distribution North America
Tommy Boy Records
Tee Vee Tunes
Bayside Distribution
Allegro Corporation
Proper Sales and Distribution
City Hall Records
Welk Music Group
Select-O-Hits
Mordam Records
Gotham Records
Southern Records
VP Records
What Are Records?
Fonovisa
Madacy
K-Tel Distribution
Telarc


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