‘We have always tried to be David against Goliath, but there’s only so many times David can win.’

[PIAS] founders Kenny Gates and Michel Lambot

Whenever Kenny Gates and Michel Lambot hit a key development – good or bad – in the life of [PIAS], they turn to each other, raise a quizzical eyebrow, and say, ‘Never a dull moment’.

It’s a phrase that’s seen plenty of action across the last four decades. [PIAS] celebrated 40 years as one of the world’s leading independent music companies in the past few months, and its incredible journey from there to here is the ultimate music industry survival story.

Co-founders Lambot and Gates first met in an independent record shop, Casablanca Moon, in Brussels, Belgium. Lambot was the proprietor, Gates a customer, dubbed ‘Factory boy’ by Lambot, after the young Gates attempted to collect all six different coloured vinyl editions of New Order’s Everything’s Gone Green. 

Lambot gave Gates “a political and philosophical brainwashing about independent labels” and, when the shop had to close after Lambot’s lack of understanding of exchange rates resulted in massive debts, the two became friends and then business partners. 

Gates lent Lambot the money needed to release a Polyphonic Size album on Lambot’s fledgling label, Sandwich Records, and the two toured Belgium’s retailers in a car, Lambot giving his young apprentice a crash course in everything from manufacturing to sales along the way.

Fuelled by the realisation that Belgium could be the gateway to the new, unified Europe, they then decided to launch a
business importing records together, before adding a distribution arm, a label and publishing company (Strictly Confidential) in rapid succession. [PIAS], then Play It Again Sam, was up and running, fast…

Since those early days, [PIAS] has become a vital part of the world’s independent ecosystem. It has 16 offices around the world, more than 280 employees, three in-house labels (Play It Again Sam, Different and Harmonia Mundi), a host of affiliated indie labels (from Bella Union to Transgressive, Heavenly to Mute) and a burgeoning services/distribution group, now known as [Integral].

Over the years, they’ve been at the heart of musical movements from New Beat to French touch to Britpop and, via various iterations of labels, distributors and associated labels, had a hand in the success of everyone from Front 242 to Editors, Deus, Young Gods, Oasis, Arlo Parks, The KLF (who gave the company its first hit as a distributor, crucial in establishing its credentials), Mogwai, Sigur Rós, Warhaus, Melanie De Biasio and Soulwax. 

It’s no exaggeration to say the entire history of independent music would have been very different – and a lot less fun – if [PIAS] had never existed. Likewise, the independent industry: the success of [PIAS] has often led to better deals for the entire sector, while Lambot also helped set up pan-European indies umbrella body IMPALA and independent digital licensing vehicle Merlin.

Which is not to say there haven’t been a few enforced pitstops along the way. The business has often teetered on the brink – at first because of the pair’s self-confessed lack of business acumen (Kenny recalls them using a broken calculator for three months in the early days, thanks to which literally nothing added up) and later because of, well, the inherently precarious nature of running an independent music company.

Indeed, [PIAS] has had so many cliffhanger moments that the duo compare it to a soap opera. Most dramatically, in 1999, they sold 74.9% of the company to Edel, a German media group that gave them the injection of cash they needed to expand across Europe and compete against the majors for deals, while allowing them to remain in total control. 

“There was absolutely nothing fishy in the proposal we were made, it was perfect,” smiles Gates. “It had independence, control, access to finance. But still it went wrong…”

Edel expanded too far, too fast, so two years later, Gates and Lambot bought back that 74.9% stake and tried to build back better, just as online piracy devastated the physical music business. They were managing it too – until the London riots of 2011 saw over £4 million worth of [PIAS]-distributed stock destroyed in a fire at the Sony DADC warehouse in Enfield, North London.

Fortunately, a year earlier they’d decided to invest more heavily in [PIAS]’s label business, reducing the company’s reliance on distribution and somehow they survived again. 

They have also weathered storms brought by the shift to streaming, the pandemic and the current cost of living crisis.

But, eventually, Gates and Lambot decided a change was needed. Post-Edel, [PIAS] had been bankrolled by veteran Swiss music industry moguls Jack and Sara Dimenstein, the duo behind European companies such as Teldec and Musikvertrieb AG.

Over the years, the Dimensteins’ loans and investments proved invaluable, building up their equity stake to 49% in the process. But, with the duo now in their nineties, they suggested the time was right for [PIAS] to look for a new partner.

Gates and Michel trooped round all the usual finance houses in search of investment, without much enthusiasm on their part (“Money comes with strings attached – the money you’re being given needs to come back to the hands of the person who gave it to you with a big profit,” sighs Gates), until deciding to talk to the major labels they had historically set out their stall against.

They already had a good relationship with Universal, having bought the major’s Cooperative Music company, which acts as a funding and support hub for indie labels, back in 2013. Even so, 2021’s announcement of a ‘strategic global alliance’ with the world’s biggest major raised a few eyebrows, even if UMG didn’t pick up any stake in [PIAS] at the time, merely providing a loan so Gates and Lambot could buy out the Dimensteins and pay off their debts.

Eighteen months on, however, and that changed. At the close of last year, Gates and Lambot asked UMG to convert its loan into a 49% equity stake and the partnership is now going to the next level. Gates says Universal will put some “exciting repertoire” their way shortly, while the investment guarantees [PIAS]’s future at a volatile time, and allowing them to retain their independence.

“You have to realise that it’s been touch and go for 40 years,” says Gates. “We have always tried to be David against Goliath, but there’s only so many times David can win against Goliath.”

And now that [PIAS] has the money to ensure their vision continues to compete with all-comers, it’s time for Gates (the more talkative of the pair) and Lambot (the more relaxed) to sit down with MBUK and discuss 40 years of indie ups and downs.

Fortunately, as with their company over the last 40 years, dull moments are in short supply…

When you first started Play It Again Sam, you added businesses very rapidly. Why were you in such a hurry?

KENNY GATES: We had an urge. You know when you need to pee? [Laughs] It has to come out, right? Otherwise, it’s quite painful. We moved from doing a label, to doing an import company, to doing licensing, to starting a company in Holland because the Dutch were these arrogant bastards who were trying to control us…

Then our UK distributor, Red Rhino, went bankrupt, so we decided to start a distribution company in, of all places, York. But, actually, all the people in London were taking too much cocaine and partying all the time, so being removed from the noise and craziness of those times was a blessing in disguise. We certainly did a lot of things in a short amount of time – 40 years have gone by, but it feels like yesterday to me.

Did you ever expect it to last this long?

MICHEL LAMBOT: We’ve been together for 40 years – he’s lasted longer than my wives! There was no plan, we were just doing things we felt we had to do. But things were done with vision, and that vision was to remain independent and control our own destiny. It was about the absence of fear. We were not scared, thinking, ‘You’re not supposed to do this’ – we just did things.

Most indie labels at the time had a fairly rigid musical worldview, but [PIAS] was never like that…

KG: Not being attached to any tribe was definitely a conscious decision. Even though, when I speak to [Domino founder] Laurence Bell, he still thinks we’re just interested in industrial music from the eighties! 

What was special in hindsight was, we were a fantastic team. I don’t know of any partnership in the music business that has lasted as long. And everyone else was concentrating on their own home market, but we were open to the world and internationalisation long before a lot of the other labels. 

Our fire is still alive after 40 years because we keep on having the luck of being associated with music that inspires, challenges and motivates us.

Were the Edel years the closest you came to losing everything?

ML: Just before Edel, we had 220 employees. Just after the deal, we moved to 500. And just after we bought it back, we moved back to 230. In a period of 24 months! 

One of our constant weaknesses over the years has been working capital, access to money has always been a problem. Suddenly, we had access to money and we were sure at the time that we really needed to have a complete European network. And when you have that, you need repertoire to feed the network. With Edel, we had the cash to do both.

KG: But suddenly things went pear-shaped. We had the choice of either being 37 years of age with a big suitcase of cash and letting go what we had built for 20 years, or buying the company back and rebuilding what was pretty much a destroyed company. 

It wasn’t a very long conversation between Michel and I. We said, ‘We’re not going to let people down, we’re not going to run away, buy an expensive car and get bored.’ So we bought the company back and put our money back into the company.

ML: But it wasn’t enough.

So the Dimensteins came in?

KG: Yes, we were lucky to meet them really. They became a 25% shareholder, very discreet, very nice and helpful, understanding and supportive. And we carried on. 

But again it wasn’t enough. Because then piracy hit us. And from 2004, we were facing a decrease in the market of 10-15% a year, and rising costs. 

Somehow, we got through the crisis, Jack and Sara helped us with loans. They converted their loan into equity and became a 49% shareholder, but there was still a day when Michel and I called the bank. We had known the bank manager for 20 years and said, ‘We don’t know if we can get through this.’ 

But he actually refused to pull the plug and said, ‘No, I’m sure you’ll make it.’ And there have been many moments like that; moments when we didn’t pay labels, when we robbed Peter to pay Paul, but we got through by the skin of our teeth.

What made you carry on?

KG: The conviction that we were righteous, and something was going to happen and we would get through it. We didn’t want
to give up. 

Our partners helped us, labels like Warp, Ninja Tune, Domino and Beggars – they knew we were struggling, we were paying them late. But they didn’t pull the plug on us, they supported us, they knew the ecosystem was important. And they trusted us. I’ll always be thankful to them for that.

And then there was the warehouse fire…

ML: And very little help from the government. It was just amazing, £4 million of stock burned in one night and no one in London or in government trying to help, when we were representing a serious portion of the independent community.

KG: I wrote to Boris Johnson, who was Mayor of London at the time and he basically told me, ‘You’re on your own.’ And we were on our own. 

There was lots of talk about creating funds to help small independent labels, but there was no one saying, ‘We need to help PIAS.’ 

And we couldn’t say we were in trouble, because if you say that, your competition goes for the jugular. So, we were kind of going, ‘Oh, we’re alright,’ but we were not, we were struggling. 

No school, no education, no university, no degree can help you deal with something like that. There have been lots of things in the 40 years that were just like, ‘What the fuck? How do you deal with that?’ But we got through that one as well.

Did things improve after that?

KG: Well, things are still not great, because now things are too good, and you have other snakes and sharks in the business. 

I hate to say it, but streaming saved the industry. You have to invest in new bands to sustain yourself as a company but, before 2008, catalogue meant jack shit. Then, if you didn’t manufacture a thousand CDs, your catalogue was worth nothing. Now, on streaming, every second it’s worth something. But it took a lot of time for those streaming numbers to make us feel secure again.

So why do the deal with Universal?

KG: We told them, ‘We’re not here to sell out, we’re here to find a partner.’ I would have said exactly the opposite 20 years ago, I would have said, ‘Universal are predators and they will never understand where we come from and respect our entrepreneurship.’ 

But when we looked around and saw the companies they [previously] invested in, they really have a feel for wanting to partner-up with entrepreneurs. That’s what they were saying – and that’s what we were seeing. 

So, rapidly, the most non-obvious option for us became the most obvious one. Because they respect where we come from and want to be partners, not cannibalise us and eat us up. 

We were also facing the four horsemen of the apocalypse: Covid hit, the war hit, inflation hit and the planet is a big concern. All of that made us think, ‘We need to compete against those investors who call our industry ‘an interesting asset class’.’ We need to have financial stability, be strong for our partners, our staff and our bands to face the future, but still remain who we are because it’s not the end of the road – it’s far from that. 

[PIAS] has been such a beacon of independence though, surely some people will be concerned, especially after the Edel experience?

ML: This is very different because, essentially, we’re not concerned about what happens in Universal, we’re just concerned with what happens in our company. And we’ve had a relationship with the upper management of Universal for a very long time, so it’s a human business.

KG: We’ve done everything to preserve our independence and identity. That’s who we are. While one or two people might be slightly concerned, the proof will be in the pudding. 

We chose to associate ourselves with a music company and not a finance company. If suddenly something changes at [PIAS] and it’s not the same, then maybe that’s an issue, but for a lot of people [the investment will be] a positive. Success means being healthy and sustainable and it is a guarantee of sustainability.

So, will be [PIAS] still be around in another 40 years?

KG: Hopefully! We’ve strived, struggled and survived for 40 years and having a strong partner is a smart move in a very uncertain environment. We don’t want to play with fire anymore.

This article originally appeared in the latest (Q4 2022) issue of MBW’s premium quarterly publication, Music Business UK, which is out now.

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