Branson no chance to defend himself; more significantly, Branson claimed afterwards that Newman had never explained his grievance to him.
The irony was that Newman was quite mistaken in believing he had been betrayed over his shares. Had he toubled to check the accounts at Companies House, he would have discovered that Caroline Studios, the company of which he had owned 20 per cent, was still in operation as the trading company for the studios business. After the reason for his abrupt departure had become clear, Branson and Powell might easily have explained the situation and brought him back. But they saw Newman more as a musician than a business type; and they were beginning to realize the risks involved in giving employees subsidiary stakes in the companies.
‘My stupidity was such that instead of going straight to a lawyer, I was full of hurt pride. I thought Richard and I were partners; I was enjoying the situation,’ Newman recalled.
The gap in the management structure was filled promptly. Soon after Newman left, Branson appointed Phil Newell, who had formerly worked as the Manor’s maintenance engineer, to replace him.
Newman’s sense of outrage was compounded when he looked at the royalty statements he received from Virgin for Fine Old Tom, an album that he had made himself at the Manor. The record had taken three weeks to make, and Newman had arranged to do it at times when the studios were not needed by other artists. Yet his statement from Virgin after the record was released showed a deduction of £11,000 for the cost of studio time – a figure reflecting Simon Draper’s determination that studio time should be allocated to artists at its full price. But the album’s recording costs altogether were so high for this modest piece of work that it would inevitably take years for the royalties earned by his record to cover that deduction. ‘I’m not even sure that I came out positive in the end,’ Newman recalled.
It was only after Tom Newman had left Virgin that his friend Mike Oldfield began to look again at the contract he had signed with Richard Branson. Talking to other artists, Oldfield discovered that the five per cent royalty, standard though it had been at the time of signature, was by now hardly fitting to his enhanced status. Double that figure would have been more commensurate with how commercially important an artist he had become; and some artists in the same position might even have had the gall to demand a royalty of 17 or 20 per cent. Even the modest five per cent he was receiving, however, was not what it seemed, for Branson was deducting a fifth of it as commission for his services as Oldfield’s manager.
Oldfield telephoned Tom Newman one day, miserably depressed, and asked the former studio manager to come around to his house. When Newman arrived, he heard the whole story; and, to compound the dilemma, Oldfield also told him that he felt in a weak moral position to complain, since Branson had taken on Tubular Bells when almost every other record company in the country had turned it down. Newman reminded Oldfield abruptly that it was not only Branson who had shown faith in him. He had done the same himself; so had Simon Draper. Oldfield should not therefore consider the debt to Branson so great that it ruled out any change in their business dealings. In any case, his contract with Virgin was now up for negotiation. ‘If you don’t do it now,’ he said, ‘it’ll never happen.’
A few weeks later, Oldfield bit the bullet. He hired a new lawyer to renegotiate the terms of his contract with Virgin, and came out at a royalty rate of almost 12 per cent. As a gesture of thanks to the friend who had helped him summon up the courage to face Richard Branson across the table, Oldfield gave Tom Newman from that day onwards a share of his royalties equivalent to one percentage point. By 1994, more than twenty years after its first release, Tubular Bells was still selling so well that Newman’s one per cent brought in almost £10,000 a year. Had Oldfield dared to demand a higher royalty earlier on, however, he might have been well over £1m richer.
BY 1975, when Mike Oldfield’s third album reached number four in the charts, Virgin Records had become the hottest company to work for in the music business. In common with other small and avant-garde record labels, Virgin could claim to have ‘integrity’ in its choice of artists for its roster; like those of the giants of the industry, its choices seemed always to make money. There was only one other company that could make a similar claim: Island Records, the label founded by the Jamaican-born public schoolboy Chris Blackwell, which brought to stardom many of the world’s most famous Caribbean artists, most notably Bob Marley in 1972.
‘I was doctrinaire,’ remembered Simon Draper. ‘I wanted to sign original and worthwhile talent.’ His philosophy was that Virgin should be trying to produce great records that happened also to be commercially successful. This brought him into occasional conflict with Richard Branson, who was keen to sign musicians who would make money for him, but less interested in the sort of music they played. When faced with a potentially profitable addition to the roster that he knew would be unacceptable to the trend-setters of the industry and the music press, Draper had to explain to Branson why an act that might make money could nevertheless not be the sort of act that Virgin Records should sign.
Uncommercial it may have seemed; but this attitude helped to attract to Virgin, and to keep in its ranks, a group of young and fashionably talented employees. An extraordinary number of the company’s staff of the time recall that period as the most exciting of their working lives. One reason for this was that Virgin was willing to hire people who had enthusiasm and a love for music, but no formal experience in other record companies. Once inside, they would find themselves given important jobs to do – and left to get on with them. Unsupervised, they would put in long hours and great effort, and in the end would achieve far more than they had believed themselves capable of.
The days of equal pay for all at Virgin had long gone. Yet it was routine for members of the record company’s staff to turn down offers of double their current salaries or even more from other companies. There were few complaints about the cramped and unpleasant working conditions in the Vernon Yard offices to which the company had by now moved. Perhaps this was because life at Virgin was fun. Everyone seemed to be friends. And although people took their jobs seriously, they did so as they would take seriously a game of tennis that they passionately wanted to win, rather than as a career. Pensions were not a matter that was often discussed.
John Varnom served for a while as the public face of the company – writing its press releases, drafting its advertisements in Melody Maker, and answering questions from journalists. He set the tone by telling a series of whoppers to anyone who telephoned that were so outrageous that they were impossible to believe. Branson, meanwhile, indulged his love of practical jokes to the full; he had a brilliant knack for mimicking voices, and would often call his colleagues at the office and engage them in long, increasingly implausible conversations before they realized who was speaking.
But it was the company’s weekends abroad that did most to cement its team spirit. Starting on a Friday and ending on a Sunday night, the entire staff of the record company, publishing company and studio management team would decamp to a country house hotel. Attendance was in theory optional, but those who did not come were told jokingly that they were expected to spend the weekend working in the office. At the hotel, other record companies might fill the days with talk of sales targets or new products. At Virgin, business was banned. Instead, the guests would spend the weekend playing tennis or golf, swimming and sunning themselves, eating and drinking with great gusto, and taking a few drugs and sleeping with each other in the evenings.
Men who worked at Virgin looked back on those weekends as idyllic. The corporate women – who certainly had better opportunities to do well at Virgin than they would have had in other record companies – were a little more cynical. ‘Open marriages were fashionable,’ said one. ‘You were uncool if you didn’t have lots
