Draper hated the music. ‘It was all style and all aggression,’ he recalled. ‘To me, coming from a musical perspective, it just seemed like a great big noise. I went to see them at the 100 Club. [When we] came back after the gig, it was very exciting. There was such an air; it was so aggressive.’ In the car on the way home, Draper commented that they couldn’t sing – and then remembered, with a sinking realization, that people had made the same complaint of Mick Jagger when they had first heard the Rolling Stones. One magazine had described Jagger’s voice as being like broken bottles. With the Pistols, however, the shards of glass was a literal rather than a metaphorical part of the act.
Rejected by Virgin, McLaren signed the band he was managing to EMI. Their first single, ‘Anarchy in the UK’, convinced Draper as soon as he heard it that he had been wrong. There was an energy and a directness in the Sex Pistols’ music that was lacking in any other pop music of the time. More importantly, the group were packaged brilliantly. Jamie Reid, an art school friend of McLaren’s, produced album-cover designs that were revolutionary in their mixture of passport-sized photographs and letters cut from tabloid newspapers, in the style of an anonymous letter.
McLaren himself, meanwhile, contrived a series of incidents that were designed in equal measure to offend the old and the middle class, and to attract the young, disgruntled and unemployed. The greatest of them was to have the Pistols invited to appear on ‘Today’, Bill Grundy’s afternoon magazine programme on Thames Television. A few ‘fucks’ and ‘shits’ from the boys in spiked haircuts and ripped jeans, and punk rock was promoted from something unpleasant that happened in private music clubs to a national controversy.
Branson did not need to be alerted by Draper to the commercial possibilities of the Pistols’ ability to shock. The very day of their appearance on Grundy’s show, he had telephoned the managing director of EMI to offer to take this turbulent band off his hands. Since the EMI executive would not take his call, Branson left a message; the following morning, he was called to a meeting at EMI’s offices.
Branson was ready to make a deal there and then; McLaren was determined to play cat and mouse. He shook hands on a deal with Branson that day, earning £50,000 in compensation from EMI for the record company’s decision to assuage public anger by pulling the single from record shops. But McLaren then signed the Pistols to A&M Records, in a public ceremony outside the gates of Buckingham Palace. A&M paid £200,000 for the group, but had second thoughts when the group trashed its offices after a signing party. It took several more months, and five telephone calls a day from Richard Branson himself, before McLaren would condescend to accept a second compensation payment, this time from A&M, and sign his boys with Virgin Records.
Virgin entered into the spirit of things with enthusiasm. The group’s next single, ‘God Save The Queen’, was given a loudspeaker performance from a boat on the Thames just outside the Houses of Parliament during the week of Queen Elizabeth II’s Silver Jubilee. The police and the popular press obediently played their parts in the publicity stunt: McLaren was arrested, and the name of the group was all over the papers for a week. The record reached number two in the charts (some saying that only chart manipulation denied it the triumph of becoming number one), and sold over 100,000 copies in that week. Further success followed with the predictable controversy surrounding the Pistols’ album, Never Mind the Bollocks, and the unsuccessful prosecution for obscenity that followed its release.
By the end of 1978, however, the phenomenon of the Sex Pistols had worked itself out. McLaren had made a revolutionary film about the group and its handling, The Great Rock ’n’ Roll Swindle. He had briefly appointed Ronnie Biggs, a former train robber resident in Brazil, as the group’s lead singer; and the group itself had begun to fall apart. Sid Vicious died two months later of a drugs overdose, before he could be tried for stabbing his girlfriend to death with a knife. And Johnny Rotten, reverting to the name of John Lydon with which he had been born, repudiated McLaren as a manager and began an action in the High Court to have his company’s assets liquidated.
For Branson, Sid’s death was a disaster, but Virgin managed to salvage some return on the contract. There was now no longer any hope that the group would become a serious money-spinner for Virgin; but the label still had the rights to the records the Pistols had already made. Draper also went on to release a posthumous album of Sid Vicious songs. More important, however, its association with the Sex Pistols and with punk rock had once again made Virgin a label that young artists would be willing to sign to. Richard Branson had been looking for a hit act that would ‘put Virgin on the map’. Now he had found one. The five years after the end of the Sex Pistols would prove to be the record label’s most creatively successful period. In that single half-decade, Virgin would break and develop into stardom such acts as Phil Collins, Culture Club, Simple Minds, Human League, Heaven 17, China Crisis and Japan – a set of achievements that few independent labels could equal over their entire lifetimes.
While Virgin’s credibility among the professionals of the music industry was rising, however, wider trends outside were pointing worryingly downwards. Inflation, which had been falling under James Callaghan’s Labour government, began once again to look threatening. Economic growth slowed down, and the government suffered a bruising succession of confrontations with the trade unions. Matters came to a head in the ‘winter of discontent’ at the end of 1978, which saw strikes and power cuts. The record industry, as a supplier of a non-essential product, was particularly hard hit. Album sales in Britain dropped by more than 15 per cent in the course of 1978; the industry as a whole began to turn from profit into deep loss.
Virgin, which now had a disparate rag-bag of interests ranging from the record label, management and studios to retail, restaurants and a private island, was forced to look for economies. A quarter of the record label’s fifty-strong staff were sacked, starting with Arnold Frollows, the firm’s respected head of A&R. It was Virgin’s first ever round of compulsory redundancies. The artists’ roster was purged of acts that were making insufficient money. Valuers were sent around the various properties owned by the company – ranging from the Manor in Oxfordshire to the houses dotted around Notting Hill Gate in which the company directors were living – in an attempt to add some extra weight to the group’s balance sheet. An ambitious attempt to build on Virgin’s European success by opening up shops in the United States was abandoned: Ken Berry, originally sent out to build an empire in America, was asked to wind down gracefully the company’s interests there and come home.
The election of a Conservative government in the summer of 1979 made little immediate difference. Margaret Thatcher, the new prime minister, saw her first priority as conquering Labour’s inflationary legacy. It was more than a year before she could begin to claim success, for inflation actually rose from just over 13 per cent in 1979 to 18 per cent in 1980; but the price of lower inflation was sharp cuts in public spending, a rise in interest rates, and a sudden increase in the number of unemployed. The Tories owed their election victory in part to a powerful series of posters, showing hundreds of ostensibly unemployed people queuing up above the slogan ‘Labour isn’t working’. That now became a bitter joke. The only consolation for Virgin was that as times became tougher, other companies were in worse straits.
The task for Branson and Powell in 1980 was to prune back the unwieldy plant they had created. At one point they even resorted to the expedient of inviting in a firm of management consultants to advise them on what to do. None of these reforms, however, had any significant effect on Coutts & Co, the company’s blue-blooded bankers. Coutts flady refused to increase the company’s overdraft; and Virgin’s bank manager began to ask instead when he could expect to be repaid some of what he had already lent.
It was fortunate, therefore, that a significant nest-egg had been set aside in case of bad times. Seven years ealier, before the record label had even been established, Branson and Powell had registered the trademark that would appear on its first few albums – a drawing of a pair of women – in the name of an offshore trust. When overseas record companies or subsidiaries later paid for the rights to Virgin albums, the royalties
