Jacked Around

Nick Tangborn's Jackpine Social Club label sells its CDs in stores across the country. When you buy one, he doesn't see a dime. Why?

The music business is full of dicks. All kinds of dicks. Big dicks, small dicks, sleazy dicks who wear bolo ties and cowboy hats, who will buy you a drink and then grab your girlfriend's ass when you turn away, and loser dicks with frizzy black hair and piercings who will crash on your couch and then steal your wallet. Sadly, there's nothing you can do about these people except try not to let them rub off on you, because the fact is that no matter how big your smile or how good your intentions, if you stay in the business for any length of time, sooner or later you're going to get fucked. Hard. This is one of those stories.

Nick Tangborn is not a dick. He may be, in fact, the nicest person I have ever met in the local music scene. A tall man with big sideburns and a neatly styled sandy-brown pompadour, Tangborn knows everyone and everyone knows Tangborn. Hanging out with him at a show or a bar is like hanging out with the perfect host, someone who can make you and everyone else around you feel comfortable and attended to. His warm heart and generous smile are disarming.

In addition to various DJ gigs around town (during which he'll spin everything from Richard & Linda Thompson to Kelis), Tangborn, 34, runs the Jackpine Social Club record label. Founded in 2002, Jackpine is the realization of Tangborn's longtime dream. The label's first release was a tribute to Kris Kristofferson featuring a bevy of notable artists -- Mark Kozelek, John Doe, and Tom Verlaine, among others -- doing renditions of Kristofferson tunes. Since then, Jackpine has released records by some of San Francisco's most talented and enigmatic acts: singer/songwriters Kelley Stoltz, Jesse DeNatale, and Sonny Smith, and jangly pop band Oranger. These CDs can be purchased in record stores around the country. There is but one problem.

"[My wife] and I were walking through Virgin records," Tangborn tells me, "and we saw a bunch of Oranger CDs, a bunch of Kelley Stoltz CDs, and she said, 'Oh, it's great, they're in Virgin,' to which I said, 'It's awesome that they're in Virgin -- someone's going to buy them. And I will never see a dime.'"

This is what you call getting fucked. Hard.

It was an honest mistake that anyone could have made, and as it turns out, a number of people made it. In addition to Jackpine, local labels Future Farmer and KoolArrow, as well as other respected names, put their trust in a distributor called Telegraph Co. They trusted that Telegraph would get their CDs into record stores across the country, which it did, and then, upon receiving the money from the sale of those CDs, that it would take its share and pass the rest along to the labels and, in turn, their artists. In most cases, the money never made it all the way back. Jackpine, Future Farmer, KoolArrow, others -- all are owed tens of thousands of dollars by Telegraph. To someone like Tangborn, who had financed his operation through working as a consultant, doorman, bar-back, you name it, the loss was crippling.

It all started very simply. In the late '90s, a man named Jerod Gunsberg, who, he says, previously worked as a music executive at Disney, founded a record label called Telegraph, which put out releases by nascent alternative bands. Those records sold poorly, so when, in 2001, Stan Hartman approached Gunsberg about buying his fledgling label and turning it into an ambitious distribution company -- it would aggregate many smaller record labels to amass a catalog that would allow it to negotiate its offerings into bigger markets -- Gunsberg thought it sounded like a good idea. And it was.

"In theory, they had a good idea: Indies unite in this horrible system and be taken seriously," says Dennis Mitchell, CEO of Future Farmer, which puts out records by local acts like For Stars and the Mother Hips. "So I got pulled into that."

With Gunsberg acting as general manager out of a live-work loft in Williamsburg, Brooklyn, and Hartman maintaining the warehouse facilities and handling the finances in Lawrence, Kan., Telegraph set out to attract as many small indie labels as it could. The indie distribution business is structured like a pyramid, with the labels on the bottom, smaller distributors like Telegraph in the middle, and a handful of "one-stops" at the top; the one-stops won't deal with small labels individually, but they will deal with an aggregator like Telegraph if its catalog is appealing. Thanks to its label roster, which in addition to Future Farmer included indie stalwarts like Kindercore and Pitch-a-Tent (home to Cracker and Camper Van Beethoven), Telegraph was able to negotiate a deal with a one-stop called IDN, which would ensure that every label's CDs made it to stores.

So, say you're Tangborn and you've got a deal with Telegraph and you've got an artist named Kelley Stoltz signed to your label. First, you pay for Stoltz to record his new record. Then you pay to manufacture the CDs. Then you send those CDs to Telegraph, which passes them up to IDN, which gets them into Wal-Mart. When John Musiclover walks into Wal-Mart and buys that CD, a chunk of that sale goes back to IDN, which takes a cut (usually 10 to 30 percent) and sends the rest to Telegraph, which takes a cut, in this case 20 percent, and sends what remains to Tangborn, who, after paying his expenses, splits the profits with his artist. In addition to the fee it gets for distributing the CDs, however, Telegraph also collects for what it spends on marketing and promoting the release, as well as on things such as "refurbishing," as when Tower Records sends back two dozen unsold CDs with Tower stickers on them and you need to re-shrink-wrap the whole batch before you can send them to a different store. It's a convoluted process, and when things go wrong, the first party to get fucked is always the small label -- and, in turn, the artists -- which doesn't have a team of accountants to tally the beans or a posse of lawyers to challenge the improprieties, which seemed to arise at Telegraph with increasing regularity.

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