Branson. Tom Bower
looks belied a troubled personality. Newman and Simon Draper’s excitement about Oldfield’s extraordinary composition washed over Branson. To an unmusical businessman, Oldfield’s forty-minute track without a song was difficult to appreciate. Branson’s indifference was shared by every established record producer. All of them had rejected Oldfield. ‘Why don’t we produce Oldfield?’ asked Simon Draper. ‘We have nothing to lose.’ Draper’s suggestion that Virgin produce the manor’s first record, Branson appreciated, was risk free. Failure would cost nothing. Branson’s virtue was his willingness to gamble if the financial risk was minimal.
Taking a standard record company contract, Branson added a refinement. Oldfield was contracted for a decade’s work at the low 5 per cent royalty fee and, acting simultaneously as Oldfield’s agent and manager, Branson tilted the contract further in his own favour by paying Virgin an additional 20 per cent of Oldfield’s income for ten albums. ‘We’ll put Oldfield on £20 a week,’ Branson told a friend, ‘like me and all the other Virgin employees.’ No one challenged Branson’s pretension to earn just £20 per week.
‘It’s got to have words,’ Branson urged Draper and Newman. ‘Everyone says that records without a song don’t sell.’
‘No way,’ replied the two men who by spring 1973 had developed what they had named Tubular Bells into a polished composition. Branson relented. From his new offices in Vernon Yard, Notting Hill, he was hectically marketing Virgin’s first record. To increase his profits, he had retained all the rights. Tubular Bells had developed into his personal challenge to the established record corporations. Brashly, he invited the DJs and critics to dinner on his houseboat to preview the new record. The unusual venue gave his sales performance unique style. Among those persuaded was John Peel, who a few days later devoted his entire programme on Radio One to the record. His audience was ecstatic. Overnight, thanks to Peel and others, Branson owned Britain’s best-selling album of 1973. The success was spectacular. Daily, tens of thousands of pounds poured into Virgin’s account. Atlantic Records, after buying the American rights for $750,000, sold the music to Hollywood as the soundtrack of the film The Exorcist. Branson’s personal wealth was assured. Some would subsequently carp that Tubular Bells effortlessly fell into Branson’s lap, but that reflected their naivety. Flair and energy had created the circumstances.
At twenty-three, Branson was a millionaire. Wealth tortured many in that socialist era but Branson’s conscience was untroubled. He seized the moment to develop a formula for survival and success. Previously, the mystery about Branson’s finances was his fearless accumulation of debt. The new mystery was the cloak of secrecy he cast over his business and personal wealth. To disguise his ambitions from his low-paid employees he plotted a strategy to protect his new fortune from taxation and future creditors. Although he would boast, ‘we still paid ourselves tiny wages’, the whole picture was different.
On the advice of his father, and against the background of family trusts, he sought the help of Robert Maas of Harbottle and Lewis, his solicitors, to establish his first offshore trust in the Channel Islands. Hundreds of thousands of pounds of royalties received for both Tubular Bells and the use of the Virgin logo, a newly registered trademark, were being deposited in the offshore trust. Ray Kite, the logo’s designer commissioned by Simon Draper, was paid £250 out of Virgin’s fee of £2,000 and received no further royalty. (Branson’s subsequent account about casually seeing a sketch of the logo drawn on the back of a serviette while passing through a dining room seems to be mistaken.) Beyond the view of the Inland Revenue and his growing Virgin family, Branson, Draper and Powell, the elite, could discreetly accumulate and manage their millions. Yet despite their legality, Branson’s trusts did arouse suspicions.
Taxes could only be avoided under British law if Branson, as a British resident, did not influence the management of the trusts. Yet Branson would speak of his ‘family trusts’ and enigmatically assure banks and business partners that the trustees would financially support his business ventures, appearing to call into question the trustees’ independence.
After taking advice as to how he could conceal his fortune from the Inland Revenue, Branson’s next step was to reinforce his camouflage from his employees. Austerity was introduced to suggest poverty and to protect his wealth. He expressed a new dislike of expensive cars and clothes. The second-hand Bentleys bought by Virgin for Tom Newman and others were sold. The patriarch, however, discovered that some Virgin employees were becoming jaundiced by the fraying façade of the family’s equality.
To capitalise on his success, Branson had become immersed in the millionaire’s schedule of international travel and power lunches to negotiate mega-deals with major record companies. He was unaware of his staff’s complaints about low wages. ‘They want to join a trade union, Richard,’ revealed a secretary after a return to London. Horrified by visions of the constant trade union strife ravaging Britain, Branson rushed to his employees’ meeting and burst into tears. ‘Why are you so interested in money?’ he asked, presenting himself as a victim of their demands. The millionaire’s question only temporarily silenced his confused audience.
‘Do you know how much a pint of milk costs, Richard?’ asked Sian Davis, the director of Virgin Records publicity department.
‘No,’ he replied sheepishly.
‘You live on another planet. We need money to live.’
‘We’ve got no money,’ pleaded Branson, tears running down his cheeks. His manner reinforced the impression of equality and poverty. Richard, the capo of his family, was giving everyone a chance of their lifetime, so long as they obeyed his rules. The threat dissolved. No one was inclined to contradict the source of so much fun and few appreciated the sharp variation in incomes between the ordinary employees and the inner circle.
Entry into the cabal was biased in favour of former public schoolboys. By accident rather than intention, that selection automatically excluded the racial minorities. Branson’s social background and life had not included Jews, blacks or Arabs as intimates. Rather the capo was attracted to like-minded people from a similar mould. The result was reflected in the employees’ contractual relationships with Virgin.
For Steve Lewis, a state-educated Jew negotiating publishing rights for music which became the seedcorn of Branson’s future fortune, entry to the cabal was barred. Lewis was welcome to dedicate his life to enhance Virgin’s fortune by accumulating the ownership of publishing rights in popular music and managing the record company, but he could expect nothing more than appreciation and his salary. Branson appeared to be unaware of the insensitivity of jotting on his notepad under the name Arthur Indursky, a famous New York lawyer, the word ‘Jewish’. Branson, Lewis accepted, was not anti-Semitic but merely ignorant of those who lived their lives outside the realm of the Jags and judges inhabiting Surrey and Stowe.
Branson’s appreciation of Tom Newman and Simon Draper was expressed by giving each stakes in different Virgin companies. Newman’s stake was in the studio at the manor; Draper’s in Virgin Records. Both shareholdings were potentially worthless since their value was determined by Virgin’s holding company which Branson and Nik Powell controlled. Nothing was needlessly given away. Branson’s loyalty was restricted to those aware of his financial secrets, especially to Ken Berry, a skilled accounts clerk promoted to Branson’s personal assistant. For the rest, Branson evinced no sense of obligation. In the process of rapid self-education, his canon tolerated nothing else.
Unlike Chris Blackwell, a rival independent who owned Island Records, Branson spent limited time in the studios with artists and appeared less concerned than Blackwell about his artists’ lives. His pleasure was the deal: signing artists as fast as possible, even if they were contracted to his competitors. Island Records was a first target. Having pondered whether Bob Marley could be lured, he settled on Peter Tosh. After that deal, Alison Short, his secretary, would say someone punched Branson on the nose in fury, and he faced threats on his houseboat from G. T. Rollins, a musician, over a payment of £2,000. ‘You shouldn’t go taking other people’s acts,’ advised Tom Newman. Branson laughed. Poaching was, he replied, acceptable. In the tough rock world, whatever the rights and wrongs, he would fight with the best. Breaking into the big league required risks and he was happy to gamble over his limits,