A Faint Imprint
Imprint Records chairman/CEO Roy Wunsch says country music’s only publicly held record company may be down, but it’s far from out. Even so, in its current state, Imprint hardly resembles the independent record label that opened here three years ago. The value of the company’s stock has dropped drastically, and most of the musical acts have been cut from the roster. As a result, the label is now gearing up to launch Imprint Entertainment, which will focus on TV, film, and multimedia projects. The few recording artists that remain will be promoted on the side.
President Bud Schaetzle, formerly with High Five Entertainment, will oversee the new division, which will begin work on three projects soon: a Kathie Lee Gifford TV Christmas special, a cable show on the 25th anniversary of The Manhattan Transfer, and a special on the 125th anniversary of Yellowstone National Park.
“Our long-range plan initially was that we hoped Imprint could be a multimedia company,” says Wunsch. “The record element was going to be the core of the company. We thought we had better get a solid footing before we diversified. We actually wanted to start this six months ago, but the timing was off.”
“For the time being, we have an absolute obligation to our shareholders...to do the utmost to get them a return on their investment. That’s going to be a challenge. It’s just a very tough world out there, at a time when country hasn’t demonstrated...solid growth.”
Wunsch says the addition of the TV projects will create a cash infusion within two weeks to 30 days. “We have a forecast, but we have to see how real it is,” he says. “It looks like it could be substantial and get us on the right footing. It’s certainly not going to happen overnight.”
This new course is a necessary change for the financially strapped company, which was dropped last month from the NASDAQ Stock Exchange’s Small Cap Market for dipping below the minimum requirements, which include total assets of at least $2 million. Imprint’s stock is now quoted in the over-the-counter market. According to Wunsch, removal from the NASDAQ list precluded the company from implementing a warrant call, which would have enabled Imprint to bring in between $1.5 million and $2 million by allowing stockholders to purchase additional shares at a preset price.
Imprint, formerly Veritas Music Entertainment, went public in 1995, raising about $7 million through its initial offering. The stock, which went for $5 a share in 1995, dropped to below 40 cents per share last week. Wunsch and Schaetzle, who own more than 1 million shares each, have loaned the company $100,000 each and have deferred their salaries for the past year.
Wunsch says several of the 16 employees will lose their jobs because the label will be scaling back. Executives Tracy Gershon (A&R) and Connie Baer (marketing) will remain, as will others who are under employment contracts. “We’ll have a couple of projects we’ll work through the next couple of months, but they aren’t necessarily driven by radio airplay,” the label head says.
Imprint has released artists Jeff Wood and Ryan Reynolds from their recording contracts, enabling the singers to seek deals elsewhere, and the label had already ended its arrangement with Gretchen Peters and with BMG-Canada’s Charlie Major. Next month will, however, see the release of an album by the Groove Grass Boys; Bob Woodruff also remains with the label.
Wunsch, a former president of Sony Nashville, teamed up with Schaetzle in 1994 to form Imprint. The pair planned to develop five to 12 new acts in the first five years. “I wasn’t predicting gold and platinum successes,” Wunsch explains. “I was projecting what I thought were pretty reasonable numbers. I was looking at perhaps two or three projects over the first 18 months, hypothetically in the 100,000-unit range and growing from there if we were able to succeed with those artists.”
So what happened to the $7 million? Wunsch says the company had annual operational expenses of about $2 million for rent, payroll, insurance, and taxes. For the first 24 months, artist advances and royalties were expected to reach nearly $1.5 million, with another $970,000 for marketing and promotion. More than $500,000 was anticipated for artist expenses, and another $350,000 for computer and media equipment. Imprint also had to repay a $300,000 loan that it had taken out before it went public.
In the end, spending far exceeded the amount of money coming in. Wunsch says the label spent about $650,000 to launch singer-songwriter Gretchen Peters’ first album, The Secret of Life, which shipped about 60,000 copies and sold about 10,000. The numbers were roughly the same on Jeff Wood’s release. Imprint then scaled down, shipping about 18,000 Bob Woodruff records and about 20,000 Charlie Major records. The label’s best-selling project was, ironically, a singlea country version of the macarena by the Groove Grass Boys that sold about 80,000 copies. Overall, the company has shipped nearly $1 million in product and seen revenues of less than $200,000.
Imprint was launched during country’s boom, but it quickly landed in a market flooded with new acts fighting for precious few spots on country radio. “At least in 1994-95, it was much more of an open format in terms of what was acceptable from a musical sound standpoint,” Wunsch says. “You had Mary Chapin Carpenter having hits on one end of the scale and Mark Chesnutt having hits on the other end, and you had that ground in the middle.
“For our initial project, we certainly felt Gretchen Peters deserved to be heard. The music was fabulous, and we knew it was a stretch, but we were being cheered on by many [radio] programmers who wanted a change. They were bored with the sameness of sounds they were getting from Nashville.”
But in the last two years, Wunsch says, radio programmers have grown more conservative as a result of shrinking ratings and the high number of station acquisitions. “I think I foresaw the struggle adequately in the sense that I [knew] how tough the business can be,” he says. “What I honestly didn’t anticipate was...how the competitive edge is so important. I didn’t anticipate people faxing negative information to radio stations in order to help their own positions.
“It certainly wasn’t collusion. It was just tough competition, and it’s gotten unsavory at some levels.... It’s tough out there, and no one said it had to be fair.”
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