Pinnacle's demise a low point for independent labels

It was a Black Wednesday for dozens of indie labels following the news that music distribution company Pinnacle Entertainment has gone into administration.

Pinnacle distributes releases by such acts as Fleet Foxes, Nitin Sawhney, Belle Sebastian, Feeder, Katie Melua, Frightened Rabbit and hundreds more.

It has deals with about 400 labels, including Bella Union, One Little Indian, Tru Thoughts, Cooking Vinyl and Dramatico, and had a 4 per cent share of the UK album sales market in 2007.

Pinnacle employed 94 people in total, including one full-time employee at a Dublin office.

In a statement, administrator Matthew Tait said the company's collapse was down to "the sudden and steep downturn" in the economy.

Other reasons which the administrator could have mentioned for Pinnacle's fall include a shrinking market for physical product and huge competition from online retailers sourcing their CDs and DVDs from other companies.

Pinnacle's difficulties come in the midst of a rotten period for music distribution, ironically at a time of the year when demand for entertainment products usually peak.

Last week, EUK, one of the largest entertainment distributors in the UK with an annual turnover of £1.5 billion, was forced into administration following the collapse of parent company, retail chain Woolworths.

But there are some significant differences between the client-base for both companies. EUK was largely in the business of supplying big-volume chart titles to superstores and chains such as Tesco and WH Smith, so the major labels and retailers will be hit hardest by that collapse.

Pinnacle's problems, on the other hand, will impact most severely on small independent labels, who will now experience serious financial pain because of delays in reimbursing them for sales.

What all concerned will be hoping is that this is not a repeat of what happened in 1991 when Rough Trade Distribution company went into receivership. Its collapse led to the closure of dozens of labels and cost hundreds of jobs in the independent sector.