The Ivor Arbiter Story (Part 3)
Part 3. CBS
The giant public corporation, Arbiter—Western, that Ivor Arbiter had helped to establish in the mid-sixties, found itself in a liquidity crisis. Result was that Ivor and the music division were sold to Dallas. Soon after it became Dallas—Arbiter...
Anyway, we set about building Dallas up with the boys who joined me from Arbiter. They were Andrew Wallace and John Moore who were great guys and we got stuck into it then. After a year I was appointed to the main board and then I was appointed deputy chairman. You know they made £34 in '66 and £55 in '67 — that was their profit record. I joined there and after the first year £72,000 then £75,000 then £375,000. They changed the name of the music company to Dallas-Arbiter.
Tell me the story of how you finally came to leave and set up with CBS.
Well, I had a five-year service build-up with Dallas. I also had a substantial stake. I suppose really it was my ambition once again — it would have been difficult for me to have gone much further — there was a chairman with a large family interest who had control of the company.
I think probably it was a clash of personality, although I had a lot of respect for the old man. I think basically I became disenchanted for various reasons and I also decided having been locked into shares all my life, first with Arbiter and then with Dallas, it would be a good idea for me at 43, after all this struggling and climbing up the ladder, to try and realise in actual money what the paper value was. I just took a decision and just sold my shares one morning.
What did you do to get yourself back into it?
I had known that C.B.S. had always had an ambition to have their own operation in Europe and the president of C.B.S. was over here on a trip and we went out for lunch and he said that they wanted to change. Quite honestly, now that the story can be told, the reason why I built Hayman and Hayman Guitars and Sound City Amplification at Dallas was a hedge against losing the Fender agency. I knew that one day it would go. It's a natural progression, this is an important market to them, they were bound to get their own set-up.
They had in fact been looking for an outlet over here for a long time. Dallas knew perfectly well that this was going on. C.B.S. at this time had been going through a period of funny management and had openly said that this was their intention.
Anyway, they asked me if I was interested in becoming a Fender distributor, and I said yes, and we set up a joint operation. A joint venture, really, because we don't work for C.B.S. as such. We have a 49% stake in the company. I thought what a fantastic opportunity for me to do everything I'd ever dreamed of. I'd always wanted to be in that sort of league.
Your present operation at C.B.S./Arbiter is extraordinarily successful. You opened in September 1974 and you were big from the word go. There was no messing about, was there?
Well, let me tell you some of the politics behind it. Having secured myself and my family financially, and having a beautiful product like Fender to deal with, I thought, how can I best utilise it and bring something to the industry.
The first thing I did was to leave AMII, that was after being very closely associated with them and having worked my balls off, having been chairman of MIPA for seven years and more or less created the seal of approval and all the other things, having more or less innovated the rock thing and all the competitions and all the rest of it, I quit!
I'd been through a very, very distasteful situation with Dallas, with the Association, and to find that a lot of the members of the Association, the hammering away at the agencies that I had behind my back. Like here we are, sitting around a table so to speak, like buddies, and these guys are going around behind my back to trade fairs and saying "Let's have his agency."
I think we're the first large company to have gone their own way. I must admit, I miss all my mates, because naturally I never hear from anybody. I do miss the kind of slanging matches and the old wives' tales, but nevertheless I find that by being single-minded we're in a much better position to get on with the job and not worry, we're not involved with our competitors. I think really we owe a lot of our success to our retailers, the people who distribute it for us and the customers who bought it from us. That really leads us very neatly back to this Fender Soundhouse thing.
We thought, "what can we do for the dealer; how can we maximise the potential of the name Fender? Having run Sound City and Drum City, I'd been very close to the retailer. I think really we created the guitar shop image, which sounds silly, but I think we were the first, even before anybody in the States, to get into a guitar shop complex, but what I wanted to do was to upgrade and try to create something for our dealers to latch onto. The industry is growing rapidly — I mean, I think it's worth over 40 or 50 million a year — we're no longer a small, back-street piano business. We thought, "Let's present ourselves nicely, let's try and design the establishments around our customers."
The name Soundhouse — ideally I wanted to be opposite the Roundhouse, that's where I got the name. I envisaged a Soundhouse opposite the Roundhouse. We conceived a Soundhouse concept. It was cheap, I visualised that a dealer could set his shop up very cheaply by using scaffolding and scaffle boards, brown paint which lasts ten years and a bit of light.
We have now got our dealers, I think 110 of them, and they get the maximum support from us because they do the maximum business for us, and they're allowed, if they want to, to use the name Soundhouse.