Shutdown of RPM Distribution, Canada’s leading independent vinyl distributor, stuns music retailers

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“I opened up my e-mail on Monday morning and my jaw hit the floor,” says Mark Richardson, manager of East Vancouver’s Audiopile Records & CDs. “It was completely unexpected.”

Richardson is speaking about the message sent out to hundreds of small music retailers a week ago from RPM Distribution, Canada’s leading independent distributor of vinyl recordings. The e-mail from the company based in Concord, Ont., informed customers that RPM was closing its operations immediately and that existing orders would be cancelled.

The abrupt shuttering sent shock waves through the country’s vinyl-selling scene, leaving stores scrambling to find other suppliers. As well, because RPM’s prices tended to be lower than those offered by other distributors, a small jump in the cost of new LPs to consumers is a possibility.

“We had a great December, and our shelves are just famished right now” says Richardson, who had $10,000 worth of merchandise on order with RPM. “We need to get new stock in here, and it’s just not out there on such short notice.”

The reason for RPM’s closure is unknown. RPM owner Paul Herzog gave retailers no explanation and has not responded to news media inquiries. The distributor had shut down for two weeks over the holidays, Richardson says, but otherwise the downfall of RPM was an unforeseen development. “For all I knew, they were doing so well that they could afford to take off that much time,” he says.

Indeed, the vinyl business is strong. According to figures released last week by sales-tracking service Nielsen Music Canada, vinyl sales were up 25 per cent in 2018, surpassing one million units. This, in a year which saw sharp declines in music purchases overall. (Music consumption, on the strength of streaming volume, was up, however.)

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Still, although the vinyl resurgence continues, the distribution business is no gold mine. Acting as a one-stop-shopping service between record labels and retail outlets, wholesalers such as RPM work on tight margins and high inventory. “It’s a stressful business,” says Trevor Larocque, owner of Toronto’s Tiny Record Shop and the indie music label Paper Bag Records. “A lot of people depend on you to get them records. I wouldn’t want to do it.”

Here’s who else doesn’t want to be in the vinyl distribution game: The major labels themselves. “As far as I can tell, they don’t care about physical products,” says Audiopile’s Richardson, referring to Sony, Warner and Universal. “I think they think it’s a hassle for them.”

It is a hassle, which is why the majors, who increasingly make their money from music streaming, mostly farm out their physical distribution to middlemen such as Ontario’s Isotope Music, Montreal’s F.A.B. Distribution and, until recently, RPM.

After RPM went out of business, some of its customers reached out to the major labels directly for distribution, only to come away empty-handed. “Sony and Warner didn’t bother to get back to me, and Universal told me they aren’t accepting new accounts," Larocque says.

Audiopile's Richardson has long been frustrated in his dealings with the majors. “The resurgence in vinyl is good for us, and it should be a good thing for major labels,” he says. “They’re not interested, though. They’re almost completely hands-off.”

Filling the void created by RPM’s closing is Isotope Music, which bills itself as “Canada’s largest music distributor.” According to the company’s owner, Isotope has picked up 150 new accounts since RPM shut down. “You hate to see anyone go out of business, but it has been good for us,” Gerry McGhee says.

Isotope is a success story in the business, not only as a wholesale distributor (of vinyl, CDs, DVDs and band merchandise) but as a manufacturer as well. The company has a 50-per-cent stake in Precision Record Pressing, Canada’s largest vinyl-pressing plant. Located in Burlington, Ont., Precision is a partnership between Isotope and Prague-based GZ Vinyl, believed to be the leading manufacturer of vinyl in the world.

“When I noticed the vinyl upswing about seven years ago, we took steps to diversify,” says McGhee, also a middle-aged rock ’n’ roll singer with the band Brighton Rock. “We’re running three shifts now at Precision, and we’re about to add three more machines.”

Still, while Isotope thrives, small independent retailers are in the lurch after the RPM closing. “If Isotope can do what RPM did, everything will be hunky-dory in a few months,” Richardson says. “But that remains to be seen.”