The uncertain future of Gallo Records

Gallo has been in a downward slide since the early 2000s when they were forced to sell off assets such as Downtown studios. The company has seen a steep decline in turnover of about 80% over the past 5 years.

In 2006, Johnnic Communications (Gallo's parent company), changed its name to Avusa in November 2007 & entered a joint venture with the South African division of Warner Music International, forming Warner Music Gallo Africa, which ended in December 2013. In 2012, Avusa was acquired and renamed Times Media Group, which was then relisted on the JSE.

Times Media combined the music facet with an already strong broadcast and content division in print & online media and film. Thus aligning synergies in the Media Division and cross pollination and opportunities between entertainment (Times media films ,DVD, The Home channel, Soweto Tv), Radio (TMG owns several radio stations (Rise fm (DJ Sbu), Vumafm, Kiss fm, East fm, etc ) , print and online media (Sowetan, Times Live, Business Day, Sunday World, Sunday Times …) with Music catalogues and master recording rights (Gallo record company) and music publishing copyrights (Gallo Music Publishers) and their African footprint.

In 2014 Gallo Records acquired a number of catalogues. Rob Cowling went with the Sheer Sound label to Gallo. The digital age has put further pressure on the record business. In 2019, new owners Tiso BlackStar transferred the assets of Gallo Record Company and Gallo Music Publishing to Gallo Music Investments. The company is less than a year old but has a 100 year old catalogue. Tiso Black Star were operating under financial losses of R581 456 000 (2018) and R374 277 000 (2019).

In April 2020 TSB sold Gallo Records to Lebashe Investments.

On the 10th March it was announced that Lebashe had acquired Gallo Music Investments for R75-m which was double the book value. Gallo had only turned R1.5-m profit in the recent financial year. Lebashe have expressed interest in rebuilding Gallo and preserving the catalogue as important SA heritage. There could be huge opportunities to become a proper independent label with power by adding to the catalogue. To these ends Lebashe have entered an arrangement with DJ Black Coffee to take a stake in Gallo Records.

"During the apartheid years, Gallo Africa ran a successful and lucrative sanction busting operation outside South Africa. Post-apartheid, through various evolutions of Gallo Africa, the structure was maintained and ‘managed’ at the highest level."

Gallo Records rich history

In 1926 a new upstart appeared on the scene and that was a 21 year old Eric Gallo. He became the exclusive agent for the Transvaal for the Brunswick label - an American record company that started after the First World War from its origins as a billiard and pool table maker.

By 1930 due to increased competition in the industry, Gallo began recording music sending two Afrikaans musicians to London to record for a small label called Metropole. Gallo kept sending artists to Metropole until 1932 when Metropole went bust.

“Eric with his gambling temperament set up a permanent studio in South Africa. He bought all of Metopole's recording gear and he brought their engineer, John Hett to install it in the basement underneath a so called bioscope café, around the corner from the Rissik Street post office. The first masters only came out in 1933. Due to the street noise they moved the recording apparatus and set up another studio in 160 Market Street on the mezzanine floor. Gallo’s first hit came from the underground miner and railway shunter David de Lange. His record ‘Waar is Moeder' sold 150 000 copies and his follow-up “Suikerbos” sold 200 000 copies. The first African hit record was Mbube by Solomon Linda and the Original Evening Birds and recorded in 1939. And it sold 100 000 copies before the 50s – and is still selling,” explained historian Rob Allingham.

The record industry came to a halt during the Second World War and was revived again in 1947 during an incredible expansion in the business. Gallo set up South Africa’s first publishing business in 1949, Music publishing in Africa (MPA). Gallo built its pressing plant in 1949 and by 1951 they were pressing 1.5M records out of that one facility per year.

“From that period up to today you had a situation of well-established majors and then over a period of time there would be consolidation. There would be independent companies that start up and they would be consumed eventually into the bigger companies. The companies that survived, were always vertically integrated. From the minute the artist stepped into the studio to record to the record being put on the shelf,” said Allingham.

Gallo’s success continued right through apartheid and during the 80s and 90s, the label was together with EMI, running the SA music industry, turning 100s of millions profit. After democracy all the major record labels established offices in South Africa and Gallo’s influence began to wane.

During the apartheid years, Gallo Africa ran a successful and lucrative sanction busting operation outside South Africa. This continued post-apartheid, through the various evolutions of Gallo Africa. The structure was maintained and ‘managed’ at the highest level. A key file was kept solely by Howard Benatar at Mega/Johnnic/At Velocity/Times Media/Tiso Blackstar. Empirical evidence arising from a forensic audit in 2012, was presented to the previous owners Tiso Blackstar.

Gallo Records face liquidation Appeal

South Africa’s premiere independent record label – is facing a liquidation application for allegedly receiving payments, but not disclosing to rights holders. They claim that Gallo has been receiving payments from SAMPRA but not disclosing to rights holders. Bula Records copyright-holders who retained copyright decided to go to SAMPRA RAV AIRCO to investigate their needle-time royalties directly and found Gallo had received 1.3M due to Bula that they had not paid over in full. In January 2020 they filed a 3,4,5 application to have Gallo liquidated claiming R1 221 566 in unpaid royalties. This case is expected to be heard after lockdown.

The court papers also allege, Gallo not accounting for royalties, not paying rightsholders and going straight to litigation when faced with this. The litigation raises many questions such as transparency for artists and long term impact on copyright holders in the catalogue.

Struan Douglas

Struan Douglas is a freelance writer and author based in South Africa.