The SAME OLD SONG

Most in the business are familiar with the history of Warner Music Group, whose Warner Bros., Atlantic and Elektra labels deftly balanced art and commerce from the mid-’60s until the company’s idiotic dismantling in the mid-’90s at the hands of Bob Morgado and Michael Fuchs. But the equally significant and colorful story of CBS Records/Sony Music, WMG’s most formidable rival throughout those three decades, has yet to be told in similar detail. It’s a gripping tale that approaches a Shakespearean level of drama at certain pivotal moments. What follows is a recounting of the high and low points of the CBS/Sony narrative, with a focus on the individuals who shaped the company over the years, right up to this historic moment: the beginning of the Rob Stringer era.

LIEBERSON AND HAMMOND BUILD THE FOUNDATION

In 1938, William S. Paley moved the Columbia Broadcasting Service into the music business by paying $700k for the American Record Corp. and its three subsidiaries, one of which was Columbia Phonograph Co. One unintended consequence of the deal is that it brought nascent CBS Records the services of Columbia producer/A&R man John Hammond, an enlightened and gentlemanly individual who crusaded against the discrimination faced by black artists throughout his career. Hammond’s contribution to CBS was immeasurable, as he forged the company’s identity through the signing of some of the company’s most important artists, including Benny Goodman, Harry James, Billie Holiday, Count Basie, Pete Seeger, Robert Johnson, Aretha Franklin, Bob Dylan, Leonard Cohen, Bruce Springsteen and Stevie Ray Vaughan. That Hammond was able to create this rich culture inside one of the most corporate of environments renders his achievement that much more remarkable.

But Hammond operated with the blessing of record producers turned label heads Goddard Lieberson and George Avakian, who made CBS the premier label throughout the Tin Pan Alley/big band/showtunes era, introducing the LP and releasing the cast albums of shows like Kiss Me Kate, Finian’s Rainbow, South Pacific and My Fair Lady. Lieberson and Avakian hired Mitch Miller to head A&R, and he reigned from the 1940s to the mid-’60s, working with the likes of Frank Sinatra, Tony Bennett, Andy Williams, Rosemary Clooney, Percy Faith, Ray Conniff and Johnny Mathis. Miller, a professed hater of rock & roll, became the face of adult pop/AC/MOR, while hosting the Sing Along With Mitch TV series on NBC.

CLIVE DAVIS COMES TO PROMINENCE

Lieberson, who’d joined the company in 1939, led Columbia/CBS from 1956 to ’71, ushering in a sea change in 1965 when he made in-house attorney Clive Davis his second in command, whereupon Davis began the process of giving CBS a profound musical makeover. Before the charismatic Davis was elevated to the Columbia presidency in 1967, CBS had a string of mid-’60s hits with The Byrds, Dylan, Paul Revere & the Raiders and Simon & Garfunkel, but the label deepened its commitment to rock after Davis had his mind blown at Monterey Pop in 1967. He then went on a prolonged signing spree, nabbing the Janis Joplin-fronted Big Brother & the Holding Company, Moby Grape, Blood, Sweat & Tears, Chicago and Santana, as well as Epic’s Donovan and Sly & the Family Stone. The run continued into the ’70s, as Chicago, Santana, Paul Simon, Earth, Wind & Fire, Pink Floyd and Barbra Streisand churned out hit albums and singles, as the Big Red Machine established its dominant presence in the business.

In 1973, soon after signing Billy Joel, Davis was unceremoniously removed from his job for what was believed to be a number of irregular practices involving one of his lieutenants, David Wynshaw, bringing the bountiful Davis era to an abrupt close and creating a press storm around his son Fred’s Bar Mitzvah. As legend has it, they folded up the walls of Davis’ office, boxed its contents and security escorted him from Black Rock, as a federal grand jury opened an investigation into payola and drugs in the music business. Nixon, furious about reporting on the escalating Watergate scandal and the interminable Vietnam War, had the DOJ target the three networks, CBS, NBC and ABC, in essence declaring war on the media—not unlike what’s happening today. Davis would spend the next 40-plus years as one of the most credible, productive execs of the modern era.

THE RISE AND FALL OF WALTER YETNIKOFF

Davis was replaced as CBS/Records Group chairman by none other than the returning Goddard Lieberson, who ran the company for the next two years, while General Counsel Walter Yetnikoff was upped to president of the international division. In 1975, Lieberson retired, Dick Asher was given the international gig and Yetnikoff was upped to president of CBS Records, marking the beginning of what would be a historic 15-year run characterized by great success fueled by extreme excess.

By the mid-’70s, cocaine had become rampant throughout the business, so much so that label staffers fell into three groups: those who did blow, those who smoked weed and those who stayed clean. “Sex and drugs and rock & roll” literally described this period of overindulgence, as office doors were kept discreetly closed, celebrity dealers—like L.A.’s Electric Larry—made regular stops at virtually every department, bindles were passed around under restaurant tables and expense accounts were full of doctored receipts. Black Rock, as industry people called the monolithic CBS building on Sixth Ave. and 52nd St., was no exception. Coke burned people out, further inflated egos and led to the demise of many.

Nonetheless, the hits kept coming throughout the decade—racked up by Springsteen, Neil Diamond, Boston, Meat Loaf, Billy Joel, Journey, Willie Nelson, James Taylor (whom Yetnikoff had poached from Warner Bros. chief Mo Ostin, who countered by poaching Paul Simon), EWF, Pink Floyd, Heart, Cheap Trick and Michael Jackson. Meanwhile, the competition between Yetnikoff and the Warner label heads ratcheted up to unprecedented levels, as the two companies mocked each other in trade ads.

When Yetnikoff pushed what was known as “the big red button,” the CBS machine and the top indie promoters were mobilized—you could tell by songs rocketing up the airplay charts and the albums stacked to the ceiling near the checkout of every Tower Records store. Yetnikoff’s chief operators, the capable tandem of Asher and Al Teller, also knew what to do with the button; both were formidable execs, but corporate in their styles, in sharp contrast to their WMG counterparts, who consistently challenged and at times surpassed the Black Rock army. Between them, CBS and WMG controlled more than 50% of the market during those years. Many of the key players at the WMG labels were street-level entrepreneurs who’d made their bones in the rough-and-tumble world of independent distribution, with its guiding principle of never paying on time. The Erteguns, Jac Holzman, Mo Ostin, Joe Smith, Bob Krasnow, Eddie Rosenblatt, Doug Morris, Dave Glew, Mel Posner and David Geffen all came up in this independent sector, in sharp contrast to the Harvard MBAs and Ivy League lawyers at CBS Records: Clive Davis, Walter Yetnikoff, Dick Asher and Al Teller.

Columbia was headed by Bruce Lundvall from 1976 until 1981, when Al Teller was given the job; Lundvall left for Elektra in 1982. Yetnikoff and Asher were like oil and water throughout their working relationship, and Yetnikoff canned Asher in 1983. Asher would go to work at Warner Corporate before a successful run as head of PolyGram in ’85. Frank DiLeo became head of Epic promo the same year, as Jackson’s Thriller exploded, cementing a tight-knit relationship between him and MJ and elevating DiLeo’s importance in Yetnikoff’s eyes. As a result, the two became even closer. DiLeo assumed a bigger-than-life personality out of the relationships with Jackson, Yetnikoff and certain high-level independent promoters, as Jackson’s worldwide success altered the playing field. In ’84, DiLeo and Walter maneuvered Frank’s way into the gig as Jackson’s manager. He and Ray Anderson, who headed Columbia promotion, did their jobs more aggressively than any promo heads before them. But in 1986, NBC investigative reporter Brian Ross’ payola exposé derailed the indie-promo apple cart, triggering another federal investigation.

Meanwhile, Yetnikoff began to spin out of control. He felt he deserved the same treatment as Warner Communications ruler Steve Ross, and he pushed to get into the movie business, as Ross was. Then Yetnikoff started a beef with CBS corporate, which was then led by notorious cost-cutter Larry Tisch, predicated on the fact that Ross was paying his top execs far more than their modestly compensated CBS Records counterparts. These interrelated issues likely motivated Yetnikoff as he helped engineer the sale of CBS Records to Sony, which was revolutionizing the electronics business with its wildly successful Walkman personal cassette players. The deal was closed for the then-hefty price of $2 billion in 1988. Two years later, Yetnikoff again pushed Sony into purchasing Columbia Pictures for $3.4b, much of the booty going to majority owner Coca-Cola. He also helped bring in Peter Guber and Jon Peters to run the company, which was renamed Sony Pictures Entertainment. Post-sale, Mickey Schulhof entered the picture as chairman of Sony America, giving him over-sight of film, TV and music. Throughout this period, Yetnikoff was pushing people’s buttons and burning bridges in every sector, and his opponents began to smell blood in the water.

Teller was honored by the TJ Martell Foundation in 1988, with Joe Smith serving as roast-master, just before Yetnikoff fired Teller as President of the Records Group, replacing him with successful artist manager and major player Tommy Mottola. Many of those who attended the ceremony knew that night that Teller was on the way out and Mottola was about to take his throne. Teller went to MCA, succeeding Irving Azoff. Attorney Allen Grubman repped Mottola when he did his deal with Yetnikoff, with whom he had a “very, very” close relationship—it was rumored that Yetnikoff paid Grubman seven figures a year as a consultant. Grubman was the ultimate insider/dealmaker and consigliere to the power players; his client roster included Geffen Records, Davis, Irving Azoff, Chris Blackwell, Chris Wright, Clive Calder, Springsteen, Billy Joel, Madonna, Bon Jovi, John Mellencamp, Hall & Oates and U2. Thus began a seismic shift in which the corporate MBAs and lawyers at Sony Music were replaced by street-smart execs like those at the Warner labels, as Grubman moved pieces around the chessboard.

TOMMY MOTTOLA: THE “FUHGEDDABOUDIT” YEARS

Shortly after Mottola came in, he made a game-changing move by hiring a pair of execs steeped in indie culture—Don Ienner from Arista and Dave Glew from Atlantic—as presidents of Columbia and Epic, respectively, and doubling their previous salaries. Not surprisingly, Grubman was the attorney for both. This bold maneuver set a new pay-scale bar for promotion and marketing executives, who instantly became high-priced talent.

By the late ’80s, insiders believed the power-hungry Yetnikoff was losing it. He suffered from a disease prevalent among ego-driven, substance-abusing executives, as everything became about him rather than about the music. He picked fights with other heavyweights for no apparent reason, including a dust-up with kingmaker/slayer Geffen, who by that time had become one of the most powerful individuals in the entertainment business, and whose reach was enormous, extending from music to film and Broadway. In retaliation, Geffen staged a commando raid on Yetnikoff’s own turf, persuading Michael Jackson, Sony’s biggest artist, to hire Grubman—who was also Geffen’s lawyer—and Sandy Gallin for management. That was just foreplay. Agreeing that Walter had gone off the rails, a loose-knit alliance of Geffen, Grubman, Mottola, Springsteen manager Jon Landau and Azoff staged a palace coup. Yetnikoff resigned in September 1990, a month after Mottola was honored at the annual City of Hope dinner on the Sony lot—and many attendees knew Walter was about toast—a flashback to the TJ Martell dinner two years earlier, when Teller was being thrown under the bus. He was out just after being given a new three-year deal, which amounted to a $25m going-away present. Azoff celebrated the ouster by making up bumper stickers that read, “Ding Dong, the Witch Is Dead.”

Sony Music returned to dominance in the ’90s, in part because WMG was falling apart by ’95 and UMG wouldn’t be fully realized until the 1996 arrival of Doug Morris and the 1998 acquisition of PolyGram. Under Mottola, Sony was firing on all cylinders, churning out hits from Jackson, Celine Dion, Pearl Jam, Gloria Estefan, The Fugees, Rage Against the Machine, Ricky Martin, Michael Bolton, Will Smith and newcomers Destiny’s Child, as well as the massive Titanic and Forrest Gump soundtracks. But the most important star in Mottola’s firmament was Mariah Carey, who married him during her meteoric rise in one of the most opulent Fifth Ave. weddings of all time. That meant Mottola was Carey’s label head, husband, de facto manager and publisher—and he made sure she was earning tens of millions of dollars as she was racking up her string of smashes.

Meanwhile, on the corporate front, Schulhof, who had transformed Sony’s U.S. operations into a global entertainment company, resigned in 1997 following a prolonged box-office drought; he was succeeded by British-born exec Howard Stringer— Sir Howard Stringer after he was knighted in 1999.

Mottola’s inner circle comprised Ienner, Glew, Mel Ilberman and Michele Anthony, newly arrived from Manatt, Phelps, et al, in L.A. initially as EVP. They worked alongside the Epic crew: Chairman Glew, President Richard Griffiths and Polly Anthony, a promo exec who had come up through the ranks; she replaced Griffiths as Epic Group president in 1998. The 55th Street Gang, as they were known, was an aggressive group with a take-no-prisoners attitude, as competitive with each other as they were with their rivals at the other majors—and at times an HR nightmare. Their success inspired them to become even more aggressive, and the money was getting mind-boggling, with reports that Mottola was making $20m+ a year, while Ienner and Glew were pulling in $10m+ apiece. True to his nature, Ienner, blew through promotion execs as if they were Kleenex—among those who passed through were Burt Baumgartner, Marc Benesch, Bruce Tyler, Jerry Blair, Charlie Walk, Kid Leo, Lisa Ellis and Lee Leipsner.

But amid great prosperity, Mottola was sowing the seeds of his own demise. He lived in baronial splendor, sequestering himself behind his velvet rope, John Gotti-like; impeccably dressed, he split his time between his lavish quarters in Manhattan and his estates in Upstate New York and Miami. Mottola believed he was untouchable, so much so that he thought he could get away with disrespecting his superiors, including Sir Howard Stringer, repeatedly blowing off the obligatory annual trips to Japan. In the end, Mottola was undone by the combination of his inflated ego, his inability to manage upward and the negative fallout from the Mariah Carey divorce, forcing Stringer to fire him in 2003.

WRONG PLACE AT THE WRONG TIME: LACK & SCHMIDT-HOLTZ

Taking Mottola’s place was longtime TV exec Andy Lack, who tapped Ienner and Michele Anthony to oversee the Sony labels; Glew had retired in 2002 after a great run as head of Epic, shortly before Mottola was axed, with Grubman client Polly Anthony getting the top job at Epic. Ironically, just as Mottola had conspired to oust his predecessor Yetnikoff in 1990, Ienner was believed to have been part of a conspiracy to depose Mottola, in an “Et tu, Brute?” subplot. After assuming the Sony Music chairmanship in April 2003, Ienner got busy, firing Polly Anthony in September, and replacing her as Epic head with Grubman-repped Steve Barnett. In December 2005, he fired Columbia Chairman Will Botwin, moved Barnett into that post and put marketing/promotion exec Charlie Walk in charge of Epic. Under Ienner’s iron rule, Columbia dominated the market—the label was #1 in share for 10 years in a row. Ienner may not have been the easiest guy to work for, but he was a dominant record executive.

Lack was busy as well, as he helped engineer the BMG merger in 2004. But he couldn’t figure out how to get the combined companies to work together during his three years at the helm. Lack also faced technical difficulties stemming from Sony’s whiff on digital music. The issue was encapsulated by the so-called “rootkit fiasco,” wherein CDs were encoded with copy-protection software that installed itself on users’ computers, interfering with and in some cases damaging their systems, while surreptitiously reporting data back to Sony BMG. This boneheaded move resulted in a series of class-action suits, prompting an investigation by New York Attorney General Elliot Spitzer and causing Lack great public humiliation.

In 2006, Lack was replaced by BMG veteran Rolf Schmidt-Holtz, who reorganized both units, shocking the entire business when, without warning, he forced out Ienner and Anthony in June, just four months after making Ienner Sony Music chairman. Ienner was succeeded by Rob Stringer, who was brought over from the U.K. In April 2008, Schmidt-Holtz named Jive veteran Barry Weiss the head of the BMG labels: RCA, Arista, Jive, Clive Davis’ J Records and the L.A. Reid-founded LaFace. Davis’ right-hand man, Charles Goldstuck, a Grubman client, who’d been heading the BMG side, had been politicking on behalf of Davis and himself to be the heads of the combined music group. Instead, Schmidt-Holtz moved Davis sideways to Chief Creative Officer and fired Goldstuck.

Even after Sony bought out BMG from Bertelsmann in August 2008, Schmidt-Holtz’s presence gave the BMG team a bigger voice in the company, emboldening Weiss to dream big. He too coveted Sony Music’s top worldwide post and lobbied Schmidt-Holtz, who appeared to be teetering. Most believe it was a naïve move, as Weiss failed to take into account the company’s various moving parts. Rob Stringer, meanwhile, had been making moves of his own. Columbia was doing very well under Barnett, while Epic was struggling, so Stringer replaced Walk with English songwriter Amanda Ghost. By so doing, he removed virtually the last vestige of the Mottola era from the company. Ghost would tank, lasting just 21 months. There was also growing tension between the Weiss and Stringer teams as the cultures continued to clash, which became fodder for the tabloid press. It finally boiled over at the 2010 Grammys, when Barnett and Weiss’ consigliere Ivan Gavin nearly came to blows. In March 2011, not long after Sony announced that Doug Morris would replace Schmidt-Holtz, Weiss left to head UMG’s East Coast labels but crapped out and went into business with SONGS.