RUMOR MILL
Friday, June 20, 2014
NEAR TRUTHS BY I.B. BAD
THAT’S WHY THEY PLAY THE GAME
| The rivalry between the two major music groups has reached what may well be an all-time high, ranging from battles to sign in-demand new artists to the poaching of established artists and top executive talent. While the music business has always been competitive, few can ever remember a time when the pitch was as feverish as it is now between Sony Music and UMG—in large part because of what has essentially become a two-horse race on the recorded music side. WMG still has hits from time to time, but Len Blavatnik’s company isn’t playing in the same arena as Sony and UMG. Most agree that the chief culprit in Warner’s retreat was the present regime’s decision to drastically cut back the A&R budget, primarily out of a lack of understanding of what A&R actually does. Nonetheless, WMG remained within spitting distance in the U.S. until Universal chieftain Lucian Grainge outmaneuvered Team Blavatnik with a lightning-quick bid that took EMI off the market just as Warner figured it had the British company in the bag. That acquisition has given UMG a comfortable 10-percentage-point lead in the U.S. marketshare race, 38% to 28%. |
| This rivalry, then, is about two heavyweight companies going head to head. These companies are led by Grainge and by Sony ruler Doug Morris, who had chosen Grainge as his handpicked successor while Morris was the Chairman/CEO of UMG. When Grainge was made co-CEO in 2010, Morris is said to have thought that he would still be part of the brain trust that would be making all the key decisions at Universal. Instead, Grainge took control, moving himself and UMG’s world headquarters from New York to L.A. and setting about making the changes he felt were appropriate, assuming Morris would be content to have an emeritus role until he decided to retire at a later date. But Morris felt he still had plenty of high-test left in the tank, chafed at his new non-role and was all ears when Sir Howard Stringer, the then-head of Sony Corp., came a-calling, and he seized the opportunity to begin his third act. Many believe that Grainge was more than a little taken aback at what he perceived to be an aggressively competitive move toward UMG by Morris, who had led Universal since 1995, taking the company to industry dominance. When Morris arrived at Sony in mid-2011, he moved quickly and decisively in a strategic reorganization of the company. He cut away miles of red tape, drastically reduced costs and did the exact opposite of WMG by funneling the freed-up money directly to A&R, where it could be put to the best use. By pairing Peter Edge and Tom Corson as co-heads of RCA, Morris transformed the label into a synergistic operation with a strong A&R leader complemented by a top-notch marketing executive. The RCA vacancy was created prior to Morris’ arrival by the departure of Barry Weiss, who’d moved on to the top post of UMG’s East Coast operations after coming out on the short end in the internal competition with Columbia-Epic overseer Rob Stringer and Columbia chief Steve Barnett. Morris also made Stringer and Barnett the co-Chairmen of Columbia, the crown jewel of the Sony label group, while bringing in L.A. Reid, the onetime head of Arista who’d moved on to the top post at IDJ, in hopes of turning around long-struggling Epic. Together, those moves brought Sony back into fighting shape. |
| The competition between UMG and Sony extends across the Atlantic, with former UMG label head and recently named Sony U.K. chief Jason Iley, along with SYCO’s Simon Cowell and Sonny Takhar, going up against Universal U.K. commander David Joseph, international head Max Hole and the individual label heads, Island’s Darcus Beese, Capitol’s Nick Raphael (who signed Sam Smith) Virgin’s Ted Cockle and Polydor’s Ferdy Unger-Hamilton (who signed Lana Del Rey). Getting British company EMI made UMG an even more dominant player in the all-important U.K. market, and it continues to pump out high-profile releases like Del Rey and Smith this week. But the addition of Iley considerably strengthens the Sony team, while the presence of fellow Brits Stringer and Edge in the U.S. company gives Iley a pair of strong allies. And lest we forget, Sony’s two biggest acts, Adele and One Direction, are based in Britain. The most vivid illustration of this label-level competition in the U.S. is the rivalry between Stringer and Barnett. Friends and colleagues for a quarter century, these two Brits had been joined at the hip for more than a decade as they simultaneously climbed the ladder inside Sony U.K. and Sony U.S., respectively. But working together as the co-heads of Columbia set in motion a major change in the dynamic between the two colleagues that led Barnett to look for love from elsewhere. So when Grainge offered Barnett a chance at new life in California and an immense but intriguing challenge in resurrecting the storied Capitol brand shortly after the merger, Barnett packed his bags, initiating the Columbia-CMG rivalry. Throw in the Neil Diamond deal, along with a few Sony staffers joining CMG in L.A., a blistering hot streak for Columbia, a marketshare jump for CMG that has taken the revitalized company to within a point of Columbia and the One Direction collaboration on the 5 Seconds of Summer deal, and you have all the ingredients for a good old fashioned English football rivalry. Although Stringer and Barnett are still friends, it can get rough on the pitch when their teams are battling for the upper hand. |
| Following Barnett’s departure, Stringer orchestrated a surgical counterstrike behind enemy lines, luring Joel Klaiman, Monte Lipman’s main man at Republic, by offering him the job of EVP/GM and big bucks before Universal could make a counter-offer, adding a Columbia-Republic wrinkle to the game. The Klaiman-Lipman face-off has extra spice because Lipman had taken in Klaiman when he was out of it, providing him with a new beginning. So after losing Klaiman, what did Lipman do? He reached deep into left field and brought back one of the old Sony players who hadn’t fit into the Stringers’ Sony in Charlie Walk, whose new marketing company was becoming a player in its field. What’s more, Walk and Klaiman had issues when both worked at Sony during the Ienner years. Thus, Lipman, Walk, Stringer, Klaiman and Barnett are all playing major roles in the narrative. So are Michele Anthony, the EVP of Universal, who was dismissed by Sony BMG boss Rolf Schmidt-Holtz in 2006 during the Ienner purge; former Sony exec David Massey, who now heads Island; Weiss; the Rhone-Reid tandem; and Steve Bartels, who worked for Reid at both Arista and IDJ. The competition exists not just between UMG and Sony, but also within each company, as we noted earlier in describing the internecine struggle between Weiss and Stringer-Barnett. At Sony, Columbia’s Stringer and RCA’s Edge- Corson duo fought for marketshare dominance, with Stringer closing what had been a sizable gap. But the Columbia-RCA rivalry is relatively civilized compared to what happened during the Lack/Schmidt-Holtz era or the ongoing round-robin within UMG, a contest encouraged by Grainge. Since he took charge, Lipman’s Republic has caught and passed long-dominant IGA, whose longtime leader Jimmy Iovine was becoming increasingly distracted by his Beats project and, for a time, his American Idol mentoring duties. At Grainge’s urging, Iovine plucked young indie entrepreneur turned major-label all-star John Janick from Elektra, anointed him as his heir apparent and empowered him to handle IGA’s day-to-day responsibilities. As a result, IGA had one of its most profitable years, regaining much of the marketshare it had lost during the previous few years. Meanwhile, Barnett took Grainge’s mandate to restore the Capitol nameplate to its former glory to heart, transforming it into a diverse coalition of A&R sources not unlike Republic, while also making effective use of U.K.-signed acts to bring CMG back in the game. In April, the scrum within UMG became even more heated when Grainge and his advisors dismantled the ill-conceived, 16-year old pairing of Island and Def Jam, moving Island under the Republic umbrella, restoring Def Jam to standalone status under Bartels and bringing together a pair of iconic labels by sending the Ethiopia Habtemariam-led Motown to L.A., where it had once been based, to Barnett’s CMG. |
| The combination of these external and internal rivalries led to an ever-tightening 2013 race that ended with Republic on top in frontline marketshare, followed by late-surging Columbia, RCA, IGA and CMG, while IGA prevailed in TEA share. In the six-month Top 5 follow-up that forms the meat of this issue, the respective label heads describe what has transpired since we last checked in with them and provide details about what they’re bringing to market during the second half of 2014. All of these interrelationships and shared histories bring incredible drama to the modern-day music business. At this point, given his upcoming releases, which include new albums from Taylor Swift, Florida Georgia Line, Lil Wayne, Nicki Minaj and Ariana Grande, this appears to be Monte Lipman’s game to lose. |
