OUT WITH THE OLD, IN WITH THE NEW: Amid the economic meltdown of 2008, the music business could only shrug and say, “Been there, done that,” having spent the last six years getting used to diminishing returns with seemingly no light at the end of the tunnel. From this perspective, and despite the progressive declines in physical sales, the year now closing had its share of good news to go with the bad, as the labels managed to move mega-units on a batch of bona fide smashes, and break some artists—explosively in the case of one newcomer—in the most difficult climate
ever. Year-to-date, 19 albums have sold a million or more, with a total of 25 projected when all is said and done, compared to 39 a year ago, but it could've been worse. In terms of the changing face of retail, the big-box exclusive became a big success, although not in every case, while
iTunes battled
Wal-Mart for marketshare dominance, as digital sales continued to represent an ever-greater percentage of the market, thanks primarily to the iTunes Store, which remains pretty much the only game in town. Management flexed its muscles, though the biggest moves were limited to a single management company—which recently became a management/ticketing hybrid. The 360 deal picked up steam, as a new player entered the arena, while the same player prepared to enter the ticketing business. And without making a lot of noise, the music publishers continued to be the most consistent revenue producers in the industry. We begin our look back on the year in the business with an overview of the Big Four…
UMG: The music group that the legendary Doug Morris built into an empire is still a resounding #1 in new-release share, registering an essentially flat 34.5%. The biggest contributor was Mel Lewinter’s UMRG, which made a dramatic jump from 3.9% to 6.5%, with the year's biggest seller in Universal Motown’s Lil Wayne, at 2.8m. Sylvia Rhone’s slam dunk wasn’t the only jaw-dropper though, as Monte Lipman’s Universal Republic hit the trifecta: Jack Johnson (#5, 1.5m) Taylor Swift’s 2007 album (#6, 1.4m) and her new Fearless (#10, 1.3m), as the young Country superstar hits the last weeks of the year with tremendous momentum. That gives UMRG four of the Top 10. Universal Republic’s Colbie Caillat, who broke last year, continued strong in 2008 with another 730k, for a total of 1.9m in a significant breakthrough… L.A. Reid and Steve Bartels’ IDJ was flat at just north of 5%, with its biggest sellers being Mariah Carey (#13, 1.2m), Rihanna’s 2007 release (#16, 1.1m this year alone), Rick Ross (#34, 690k), Ne-Yo (#36, 675k), Young Jeezy (#39, 660k) and Kanye West (#52, 600k), whose December sales will put him in the thick of it. IDJ’s revived Mercury label, under David Massey, hit the ground running with Duffy (#48, 620k)… Jimmy Iovine’s Interscope Geffen A&M, the perennial marketshare champ, suffered a precipitous drop, from 8.1% last year to 5.8%, as Guns N’ Roses’ Best Buy exclusive fizzled, while hoped-for albums from U2, Dr. Dre, Eminem and Black Eyed Peas have yet to appear. The lack of superstar releases left last year’s Mary J. Blige LP (#31, 7120k) as IGA’s biggest, while the lack of breakthroughs in the new-and-developing arena led to some not too subtle finger-pointing … At UMG Nashville, which dropped a notch from 1.9% to 1.7%, Luke Lewis’ biggest was Sugarland (#15, 1.1m)… Decca scored a left-field smash with Mamma Mia! (#12, just south of 1.2m)…Under main mouse Bob Cavallo and Hollywood’s Abbey Konowitch, the UMG-distributed Disney labels continued to post big wins and atypically high profits with their locked-in tween audience, as the company is highly vested in 360 deals with its acts, though their share slipped slightly, from 5.8% last year to 5.3%. The biggies were the #11 Jonas Brothers (1.2m), #14 Camp Rock (1.1m+), #17 Miley Cyrus (1.1m+) and #21 High School Musical 3 (940k), while the previous albums from the Jonas Brothers (#27, 935k) and Cyrus/Hannah Montana (#40, 660k) kept selling…
SONY BMG: The merger that failed to cohere is now history following Sony Corp.’s acquisition of BMG from Bertelsmann, as SBMG’s combined share dropped from 21.9% to 20.3%. At the Rob Stringer-led Sony Music, which will finish the year with 9.7%, up a tick from a year ago, Steve Barnett’s Columbia team, with GM Mark DiDia overseeing the day-to-day, gained a half point to 5.3%, with a pair of Top 10 entries in #4 AC/DC (1.6m and headed to 2m)—in a personal triumph for Barnett, who once managed the band—and #22 Beyonce (900k en route to a projected 1.4m), while also scoring with newcomers Adele (250k) and MGMT (230k). Meanwhile, the second-guessing about the 2007 appointment of Columbia creative head Rick Rubin has ratcheted up… Epic had a year to forget, with an anemic 1.6%, down slightly from last year’s 1.9% and way off ’06’s 2.6%, as Sara Bareilles’ 650k on the year wasn’t enough to save the day, and Charlie Walk exited… Big changes went down on the BMG side, as SBMG chief Rolf Schmidt-Holtz anointed Barry Weiss as the ruler of the operation, reassigned legendary music man Clive Davis and fired Charles Goldstuck, Davis’ #2. Under Weiss, the combined RMG (3.7%) and ZLG (3.0%) tallied 6.7%, compared to a combined 8.5% in 2007. The winners were Leona Lewis (#9, 1.3m), Alicia Keys (#18, 1.1m), Usher (#19, just under 1.1m); a pair of 2007 hits in Chris Brown (#27, 805k) and Daughtry (#33, 685k); Jordin Sparks (#55, 560k) and the surging Britney Spears (#64 at 505k but projected to hit 1m by year’s end). American Idol made its annual contribution with David Cook (currently #67 with 480k)… Under the veteran leadership of Joe Galante and Butch Waugh, SBMG Nashville had another solid year at 2.7%, paced by Carrie Underwood (#28, 800k), Alan Jackson (#47, 615k) and a pair of Kenny Chesney albums (totaling 900k+)…
WARNER MUSIC: While WMG stock went into free fall this year and now dangles just above $2, the music group managed the only significant increase for any of the Big Four under the oft-criticized Edgar Bronfman and Lyor Cohen from 2007’s 14.9% to 16.1%. This gain was primarily due to Craig Kallman’s Atlantic, which surged from 5.5% to 8.3%, making it the #1 label. They couldn’t have done it without #3 Kid Rock (1.8m on the year, without the help of iTunes), behind the huge single “All Summer Long.” T.I. (#8, 1.3m+), the Twilight soundtrack (#32, 690k) and Roadrunner’s Nickelback (#44, 640k) were the other biggies. Things were quieter on the West Coast, where Metallica set the pace for Warner/Reprise with 1.4m for a #7 finish, with Disturbed (#26, 820k) a distant second. Madonna’s final album of new material for WB was a disappointment (#35, 680k). Despite the slippage in share to 5.2% from 6.5%, Tom Whalley is expected to be re-upped for another tour of duty…
EMI remains EMI, down slightly to 7.9% from 8.1%, but the struggling British company has several reasons to be hopeful, thanks to the arrivals of respected A&R executive Nick Gatfield (whose first hire was the highly regarded former IDJ exec Rob Stevenson) and promotion expert Greg Thompson. The big sales story was the brilliantly orchestrated, possibly game-saving performance of Coldplay (#2, 2m), as well as the breaking of new artists Katy Perry (#49, 610k) and Saving Abel (250k). The latter two hits were parting gifts from exiting Capitol Music Group head Jason Flom, who is in the process of reinventing his Lava imprint at Universal Republic. Meanwhile, Roger Ames fell off the radar…
MANAGEMENT: That term is now practically synonymous with Irving Azoff’s Front Line empire, which grows bigger by the hour, as the acquisitive mega-manager brought several newcos into the fold, notably Ken Levitan and Jack Rovner’s Vector (Kid Rock, Bon Jovi, who had one of the year’s biggest tours, and the exploding Kings of Leon), Michael McDonald’s Mick Management (John Mayer, Ray LaMontagne), Jordan Feldstein’s CAM (Maroon 5, Staind) and Dan Field (Weezer). Azoff also reinvented the big-box exclusive, following his wildly successful Eagles-Wal-Mart deal, hooking up Target with a Christina Aguilera hits package and setting up Andy Gould-managed GNR with Best Buy. Not having enough on his plate, Azoff created Ticketmaster Entertainment, with himself as CEO, as the balance of power continued to shift away from the majors. The latter move changes the relationship between Azoff and Michael Rapino’s Live Nation, which is launching a rival ticketing operation, while making noise this year with the 360 mega-deals it signed with Jay-Z, Shakira, Nickelback (turning down WMG’s 360 offer) and U2 (minus records), while staging the wildly successful Madonna tour, the first under her 360 deal with LN… The other high-profile management action was generated by Jeff Kwatinetz, who split from The Firm and started anew with much of the same roster and staff, and his former partner Michael Green, who’s quickly became a factor with his own new venture … Coldplay manager Dave Holmes had a resoundingly successful year, getting hands-on with the album setup during EMI’s restructuring, while the bold “pay what you want” online move of Radiohead managers Chris Hufford and Bryce Edge led to 620k in domestic sales…
PUBLISHING: This part of the business continued to be the most profitable part of the biz as the same players, David Renzer’s Universal Music Publishing, Roger Faxon’s EMI Music Publishing, Marty Bandier’s Sony/ATV and Warner/Chappell (under new head Scott Francis). On the indie front, Chris Wright’s Chrysalis rejected buyout offers and kept rolling, with U.S. head Kenny MacPherson continuing to build the roster, and Larry Mestel’s upstart Primary Wave kept gobbling up high-profile copyrights. Pubcos remain key acquisition targets, though the value of their catalogs is beginning to soften…
DIGITAL: Despite Amazon’s late-2007 entry into the arena, Apple continued to command the lion’s share of the legal download biz. Among the year’s milestones for Steve Jobs’ geek squad were total sales of 150m iPods and 5 billion downloads at the iTunes Store, which, according to some disputed figures, has passed Wal-Mart to become the #1 music retailer...
NAMES IN THE RUMOR MILL: YouTube, Lucian Grainge, Allen Grubman, Don Passman, Joel Katz, John Branca, Ari Emanuel, Andy Schuon, Amanda Ghost and Brian Avnet.
