The year began with iTunes’ removal of DRM from all song files, continued with Apple finally bowing to the majors’ ongoing demands for variable pricing and climaxed with the high-profile, glitch-beset launch of Vevo.

I.B. BAD ON THE YEAR IN MUSIC

OUR IN-HOUSE PUNDIT LOOKS BACK ON THE CLIMAX OF A DECADE OF TRANSITION
Ten years ago this month, as the world prepared for Y2K, the music business was enjoying record profits, while swatting away at Napster as if it were nothing more than a pesky mosquito. My, how things have changed during the course of the first decade of the 21st century, which is ending in bizarre fashion—but the bizarre has now been fully assimilated as the new normal. Here are the biggest stories of 2009:

MICHAEL JACKSON: The King of Pop reclaimed his crown after his death, towering over the year in music. The surreal saga began in March, when Jackson, mired in debt, accepted AEG Live’s proposal that he perform 50 shows at London’s O2 Arena, as handicappers placed odds on how many of the shows he’d actually do, or whether he’d show up at all. These questions continued during the ensuing weeks of elaborate rehearsals, right up to the afternoon of June 25, with the shocking news of Jackson’s death. This incomprehensible event led to a litany of names in the news: Dr. Conrad Murray, M.J.’s extremely well paid personal physician, who’d allegedly administered the fatal dose of Propofol. Frank DiLeo, who’d managed Michael during the glory years, brought back by AEG in hopes that this old hand could bring a modicum of stability to the potentially volatile situation. AEG Live head Randy Phillips, whose grandstanding, combined with a long-standing credibility problem, led to his becoming a target of media ridicule, making him the most disrespected executive of 2009. Jackson’s parents and siblings, not all of whom were on the same page in their attitudes toward how to approach Michael’s legacy and the anticipated mega-windfall. Estate co-executors John Branca and John McClain, who found themselves in a crossfire between the family’s interests and those of the heirs, as they took on the daunting mission of honoring Michael’s memory and doing right by his offspring. And Columbia/Epic chief Rob Stringer, who suddenly faced a huge global demand for Jackson music, while at the same time contemplating how to deal both honorably and practically with some extremely sensitive issues. Now, in the less than six months since his death, Jackson albums have collectively sold nearly 7 million albums in the U.S. alone, the vast majority physical units—both staggering achievements in this day and age—while the This Is It documentary has far surpassed the box office of any previous musical film, with the upcoming DVD all but certain to shatter more records when it’s released in late January. Posthumously, Jackson has reminded us of the golden age of the music business, an era driven by superstars…and he may well turn out to be the last of them. Certainly, no other act is capable of selling an astonishing 29 million albums worldwide in less than a half year.

BREAKTHROUGH ACTS: The year’s most improbable phenomenon was Susan Boyle, an unglamorous, middle-aged everywoman with a crystalline voice whose utter lack of conventional charisma may well be the key to her unique appeal. Her primary competition comes from the other extreme of the glam spectrum in the glittering form of Lady Gaga, who has taken dance-pop artifice to its most over-the-top level since Madonna in her heyday. Interestingly, both got great mileage out of massive YouTube exposure, making them the antithetical dual beneficiaries of a highly contemporary marketing tool. Meanwhile, you couldn’t escape "Boom Boom Pow" and "I Gotta Feeling," the twin smashes from the Black Eyed Peas, which were played endlessly on TV, in sports arenas and pretty much everywhere else. Another unlikely pop star, blind operatic tenor Andrea Bocelli, is in the midst of pulling off a Josh Groban, his holiday album getting bigger by the week leading up to Christmas, as PBS continues to air his special.

MONEY CRUNCH: With a crushing $1.6 billion debt load hanging ominously over his head, Terra Firma chief and EMI owner Guy Hands continues to look for a way out, spurring yet another round of speculation about a possible sale of the struggling company’s recorded music assets to Warner Music. After Citigroup rejected his proposal to restructure the loan, Hands (who has personally invested $290 million in EMI) acknowledged that the possibilities for a restructuring were diminishing by the day. In the latest twist, Terra has filed suit against Citi, accusing the bank, which made $185m on the deal, of falsely claiming there was at least one other interested bidder, and further, of purposely undermining Terra Firma’s ability to manage EMI because they wanted to take over the company and sell it to, yes, WMG. Thus, one of the plotlines that began at the start of this decade—the mating dance between Warner and EMI—continues into the next.

UMG: With heir apparent Lucian Grainge poised to join him as CEO, Chairman Doug Morris continued to flex his muscles, holding onto the top spot in new-release marketshare, with more than a third of the action at 33.5%, though down a notch from 2008’s 34.5%. Leading the charge was Jimmy Iovine’s resurgent IGA, #3 with 7.3%, compared to 5.8% a year ago, which paired the breakthrough of Lady Gaga (#3, 1.85m on the year) with strong showings from veterans the Black Eyed Peas (#6, 1.56k), Eminem (#7, 1.55m) and U2 (#18, 1.05m), while Gaga and the Peas combined for nearly 21m in digital track sales—an astounding achievement in this or any era. While 50 Cent (280k) has under-performed, Mary J. Blige and a deluxe Eminem package should help Iovine end the year on a high note… Mel Lewinter’s UMRG (5.4%) has the year’s top-selling album in Taylor Swift’s Fearless, which added 2.7m to 2008’s 1.3m, for 4m, while her 2007 album (#38, 682k) breaks the 2m mark. Both Sylvia Rhone’s Universal Motown and Monte Lipman’s Universal Republic are in the process of breaking new acts—Drake (275k) for the former, Owl City (431k) and for the latter… L.A. Reid and Steve BartelsIDJ (4.4%) experienced some rough sledding when Mariah Carey (355k) failed to ignite, but Rihanna (291k) has big-money potential, and the label is off to a good start with teen heartthrob Justin Bieber (395k). The ’08 release from Kanye West (#42, 590k) holds on as IDJ’s top seller… Luke LewisUMG Nashville (1.5%) continued to put points on the board, paced by #40 Sugarland (632k)… Decca scored its second straight left-field smash, following last year’s Mamma Mia! with an instant seasonal classic from Andrea Bocelli (#8, 1.51m and counting). Meanwhile, at UMG-distributed Disney (5.1%), Bob Cavallo and Hollywood’s Abbey Konowitch maintained the franchise behind the #5 Hannah Montana Movie soundtrack (1.74m), #17 Rascal Flatts (1.07m), #19 Miley CyrusWal-Mart exclusive (1.05k), #43 Jonas Brothers (590k) and #48 Hannah Montana 3 (523k).

SONY MUSIC: In its first full year of operation following Sony Corp.’s acquisition of BMG from Bertelsmann, the music group flexed its muscles under Rolf Schmidt-Holtz. Even so, at presstime rumors have surfaced of a high-level executive shake-up within Sony Music. Expect more to come on this subject after the first of the year… Due in no small part to the enormous windfall from Michaelmania (which can cover a lot of mistakes), the #2 music group rocketed from 20.3% in new-release share at this point last year to 26.6%, as RED’s 4.6% became part of the tally, and a robust 28.2% overall. The Rob Stringer-led Columbia/Epic generated 8.3% in new releases, good for #2 on the label side, but 11.3% overall, a resounding #1. Steve Barnett’s Columbia surged to 6.1% from 5.3% a year ago, and will continue to ascend behind the exploding Susan Boyle, who’s blazed to #4 on 1.81m in just three weeks and is closing in on Lady Gaga, Can she catch Taylor Swift by year’s end? Beyonce (#15, 1.12m) continued to move units on her 2008 release. Other solid performances were turned in by #22 Maxwell (910k), #44 Bruce Springsteen (574k), John Mayer (485k and moving up) and Barbra Streisand (425k). The label also scored a slew of Grammy nominations and #1 debuts… On the executive side, creative head Rick Rubin has spent recent months doing what he does best—producing records—while respected veteran Ashley Newton comes on board as President... New Epic head Amanda Ghost came out of the starting blocks with a bang, thanks to Jackson, whose Number Ones (#2 with 2.19m) led the way, while the follow-up from #34 The Fray sold 753k and Shakira has a new record to watch. The label jumped from 1.6% in new-release share a year ago to 2.2%, with 4.7% overall… At RMG/JLG, Barry Weiss contributed 7.3% in new-release share (up from 6.7%), with breakthrough band Kings of Leon rocking to #10 on 1.3m this year for its 2008 album. The other Top 50 finishers were #21 Dave Matthews Band (961k), #27 Whitney Houston (845k), #28 Daughtry (806k), #31 Kelly Clarkson (784k), #35 Pink (739k), #37 Jamie Foxx (694k this year on his ’08 LP) and #46 Britney Spears (528k), with Chris Brown just getting started and Alicia Keys hitting this week... The legendary Clive Davis, Houston and Keys’ mentor, has just signed a new deal with the company… Sony’s Nashville operation was relatively flat under Joe Galante and the retiring Butch Waugh with 2.5%, but the new LP from Carrie Underwood (#25, 847k) could spike that percentage in the last two weeks of the year

WARNER MUSIC: While shares of the only stand-alone major music group’s stock continue their roller-coaster ride, and while Edgar Bronfman Jr. is halfway through his projected year in London, Lyor Cohen has capably steered the domestic music group to a 15.8% share in the new-release sector, down just a tick from 2008’s 16.1%. WMG’s flagship label was once again Atlantic, as Craig Kallman and Julie Greenwald demonstrated that two heads are better than one, a striking exception to the historical track record of dual label heads. Atlantic is #1 in current share for the second straight year at 8.6%, having snagged a one-off from Roc Nation on Jay-Z’s The Blueprint 3 (#9, 1.39m) to go with Roadrunner’s Nickelback (#11, 1.28m) and the Twilight franchise (the #12 original at 1.23m this year alone; #32 New Moon at 783k and rising). Atlantic also broke a country act in the #14 Zac Brown Band, whose ’08 LP has sold 1.13m this year… Things were relatively quiet for Warner/Reprise (5.1%) under the re-upped Tom Whalley, with #23 Michael Buble (910k) having just passed #24 Green Day (871k) behind spirited holiday sales… The WMG executive team was bolstered with the addition of renowned producer Rob Cavallo as Chief Creative officer.

EMI: With Guy Hands otherwise engaged, Elio Leoni-Sceti managed to keep the recorded-music operation flat in new releases at 7.9%, while more than 2.6m units on the remastered Beatles catalog (with an estimated 10m worldwide) boosted the #4 music group’s overall share to 9.2%. This year’s two biggest contemporary sellers for Capitol/Virgin (2.6% current, 3.9% overall) were last year’s two biggest sellers: Coldplay (480k) and Katy Perry (434k). EMI’s big hope heading into 2010 is the follow-up from Thirty Seconds to Mars, whose previous LP sold north of 1.2m… Blue Note’s Norah Jones is off to a reasonable start with 445k in her first three weeks, but Capitol Nashville’s Lady Antebellum (#34, 727k) was EMI’s biggest seller overall, while the same label’s Keith Urban (#38, 660k) was next.

PUBLISHING: It was business as usual in the industry’s most stable sector, as David Renzer’s Universal Music Publishing, Roger Faxon’s EMI Music Publishing, Marty Bandier’s Sony/ATV and Scott FrancisWarner/Chappell continued to lead the way, while Chris Wright’s Chrysalis remained an aggressive player in the independent sector, and Larry Mestel’s Primary Wave kept accumulating copyrights.

LIFE AFTER THE MAJORS: Certain high-profile acts—Prince, Radiohead and Madonna among them—have experimented with conducting their careers outside the major label system, and this year Pearl Jam joined their ranks. These veterans, in tandem with longtime manager Kelly Curtis, were savvy enough to draw on the expertise of Michele Anthony, a former label executive with a keen understanding of how the system works and a two-decade relationship with the band. Together, they drew up an innovative business plan encompassing Target, iTunes, Verizon and indie retail to launch their first post-major venture. While sales on the self-released Backspacer haven’t approached those of their heyday with Epic in the ’90s, the LP has moved a more than respectable 400k units, and looks to continue strong into the new year behind breaking singles. Those units, plus tour revenue and the deals with their partners, add up to a giant payday for the band. Successful transitions like Pearl Jam’s have wonderers wondering which major acts will take the plunge in 2010.

DIGITAL: The year began with iTunes’ removal of DRM from all song files, continued with Apple finally bowing to the majors’ ongoing demands for variable pricing and climaxed with the high-profile, glitch-beset launch of Vevo. The problems have been corrected, and the early signs suggest that Vevo may well emerge as an enormous new revenue stream for the majors, as UMG attempts to reinvent MTV for the Internet Age—hopefully correcting two mistakes (1981 and 1999) in one fell swoop. As the new decade dawns, speculation surrounds the Apple Tablet, which some see as the logical hardware to make the iTunes Album initiative viable, the possibility of a web-based iTunes application and the company’s purchase of Lala, which suggests that iTunes may launch a subscription service in 2010.

CONCERT BUSINESS: A year ago, Live Nation’s Michael Rapino and Ticketmaster Entertainment’s Irving Azoff were in the midst of a showdown; mere months later they were allies and prospective partners, having hatched a bold plan to merge the leading concert power and the top ticketing company. The pair made several trips to DC, where they were grilled on Capitol Hill about the potential pros and cons of their proposed merger, while Azoff tapped Roger Ames (who’s has experience with previous EU merger issues) to run TM’s international operations out of London. The year will end without a resolution, and it’s anyone’s guess whether they’ll manage to get through ongoing intensive congressional and federal scrutiny to achieve a union that both executives, as well as numerous industry observers, believe is crucial to the futures of both companies, and of the concert business as a whole. Meanwhile, as Live Nation notched up the year’s two biggest tours (see next section), the company’s bitter rival AEG is doing everything in its power to derail the merger.

MANAGEMENT: It was a very good year for Paul McGuinness, as U2 generated $311m on their stadium tour this year. The same can be said for Guy Oseary (Madonna, $222m), Jon Landau (Bruce Springsteen, $156m) and Roger Davies (Pink, $103m), while Vector’s Ken Levitan and Jack Rovner are enjoying great success with Kings of Leon, Bon Jovi, Kid Rock and recent pick-up The Fray. Nonetheless, Front Line emperor Irving Azoff managed to separate himself from every other music manager by a substantial and ever-growing margin, as he cements his status as the single most dominant individual in the music business. Whether or not the Live Nation-Ticketmaster merger is finalized, the canny veteran is likely to remain on top of the heap for some time to come.

NAMES IN THE RUMOR MILL: SME, EMI, WMG and UMG.

ON THE BMM COVER:
RICO WADE
ATL legend (6/17a)
KEN & FRIENDS FILL THE FORUM
High times in Inglewood (6/20a)
BEADS! FEEDS! TIKTOK EXPANDS TAY'S ERAS TOUR HUB
Collect 'em all (6/20a)
FESTIVAL FORECAST: IT'S MUDDY OUT THERE
Sloshing through the fun (6/20a)
WELCOME TO ATLANTA
Black Music Month in the ATL (6/18a)
THE GRAMMY SHORT LIST
Who's already a lock?
COUNTRY'S NEWEST DISRUPTOR
Three chords and some truth you may not be ready for.
AI IS ALREADY EATING YOUR LUNCH
The kids can tell the difference... for now.
INDIE DISTRIBUTION'S RISE TO GLORY
The discovery engine is revving higher.
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