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Will Doug Morris and/or Lucian Grainge take a run at making Cohen a deal, or will he gather some of his other billionaire buddies and begin acquiring music assets of his own?
I.B. BAD ON THE BIG SQUEEZE AT WARNER MUSIC GROUP
The Russian Tries to Put the Screws on Lyor and His Posse, the EC Probes and Columbia Keeps on Rolling, as a Pair of Pumped-Up Challengers Flex Their Muscles
Is Warner Music the new EMI? Are Len Blavatnik and Stephen Cooper becoming the new Guy Hands and his Terra Firma clowns? Rumors are flying that the WMG rulers are attempting to reduce costs by offering Lyor Cohen and his team of top executives bigger back-end packages based on performance in exchange for dramatically lowering their guaranteed salaries. Not surprisingly, the plan is going over like a lead balloon with these same execs.

After kicking the tires at EMI, the new WMG owner and his CEO were reportedly surprised to discover how little the Brits were paying their people and how few executives they had running their frontline business. Potentially deepening the irony—and further raising the eyebrows of industry observers—Blavatnik and Cooper are rumored to have offered short-lived EMI CEO Elio Leoni-Sceti (a poster boy for the disastrous Hands era) a consultancy at WMG.

What’s more, the Warner ruling tandem had been struggling with the notion that the profits come primarily from catalog sales and were rumored to be considering getting out of the frontline business altogether, until they were convinced that frontline A&R and marketing are one of the primary drivers of catalog sales.

The problem, not surprisingly, is that the top Warner creative executives don’t want to work for the major that pays its top people the lowest amount of money, but would rather work at Sony Music or UMG, whose rulers understand the critical importance of these rainmakers and are willing to pay top dollar for their services. Key Atlantic executives whose deals are coming up are wrestling with this situation right now, and the prevailing belief is that some will leave—including young Turks Mike Caren and John Janick from Craig Kallman’s team.

Meanwhile, according to some insiders, Cohen is running out of patience with his new bosses. Will Doug Morris and/or Lucian Grainge—both of whom have worked with Cohen—take a run at making him a deal, or will he gather some of his other billionaire buddies and begin acquiring music assets of his own?

Some say Blavatnik is fighting the UMG-EMI merger in an attempt to buy EMI at his price, which would obviously be well under the $1.9 billion Universal shelled out. His reasoning appears to be that, should the European Commission block the combining of the companies, it might still approve a WMG-EMI pairing because of Warner’s much smaller marketshare in Europe and elsewhere.

The EC has set an initial deadline of March 23 for its list of questions on UMG-EMI, and some believe the EC will reveal whether it has major problems with the proposed merger on that date.

Rob Stringer and Steve Barnett’s Columbia is running away with new-release marketshare with nearly 13%, and the seemingly endless run of Adele, augmented by anticipated releases from Bruce Springsteen, One Direction, The Shins and Jack White, strongly suggests the label will be untouchable for the rest of 2012. The battle this year will be for the #2 slot.

While Jimmy Iovine’s perennial marketshare leader Interscope (#3 year-to-date with 7%) will obviously be in the competition, it will be challenged by Monte Lipman’s Universal Republic (currently #2 with 8%) and Peter Edge and Tom Corson’s RCA (#5, 4.8%). The two companies have a great deal in common: each combines what were previously two labels—RCA and Jive, Universal Republic and Universal Motown—and each boasts one of the best promotion heads in the business in Joe Riccitelli and Joel Klaiman.

What’s more, each label will have an array of superstar releases in the coming months. RCA’s lineup includes Adam Lambert, Usher, Chris Brown, R. Kelly, Pitbull, Pink, Alicia Keys, Ke$ha and Monica. Universal Republic has Akon (SRC), Enrique Iglesias, Florence + the Machine, Godsmack, Jack Johnson, Jessie J (Lava), Nelly, Taylor Swift and the Hunger Games soundtrack, along with the breaking Gotye.

Also on the docket are Young Money/Cash Money’s Lil Wayne and Nicki Minaj, providing Ron Sweeney and Young Money with serious leverage in Cash Money’s renegotiations with UMG. Young Money is also the label home of Drake.

Turning the focus to Nashville, Mike Dungan’s UMG deal is a whopper—it’s said to be four times that of his contract with EMI—while Luke Lewis has quite a bit of time left on his deal and is reportedly holding UMG to it until he decides what's next on his agenda.

 UMG’s sale of Fontana to INgrooves went down just as the Ron Spaulding-led company was starting to make some serious inroads into the dominance of Bob Morelli’s RED—whose recent top sellers include Mumford & Sons (2.2m) and Jason Aldean (2.4m)—in the indie distribution sector. Will INgrooves Fontana be able to compete at the same level? And why did UMG get out of the burgeoning and increasingly profitable indie space? Is Universal content to have INgrooves Fontana as part of its marketshare, while holding a 15-20% stake in the combined company?

As for Spaulding, what happens to the experienced record man who so quickly grew Fontana under Jim Urie, with successful projects like Mac Miller (292k) and Edward Sharpe & the Magnetic Zeros (290k)? Insiders say Spaulding intends to make deals as aggressively as before—though he’s now running the company in partnership with recently named INgrooves topper (and former UMGD and Fontana exec) Dave Zierler; both report to INgrooves founder Robb McDaniels.

On a closely related subject, what of EMI’s Caroline (with Five Finger Death Punch, 325k, and M83, 110k), which has had a solid successful run of its own under Dominic Pandiscia and Mike Harris? Now that UMG has sold Fontana, will it make Caroline part of its post-merger world?

At one time, ADA (Arcade Fire, 725k, Bon Iver, 410k) was a serious player in the indie sector, but the WMG-owned distribbery is now primarily a sales arm, with the participating labels doing all the heavy lifting in the developmental arcs of their acts, as opposed to the other key players in the space, who boast more bandwidth.

Meanwhile, Alan Grunblatt’s eOne (formerly Koch), which has long been a factor in the urban music arena, is making a move into indie rock on the heels of its successful run with Gavin Rossdale’s Zuma Rock imprint and Bush’s #1 Modern Rock single “The Sound of Winter.” Proactive DIY acts like Bush and The Civil Wars are beginning to challenge the long-standing dominance of the big dogs in this hunt.

What acts will The Voice and American Idol break this year? In 2011, the massive prime-time exposure supercharged the careers of Adam Levine and Jennifer Lopez, while establishing the career of Idol winner Scotty McCreery. Lopez and Christina Aguilera both have singles coming from their next albums, while boy band One Direction, coming off The X Factor in the U.K., streets on March 13, in what promises to be another big score for Simon Cowell.

Names in the rumor mill: Scooter Braun, Mark Shimmel, Jack Rovner, Benny Medina, Ian Montone, David Cohen and Brenda Romano.
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