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Youth was served this year, as a passel of previously unknown acts made strong first impressions, a gratifying phenomenon during these challenging times.
I.B. BAD ON THE YEAR IN MUSIC:
THE WHOLE ENCHILADA
Our In-House Pundit Recounts the Biggest Stories of 2010, 12 Months of Heated Activity in All the Key Sectors of the Industry: Records, Publishing, Digital and Touring
CHANGING OF THE GUARD: Insiders at both UMG and Sony Music are now claiming that the Doug Morris-to-Sony deal is a fait accompli, the only remaining issue being when he’ll start his new job. Presumably, Sony will eventually be moving forward under the leadership of the single most successful CEO in the last 20 years of the business, a remarkably savvy and collegial record man who managed to build the most dominant worldwide music company of all time. For the first time since Sony and BMG merged in 2003, the company will be overseen by a music business insider who understands how the game is played, in sharp contrast to the undistinguished reigns of Rolf Schmidt-Holtz and Andy Lack. And if history has taught us anything, it’s that non-music business CEOs are inevitably, without exception, doomed to fail… Morris leaves UMG in the extremely capable hands of another astute and experienced record man in Lucian Grainge, his handpicked successor, who recently lured RMG/JLG chief Barry Weiss to become a key part of Universal’s East Coast operations, the prevailing belief being that he’ll oversee the revamped entity, which now consists of IDJ, Universal Republic and Universal Motown. In getting Weiss (whose Sony contract runs through next March) and keeping fellow rainmaker L.A. Reid, Grainge has scored a major coup just a few months into his new job. These decisive moves substantiate Morris’ absolute faith in Grainge when he chose and mentored the veteran English executive, but they’re also very much commensurate with the aggressive approach Grainge consistently displayed in his previous jobs as head of UMG’s U.K. and international operations. Throughout, he’s performed at a consistently high level, conducting one of the most fruitful business relationships of the modern era with his mentor… Weiss’ departure leaves a key vacancy, leading to the question, who will head up RCA/Jive? This is but one of numerous questions involving the Sony hierarchy and infrastructure. What role will Clive Davis play? What will happen with Epic, and will the label continue to exist? What part will Jay-Z’s Roc Nation have in Sony’s future? Will any or all of these issues be resolved before Morris’ expected arrival? And will he be released from his UMG contract before it expires at the end of 2011?... When all is said and done, the two biggest music companies—comprising around 60% of the U.S. market between them—will be in the capable hands of a pair of smart guys who get it. Will they be able to work together to try and find ways to help turn around the misfortunes of an industry in a tailspin? Morris and Grainge, with their complementary but contrasting management styles, could conceivably pull off such a feat. According to those in the know, Morris gives his top executives the autonomy to run their companies as they see fit, whereas Grainge has exhibited more control and greater discipline. And while Morris’ nature encourages marketshare, Grainge’s character leads to profitability, as he faces the daunting task of cutting the fat but leaving the muscle. Now, Grainge is getting a well-deserved opportunity to put his own stamp on the world’s biggest music company, while Morris is poised to write yet another chapter in his one-of-a-kind career.

ALL HANDS ON DECK: Increasingly desperate Terra Firma chief and EMI owner Guy Hands managed to persuade Terra investors to fork up $156 million so that EMI could meet its most recent debt covenant with Citigroup, even as the bank rejected his latest proposal to restructure the loan. Hands (who has invested $290 million of his own money in EMI) will be hard-pressed to get investors to peel again after his humiliating courtroom defeat this fall, as a New York jury found no substantive basis for his allegations that onetime friend David “Worm” Wormsley had purposely deceived him into thinking there was at least one other interested bidder for EMI, causing Hands to pay a grossly inflated $6.7 billion for the company. What followed was the inevitable media speculation about a possible sale of the struggling company’s recorded music assets to Warner Music—a scenario we’ve continually dusted off for more than a decade now. Now comes word that Hands may lose control of EMI by Christmas, as talks with Citi to resolve the impasse intensify.

PUBLISHING: The most stable sector of the music business was in flux, as BMG Rights Management, a joint venture between Bertelsmann and New York private equity firm KKR, began gobbling up pubberies like Pac Man, culminating its first year with the biggest prize—Chris Wright’s Chrysalis Music—which doubled its catalog to 200k copyrights in one fell swoop. Expect the company, led by Hartwig Masuch and Richard Blackstone, to become an increasingly significant player in 2011… Roger Faxon transitioned from heading EMI Music Publishing to taking the helm of the entire EMI Group. Meanwhile, EMP became a prospective 2011 acquisition target pending the resolution of Guy Hands’ ongoing struggle to keep EMI out of the clutches of Citi, which most expect will sell off the two halves of the company separately if it comes to that. In contrast to this volatility, Marty Bandier’s Sony/ATV, the Scott Francis-led Warner/Chappell and Universal Music Publishing remained rock-solid, throwing off revenue as always, while Larry Mestel’s Primary Wave continued its expansion.

DIGITAL: A decade ago, the mainstream music business was still pretending the Internet didn’t exist; today, the digital realm is the industry’s primary focus and battleground as well as the key to its survival. As always, Apple generated the most headlines and the most revenue, introducing the iPad and the iPhone 4, and finally making a deal with the Beatles, while the stock price rocketed past $300 a share. Apple played hardball with labels and acts that allowed their new releases to be featured in Amazon MP3’s Daily Deal promotion, despite iTunes’ undiminished preeminence in music retail. Google spent much of the year in licensing negotiations with labels and publishers, as the media speculated about the nature of the Internet giant’s much-anticipated music venture, while European subscription service Spotify engaged in talks with the same parties in hopes of creating a U.S. service, but neither company managed to make its hoped-for launch by year’s end. The summer brought a still-unresolved showdown between the UMG-created Vevo and MTV Networks in which clips from UMG and partner Sony Music were pulled down from MTV’s digital platforms, which featured the video catalog of Vevo-holdout Warner Music. The ultimate prize was and is dominance in the ad-supported music-video streaming sector, with Vevo and MTVN both claiming to be on top based on differing formulas.

THE CONCERT BUSINESS: After months of lobbying on Capitol Hill, Live Nation’s Michael Rapino and Ticketmaster Entertainment’s Irving Azoff got approval for the merger of the two companies. But as soon as the champagne corks were popped, the newly formed Live Nation Entertainment and bitter rival AEG Live were buffeted by the most horrific summer touring season in memory, from which the two concert powers are still struggling to recover.

THE INDIE UPSWING: January was a historic month for the little guys, as XL Recordings/Beggars Banquet art-rockers Vampire Weekend debuted at #1 with 121k, followed two weeks later by a #4 bow from veteran Merge band Spoon. The biggest noise was made in August by Merge’s Arcade Fire, whose chart-topping, 156k debut set a new commercial standard for indie rock. The greatest growth was shown by Daniel Glass’ latest discovery (following the 2009 breakthrough of Phoenix), Mumford & Sons, whose week-to-week increases have put the upstart folk-rockers on the verge of 500k. Beggars and Merge both moved the needle in new-release marketshare, scoring .9% and .6%, respectively, making them the #2 and #3 indies behind E1 Entertainment, with 1.5%.

THE CLASS OF 2010: Youth was served this year, as a passel of previously unknown acts made strong first impressions, a gratifying phenomenon during these challenging times. This bumper crop of probable career artists included Atlantic’s Bruno Mars, Universal Republic’s Florence + the Machine, Young Money/Cash Money/Universal Motown’s Nicki Minaj and Glassnote’s Mumford & Sons. Leading the pack was 16-year-old Canadian song-and-dance man Justin Bieber, whose My World 2.0 (Island/IDJ) has sold 2.14m, while his 2009 debut album My World has added 975k on the year. Two other rookies are in seven figures: Young Money/Cash Money/Universal Motown MC Drake, who’s at 1.2m, and RCA/RMG’s Ke$ha, with 1.07m. But it should also be noted that few outside of the mainstream country audience were aware of the existence of Capitol/EMI’s Lady Antebellum before the co-ed trio’s sophomore album Need You Now crossed over, scoring the year’s #2-selling album.

UMG: Heir apparent Lucian Grainge is about to become sole ruler of the long-dominant and still top-ranked music group, though UMG’s piece of the pie has increased to 34.4% in new-release marketshare, compared to 33.5% at this point in 2009. On the label-group front, Mel Lewinter’s surging UMRG leads the in-house competition with 8.3% in new-release share, compared to 5.4% a year ago, behind Big Machine/Universal Republic’s Taylor Swift, whose latest release, Speak Now (2010’s #3 seller), has moved 2.35m in six weeks, while 2008’s Fearless (#15), added 873k, taking it to 4.9m. Monte Lipman’s label also scored with Jack Johnson (#22, 687k). The above-mentioned newcomer Drake (#7) paced Sylvia Rhone’s Universal Motown, which also sold 563k units to date of Lil Wayne’s latest (#29)… UMRG’s big year vaulted it ahead of IGA, under Jimmy Iovine and Vice Chairman Steve Berman, despite the fact that the label group’s share is 7.5%, up a notch from last year’s 7.3%. In Eminem’s Recovery, IGA has the year’s best seller with 3.14m, followed by Lady Gaga (1.61m for #5 Fame; 851k for #16 The Fame Monster) and the Black Eyed Peas (#10, 1.13k on the year, with a new LP entering the picture)… L.A. Reid, Steve Bartels and David Massey’s IDJ rose to 6.2% from 4.4%, as rookie of the year frontrunner Justin Bieber (#4 and #12) piled up the points, Kanye West (#24 and moving up with 673k in two weeks), #31 Ludacris (539k) and #32 Rihanna (534k)… Luke LewisUMG Nashville (flat at 1.5%) was once again paced by #27 Sugarland (620k)… Of the distributed labels, Disney had an atypically quiet year, dropping to 2.5% from 5.1%, and Concord logged 1.2%, led by Carole King & James Taylor’s Live at the Troubadour (#34, 513k).

SONY MUSIC: The #2 music group has enjoyed a prosperous year despite slipping slightly to 26.8% from 28.2% in new-release marketshare. Rob Stringer’s Columbia/Epic ended Atlantic’s two-year run as the #1 label group, registering a jaw-dropping 9.2% (from 8.3%). Steve Barnett’s Columbia was by far the primary contributor, with 7.1%, the best of any individual label (compared to 6.1% a year ago) via Susan Boyle (with her hot-selling holiday album #6 at 1.42m, while last year’s breakthrough debut has sold another 952k, good for #14), big-voiced youngster Jackie Evancho (#25 with 671k on her Christmas LP) and the mother lode: a series of releases from the Glee cast (their domestic 2010 total now at 2.8m albums and 11m tracks)... The situation is fluid, to say the least, at sister label Epic, where the brief reign of Amanda Ghost came to an end after just 21 months. The label did manage one bona fide hit with #7 Sade (1.26m), which joined the residue of last year’s Michael Jackson windfall to bring Epic a 2.2% (a big drop-off from 2009’s M.J.-powered 4.7%). After erupting to 8.3m domestically last year, Jackson’s sales dropped to 1.6m, compared to 1.3m in 2008… RMG/JLG contributed 7.1% in new-release share (up from 6.7%) in what has turned out to be Barry Weiss’ final year at the company. The RCA/Jive hit parade comprised #9 Usher (1.16m), #11 Ke$ha (1.07m), #18 Alicia Keys (743k) and #33 Monica (520k). At Sony Nashville (2.7% from 2.5%), where Joe Galante was succeeded as CEO by Gary Overton, the heavy hitters were Carrie Underwood (#20, 707k) and Miranda Lambert (#21, 706k)… The imminent exit of Rolf Schmidt-Holtz and the naming of his successor will be the big story early next year, but this is a solid, consistent company with experienced leadership in place, so Sony shouldn’t miss a beat during the transition. Later in the year, Columbia will become the beneficiary of the newly minted artists and music thrown off by the U.S. version of Simon Cowell’s X Factor. As for the status of Rick Rubin, many are surprised that he’s still officially at Columbia, his return to WMG having been predicted for months.

WARNER MUSIC: With a dearth of superstar releases for the second year in a row, the lone remaining American-owned music group lost ground in new-release marketshare, with 13.9%, nearly two percentage points behind 2009’s 15.8%. Craig Kallman and Julie Greenwald’s Atlantic experienced the biggest drop-off in the label group new-release competition, plummeting from an industry-leading 8.6%, a year ago to 6.4%, with the biggest seller a two-year-old LP from country group the Zac Brown Band (#13, 968k for the year), followed by Trey Songz (#28, 563k)… On the West Coast, Lyor Cohen attempted to awaken the recently dormant Warner Bros. Records, replacing Tom Whalley with the triumvirate of Chairman Rob Cavallo and Co-Presidents Todd Moscowitz and Livia Tortella. It will take time for the new team to reinvigorate WBR, which improbably managed to pick up nearly a percentage point in share to 6% from 5.1%, despite moving the needle only with Michael Buble’s 2009 album (#19, adding 734k year-to-date) and Linkin Park (#30, 544k), causing wonderers to wonder, how’d they do that?

EMI: The underdog #4 music group kept battling, scoring a near-miraculous 9.9% overall—a Blake Griffin-like leap from 2009’s 9.2%—despite continuing ownership uncertainty and a game of musical chairs at CEO, as Elio Leoni-Sceti was replaced by Charles Allen, who was himself ousted as sanity finally prevailed and the clued-in Roger Faxon was given the keys to the car. While the capable and highly regarded North American chief Ron Werre departed in the transition, Faxon inherited the experienced executive team Werre had assembled, led by Colin Finkelstein and Greg Thompson… The year’s biggest seller for Capitol/Virgin (2.9%) was Katy Perry (#17, 786k). But the charge was led by country act Lady Antebellum, which crossed over in dramatic fashion, notching up the year’s second best-selling album, now at 2.93m. Both Perry and Lady A were big promotion victories for Thompson… It will be interesting to see what EMI looks like a year from now—but the same can also be said for the rest of the Big Four.

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

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