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I.B. BAD RECOUNTS
THE RISE & FALL
OF TWO MAJOR
MUSIC GROUPS

HOW GANGSTA RAP TOOK DOWN WMG: N.W.A, Dr. Dre and his protégé Snoop Dogg, Eazy-E, Ice Cube, Death Row Records heavy Suge Knight and Tupac Shakur, all portrayed in the film Straight Outta Compton, were in the vanguard of Cali gangsta rap, an aggressive and transformative musical movement with sociopolitical overtones that went on to play a huge role in ripping apart Warner Music, the dominant music group of the early ’90s. 

We flash back to 1990, a period of prosperity for the business, and especially for WMG, the showcase of the industry and the home of three legendary executives: Warner Bros.Mo Ostin and Atlantic’s Ahmet Ertegun and Doug Morris. That December, Morris, who’d been running Atlantic’s operations for a decade, was promoted to co-Chairman with Ertegun. A celebrated and well-liked record man, Morris had entered into a 50/50 JV with Jimmy Iovine and Ted Field’s upstart Interscope. But on Dec. 20, 1992, Warner Communications and Time Warner chief Steve Ross died, setting off a chain of events that would irrevocably alter WMG and the record business as a whole. 

After being named TW Chairman, Gerald Levin put longtime WMG administrator Bob Morgado in charge of the label group worldwide, and in 1994, determined to put his own imprint on Warner’s identity, Morgado forced out Ostin and named Morris President/COO of Warner Music U.S., soon thereafter upping him to Chairman. It soon became evident that Morgado was in over his head, and Levin axed him in early 1995. Incomprehensibly, Levin replaced Morgado with HBO head Michael Fuchs, a TW veteran with zero experience in the music business. From the beginning, not surprisingly, Fuchs and Morris were oil and water, as the wily veteran tried to prevent the clueless novice from making disastrous decisions. So Fuchs decided to fire Morris. 

Meanwhile, MCA was in transition following the 1995 acquisition of the company by Seagram heir Edgar Bronfman Jr., who soon named Morris Chairman/CEO of the newly named Universal Music Group. One of the Morris’ first additions to UMG was Interscope, whose hookup with Suge Knight’s gangsta rap label Death Row had generated a firestorm of controversy. Activist C. Delores Tucker and conservative politico William J. Bennett began a series of headline-grabbing attacks on gangsta rap lyric content, and Fuchs caved in to the pressure, tossing Iovine’s company like a hot potato to Morris. Fuchs was subsequently fired. 

In 1998, Bronfman shelled out $10 billion for PolyGram, creating the world’s biggest record company. It was then that Morris began his masterful leadership of the music industry’s lone modern-day dynasty, while Warner Music has yet to recover. Gone were years of future smashes from the likes of Eminem, NIN, Gwen Stefani, et al. But Warner’s biggest loss was the irreplaceable Iovine. Morris and Iovine have remained close and reportedly still talk every day. 

DUMB & DUMBER: Billboard had a historically disastrous week. The calamitous Hot 100 Fest moved a paltry 7,800 tickets. The bible claimed the event drew record crowds, but the house was papered, with many more giveaways than paid admissions. The BB brain trust was warned by agents and promoters that the fest was a disaster, but in typically arrogant fashion, they went ahead and lost millions. Concurrently, the mag sent out a shockingly sleazy questionnaire to the industry, slagging not only Ke$ha but also Justin Bieber, disingenuously suggesting that the co-headliner of the fest is a has-been. Will Sony and UMG allow this tabloid muckraking to continue? Both have said they would pull support over other issues; is this the straw that breaks the camel’s back? BB’s decision-makers say they don’t care whether the majors cancel subscriptions and advertising—that the labels represent a small percentage of their business. It’s all about eyeballs for their brands at events and online, according to one bible insider, and the muckraking and artist bashing are central to their strategy. This questionnaire is further evidence that the regime doesn’t care about the artists or the people running the business. 

TRANSPARENCY AT UMPG: A full-service creative pubco on a global scale, the new and improved UMPG now uses technology in a Kobalt-like way to make its accounting more transparent and writer-friendly (e.g., day-to-day account balances, expedited royalty payments) under the leadership of Jody Gerson. During her first year in the big chair, the highly regarded executive has also solidified the pubco’s relationships with its sister labels, whose leaders were relieved that the dark reign of Zach Horowitz had ended. The savvy, engaging Gerson is working with the labels, in marked contrast to her predecessor. The crumbling of the corporate Berlin Wall has resulted in the forming of a productive relationship with CMG’s Steve Barnett and Michelle Jubelirer, which helped in UMPG’s inking of the sought-after Halsey. Barnett and Jubelirer are committed to Halsey, and Gerson is backing their play. 

NAMES IN THE RUMOR MILL: Big Jon, Jack Rovner and Ken Levitan, Bryan Turner, Tom Whalley and Mike McKoy. 

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