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I.B. BAD: THE EVOLUTION OF MONEYBALL

Back in the ’80 and ’90s, when Sony and WMG ruled the roost, the salaries of major-label execs started to balloon. When Walter Yetnikoff became frustrated by the tens of millions in salaries and stock options of WMG’s top executives, he changed the game. He convinced Sony to buy CBS Records, then hired Tommy Mottola, Donnie Ienner and Dave Glew. Mottola was knocking down $20m-plus annually, while Ienner and Glew were pulling in $10m a year apiece. Yetnikoff’s bold move impacted the entire music ecosystem, as the so-called Six Sisters—BMG, EMI, MCA, PolyGram, WMG and Sony—gobbled up Motown, Island, A&M, Chrysalis, Geffen, Interscope and Jive.

The salaries began to be rolled back in the post-Napster era, with the exception of Jimmy Iovine, who was supposedly making north of $12m a year, along with a clause that allowed him to have other businesses outside of UMG under certain conditions. That led to the creation of Beats, which Iovine and Dr. Dre sold for $3b. If an executive can run a major label successfully for five-to-10 years, that individual can make real big money. The problem is that very few have managed to consistently perform at a high level. Running a major is a tough job, one in which getting lucky by bumping into genius (to quote Danny Goldberg) can make a huge difference.

FAST-FORWARD: Thanks to the seismic change brought on by the mainstreaming of the streaming sector, the Big Three are loaded with cash earmarked for making deals for artists and top execs. Columbia is still searching for the right fit for an A&R-driven exec to help fill the void, in tandem with Joel Klaiman’s marketing team. Top managers claim that Klaiman has what it takes to lead the Columbia marketing juggernaut and more. Meanwhile, Max Lousada is said to be on the hunt for some top creative execs to help rebuild WMG. With the hiring of Eminem manager and Shady Records chief Paul Rosenberg, Lucian Grainge looks like he’s loaded with top talent at his four major U.S. labels, but don’t think he’s complacent. Grainge is said to be looking to further stock up those teams with deals that provide even more ammo for the army behind what is becoming a huge year for Uni. The only remaining question is how much bigger his current year will be. Is he looking at record numbers heading into that much-rumored IPO?

FAKE NEWS? Lousada doesn’t start as WMG’s Chairman, Recorded Music until October, but he’s been spending a great deal of time in L.A. and NYC taking meetings and studying the terrain. One wild rumor has Lousada and WMG bringing back one of the iconic Warner execs from the golden era; it would be mind-altering if that came to pass. The exec in question would not be Jimmy Iovine, who has definitively stated he will never return to the music business. Not only is Iovine too rich and too famous, but he also believes that maintaining success in today’s business is deeply problematic because of ad-supported streaming and YouTube. Look for Iovine to finish up his employment contract at Apple, start other projects and make more millions. Don’t expect him to ride off into the sunset and go quietly into the night, never to be heard from again.

NAMES IN THE RUMOR MILL: David Massey, Rick Sackheim, Daniel Glass, David Joseph, Michele Anthony, John Fleckenstein and Jay Brown.

Part Two, "Rise of the Next-Gen Ballers"

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