Music Business Year-End Rewind 2004
By Ritch Ezra and Stephen Trumbull

From record company layoffs to peer-to-peer networks, from career-killing practices to predictions for the future, the publishers of the Music Business Registry document the profound changes in the recording industry and how they are affecting artists, bands, agents, managers and everyone who enjoys music.

Welcome to our "Year-End A&R (Artist & Repertoire) Rewind of 2004." The significance of this particular issue each year is that it offers an opportunity to reflect on what occurred over the last 12 months in the world of A&R and to see the impact those events made in the music business. This is also a time of year when you begin to look forward with a strong sense of commitment, expectations and making plans for the coming year. But, as the great John Lennon once said, 'Life is what happens while you're busy making other plans.'

In 2004, there were some very profound and dramatic changes that altered the very nature of not only A&R, but of the music business itself. This will always be remembered as the year the 'Big Five' became the 'Big Four.' (And don't be surprised if we're telling you about the 'Big Three' at this time next year!)

Besides the Sony/BMG merger, 2004 will also be remembered as the year labels aggressively utilized video games as a marketing vehicle for the launching of many of their artists. It was also the year when the public finally said "No Thanks" to the concert business in a very loud and clear way. The summer touring season, especially, taught some very painful and costly lessons regarding exactly how much the public is willing to pay to see an act and what they are no longer willing to pay! As a result, Clear Channel has removed service fees from its ticket prices and drastically reduced parking prices at many of its venues. The industry also learned some valuable and long overdue lessons on the volume of acts the marketplace is able to absorb, as well as the actual live-viability of some of those acts.

Of course, the most profound impact on the world of A&R as well as many other areas of the business was the closure of four major labels: DreamWorks, Arista, Elektra and MCA (although MCA was reborn with far less staff as Geffen). These closures accounted for the loss of over 600 jobs (35 in A&R departments). Speaking of A&R jobs, last year at this time, we reported that 105 A&R people had lost their jobs.

In 2004, we're sorry to report that number has increased to 121 A&R professionals who left their jobs for various reasons. Unfortunately, only 13 of the 121 have managed to find other A&R jobs so far.

The 13 are: Jeff Fenster, who joined Arista after leaving Island; Jeff Blue, who joined RCA after leaving Interscope; Kenny Salcido, who joined Epic after leaving DreamWorks; Keith Naftaly, who joined The Sony Label Group after leaving DreamWorks; Naim Ali, who joined Warner Bros. after leaving MCA; Dino Delvaille, who joined Sony Urban after leaving Universal; Teresa Labarbera-Whites, who joined Jive after leaving Columbia; and Mark Pitts, who joined Jive, Victor Murgatroyd, who joined RCA/J, and Josh Sarubin & Joey Arbagy, who joined Island - all after BMG closed Arista. Jeff Sosnow & Luke Wood both joined Interscope's A&R Dept. after the sale of DreamWorks to Universal.

What is unique here is that the ENTIRE A&R staff of DreamWorks went to Interscope in January and Sosnow and Wood are the only two who remain. And from the A&R world to the publishing world, Nanci Walker joined Universal music publishing after leaving Island/Def Jam.

Last year at this time, we also reported the hiring of 85 new A&R people and in 2004 that number dropped dramatically to only 39 new A&R hires in LA, New York, Nashville, Atlanta, Vancouver, Toronto and London - a radical 51% decline from previous years.

Fortunately, certain A&R Executives were blessed with the opportunity to leave one A&R job with an offer of another A&R job while they were still employed. This have become an increasingly difficult achievement in this current climate of label closures, downsizing and having to compete with dozens of unemployed yet qualified and experienced A&R executives for every A&R job that DOES becomes available. Those fortunate few include Lenny Santiago who joined Virgin from Roc-a-fella, Kevin Williamson who joined Maverick from Atlantic, Joe McEwen who joined Verve from RCA, Martin Dodd who joined Sony Music Europe from Jive, and Leigh Lust, Jay Brown and Sam Taylor, who all joined Atlantic after Elektra closed its doors earlier this year. Just for the record, they were the only three members of Elektra's A&R Department to make the move to Atlantic, although by the time you're reading this, Sam Taylor will have left Atlantic to join Merlin Bobb, his old boss at Elektra, at Bobb's new label venture Roun' Table (UNI).

Others who found new opportunities elsewhere include: Sylvia Rhone, who joined Universal/Motown when Elektra closed; Julie Greenwald, who joined Atlantic as President from Island; Kevin Liles, Def Jam's former President, who is now an executive in the Warner Music empire; Antonio L.A. Reid (former Arista President, who is now CEO of Island/Def Jam); Lyor Cohen (Island/Def Jam's former President, who is now CEO of the Warner Music Group); and Danny Strick (formerly President of BMG Music Publishing) who joined Maverick as an A&R Executive, but left Maverick earlier this year, in a return to music publishing, joined Sony/ATV Music Publishing as its new President.

Also making the transition from Publishing to A&R is Steve Sasse, who has just exited from EMI Music Publishing to become the Head of A&R for Atlantic Records-UK under new MD Max Lousada. Also exiting EMI Music Publishing is Ed Jefferson, who joins Polydor-UK A&R Dept.

As we've said before, the names in this business never change, just the addresses underneath them.

Other executives in 2004 who are now "doing it for themselves" include Ron Shapiro (former President of Atlantic), Berko (former A&R executive at Maverick) and Brad Aarons (Sony Int'l) who have all chosen to open their own businesses in Artist Management (can you blame them?). Former Nettwerk A&R Executive Darrin Harmon joined his old boss, Dave Holmes, in a new label/management venture called DC Music. Greg Glover (former Warner Bros. A&R exec) opened his own label in Seattle, Arena Rock Recording. Also opening a label is Bradley Kaplan (former Warner Bros. exec) who formed E Street Records earlier this year. Also forming a new label/publishing venture is former Epic A&R Executive, Pete Ganbarg, who formed Puretone Music. Others, such as John Kirkpatrick (VP A&R Elektra), chose to leave the A&R field altogether by joining Paramount Studios Music Department.

Looking back over the last few months, recent A&R Departures include longtime Def Jam A&R Executive Tina Davis, Kate Hyman (V2), Andy Goldmark (Jive), James Foster-Levy (Warner Bros.), Rose Noone (Epic) and Tony Austin (who joined and left Def Jam within the year). Eric Nicks, who exited Def Jam earlier this year to join Sony Urban, has left Sony as of the beginning of January. Don Muhammad joined Universal/Motown after leaving MCA earlier this year has also just left Universal/Motown as has Robert Watson.

New labels were not as plentiful as in years past. Of note, EMI Music Publishing Executive Evan Lamberg formed E.V.L.A., a new label via Atlantic for EMI-signed writers. Simon Fuller (American Idol) formed 19 Recordings in the US and UK, Artist Manager Dave Benveniste has a new label venture - Velvet Hammer Music via Sony/BMG, and Artist Manager Joe Simpson (Manager/Father of Ashley & Jessica Simpson) has formed JT via Geffen, Producer Kanye West has formed Good Music via Sony/BMG in Los Angeles. Shaquille O'Neal has come back into the music business via Deja 34 out of Atlanta.

In looking back over 2004, we're reminded of the many conversations we had with various music business professionals on both sides of the Atlantic concerning the current state of today's music industry. Without exception, there seems to be a very sobering sense that the record business we have known for the last 25 years is now gone. This is extremely troubling for many, sad for some and terribly exciting for others. I see these times as an incredible opportunity for a total and complete reinvention not just for record label A&R departments, but for the entire spectrum of the music industry.

If you as an artist, band, agent, manager or any other music business professional cannot see that the old paradigm of artist development (the actual long-term process of building a career from the ground up) has been completely re-invented over the last few years, then you need to get out of this business. The old methods of doing things no longer apply. This may sound obvious to most of you, but you wouldn't believe how many fairly well-known music business professionals within the industry still believe that the only way an act can have a viable career today is to get that act signed to a major label.

What's so sad is that these people who believe this (and there are many) can't even see that the very system they feel can accomplish this for their artist no longer even exists! We've said this before, but it bears repeating - though no one will actually come out and say it (truth is, they may not even be consciously aware of it) -- Major labels today, with very rare exception, are no longer willing to be in the business they have built over the last forty years. The train of thought today is that the 'old' process of signing, recording and developing talent takes far too long and is way too costly to achieve the results they desire in the time they have allotted.

As a consequence, whether intended or not, (and this is the part many simply can not see) is the major labels are now in the promotion and marketing business, but of course, only for those experienced artists who have already been developed and who they feel can be turned into multi-platinum sellers. Well, that would be nice, but it just isn't the world we live in anymore. Of course, there will always be platinum sellers in the future, but far fewer of them. Today, there are simply too many choices available.

It's fascinating to observe some of the most influential music publications out there today, such as and Blender, to name two, which have hardly any mainstream artists in their Top 50 of 2004. Today, it's all about choices. The future of this business will be thousands of niche artists selling fewer records much like cable television, which has a fraction of the audience, but is profitable! And this is the most profound difference from the past in terms of A&R signings and looking at what can and will work in the marketplace.

Under the old paradigm, the public (the majority of the time) only wanted what the major labels signed and sold to them (of course, that may have had something to do with what was available). Today, choices of music being vastly wider, a far more diverse artist selection available to us, not to mention the various new formats provides an almost infinite selection for today's listeners and consumers. And, as most of us have known for years, the market is far, far broader than the major labels ever cared to acknowledge (yes, people between the ages of 30-50 WILL BUY MUSIC when presented with artists who they can connect with). How else could Ray Charles sell two million copies of a CD via a coffee chain, or James Taylor sell over one million Christmas CDs via Hallmark without his CD without even being available at retail? If either of those artists were at a major label, (James Taylor was with Columbia/SONY for 27 years up until last year) they most likely would not have sold more than 200,000 to 300,000 copies, tops!

These two examples provide an insightful illustration why several of the major labels are struggling today for their very survival. They truly can't see what their customers want. But, in much deeper sense, they have no desire to get to know what their customers want.

Don't get me wrong, there are several wonderful executives who work for the major labels, it's just that the corporate culture at the top of most major labels is so profoundly out of touch with the times we live in, they cannot see their own part in the problems they face. The building of careers is a luxury of time to which they no longer choose to contribute. They really would like to THINK & BELIEVE they do, but the reality is the just the opposite.

Sony/BMG will let go of approximately 2,500 of their employees over the next five months, about 20% of their combined workforce, with 45% to 50% of that number coming from the U.S. operations. At this point, no one knows how many labels between the two giants will be closed or how many artists will be dropped by both companies as the two giants continue to streamline their worldwide operations into one.

What's so sad about this merger in particular is that, unlike some mergers, where the intention in coming together is a vision of creating something greater, better and something that neither company could achieve alone, this merger seems to be a grasp at mere survival.

Other major labels have also streamlined their operations. The Warner Music Group let go of over 600 employees during the last two years and just recently dropped 93 of the 195 artists from their rosters and closed Elektra, a once thriving and core label within the Warner system. Last year, EMI announced that it would drop 20% of its artist roster over the next 12 months. Does this sound like an industry that's interested or even capable of building or developing anything? It's like a struggling marriage where neither party is open, willing or even capable of REALLY seeing what the issues are that continue to keep them stuck! So they just keep making decisions over and over that allow them to avoid examining what's essential to their own survival!

The Revolution has begun!

The opportunities today are vast and limitless for those artists, bands, managers, and other individuals and companies who truly understand and embrace what is actually occurring, who can step back and see the decaying mechanism that many are still struggling to maintain for what it is - not only a crumbling business model, but an entire way of viewing the world in which we used to live, but no longer do! The personal, business and artistic successes we are seeing today are from those individuals who can peer through this fog of delusion and see the business as it actually is; not as they want it to be or hope it will become, but how it actually is! Those individuals are moving freely and creatively interacting with our new social order while others, including some politicians (and apparently a lot of voters), are still clinging to a world or a way of thinking and being that no longer exists. It's only a faint echo acting like some spirit lingering that does not know it's dead. As many of us know, most of our biggest emotional upsets in life are created by the difference between a world that we make believe exists and the world that truly does exist.

Forward-thinking artist managers, agents, venues, indie labels and the artists themselves are the ones who have become (and truthfully have been for some time) responsible for building the next generation of career-artists. There are many current examples that illustrate this. Look at what Ken Levitan (Vector Management) has so tastefully achieved with the launching of Damien Rice's career. Or how Coran Capsahw (Red Light Management) helped build and develop Dave Matthews' career before RCA signed him, by never losing sight of what the two most fundamental elements are in this business - artist and audience.

Consider Martin Kirkup & Steve Jensen (Direct Management) who have launched Jamie Cullum, a young "piano man" who had put out his own CD prior to his debut. The choices they made along the way in Cullum's career, from showcasing him to the tastemakers at SXSW last year to not over-hyping him illustrate an entirely different way of thinking about the development of artists and the building of their careers. Careers are not supposed to be events that have huge a build-up and then are over like The Super Bowl. As we all know, the best careers (The Beatles, Led Zeppelin, Elton John, Neil Young, U2) are long journeys that have been built on solid and viable foundations that can (and do) sustain a wide array of paths and experiences. Each of these artists was able to build extremely solid and viable foundations without a major label and in most cases, had no mainstream radio airplay at all. What these artists (and their managers) do have in common (regardless of genre) was an entirely new way of thinking and approaching the marketplace with regard to the development of their careers.

They all utilized new and non-traditional methods that did not have the luxury of an enormous marketing push behind it to create awareness. Most were lucky at the start to get Public Radio exposure and critical acclaim.

But today, with so many more marketing and exposure options available to artists (iPods, Internet radio, websites, non-traditional retail), the artists who develop and build careers for themselves won't necessarily be household names in the first few years, but they will have a built a very solid base of fans that actually want their music and will attend their live performances. These artists will have built their followings over a long period of time, not through hype and over-exposure on MTV, VH-1 or other media outlets that in so many cases actually damage careers instead of enhancing them. More than ever, today's youth culture is looking for something real, something it can feel a genuine connection with, not something it's oversold on!

This is the tragedy of the major labels (tragedy in the classic definition is defined as "the fall from greatness through an unseen flaw in ones character). They keep looking for the formula that will give them the huge multi-platinum sellers that they once enjoyed. Only problem is, we don't live in that world anymore! The system today doesn't allow these types of massive sellers like it did in the past. Today, we have FAR too many choices. And that's their tragic flaw. Major labels do not see that the harder and louder they continue to market their acts, the more the audience they're trying to reach doesn't seem to hear them or care for that matter.

Doubt me? Just ask any 13-18 year old today and they'll tell you. Or ask any 35-50 year old why they don't buy CDs anymore and they'll tell you "They don't put out any artists who I can connect with" Let's face it, Norah Jones' enormous breakthrough and continued success wasn't a fluke, but rather a very strong indicator that the so-called "target demographic" the major labels think is "the only one that matters" 12-21 year olds is completely out of touch with the times we live in. And for the record, Norah's career is another example of a recent career that was built entirely from this new paradigm of artist development - It is this particular phenomenon that I believe will alter the type of artists, regardless of style, that will emerge and be able to build viable careers for themselves in the coming years. Will these new Artist's careers look like what came before? Not a chance! This will be the most difficult lesson for us as an industry to truly get. Letting go of what we've always held as the definition of success (Out-of The Box Top-10 radio hits, videos in high rotation on MTV, VH-1, BET, product endorsements for anything and everything, appearing in TV commercials, transitioning into motion pictures all within the first 12-18 months. Today, for those in the know, these things are no longer seen as a path to career longevity. These are all things we have seen over and over during the last 5 years that have hurt careers when they occur too quickly or without direction.

Too many of today's 'hit' artists seem so afraid that this moment "right now" is their ONLY chance in life to have a career, that they simply overwhelm the marketplace with every conceivable form of over-exposure, and often like the major labels, don't even see their own part in any of the career aftermath.

Beyonce, Queen Latifah and even the wonderful actor Jude Law - who has appeared in six films over the last five months -- are three examples that come to mind in different arenas of entertainment. Heavy rotation out-of-the box radio hits, television ads, forgettable movies, videos on MTV and VH-1, magazine covers (Beyonce's 25 non-music magazine covers over the last 18 months were enough to overwhelm and alienate even the most devoted fan), along with countless product endorsements, award show appearances, movie premiers, television interviews, even boxes of hair color that stare back at you with their image from every grocery shelf in America.

These acts are not out of our cultural consciousness for more than an hour. How can you ever look forward to anything when it's never gone long enough to miss it? It's like meeting someone for the first time and feeling you have to tell them every single thing about yourself on the first date. Where's the mystery? What's left to discover? What's left to build? And yet this has become, especially in the music business of the last 12 years, the "accepted modus operendi". Is it any wonder that we don't have many artists who've built successful careers for themselves over the last 10-15 years?

The new breed of artists and managers (and yes, there are a few who do think long-term) emerging today do not appear to see their clients' careers with this same unhealthy compulsion. They have a solid grasp of who and what they are and have been able to map out a career path that is consistent with that vision. This is what will contribute to building careers, rather than destroying them.

A recent development in the Industry that we would be remiss in not mentioning is the recent trend of "upstreaming". This is where an independent label develops an act from the ground up, and at a certain sales level, the act goes upstream to the major label system. The catch is, of course, that the smaller label will have to give up their acts to the major if the acts become successful. The great flaw in this scenario is that the major labels have traditionally thought that any act doing 100-250K on an independent label should be able to do at least three times that within a major label system. As we've seen over the last few years, 'it just ain't so!' Most acts do not go from 150K to 500K in the course of one album. And there is nothing wrong with that. An act's evolution (both artistic & commercial) is an organic process and a long one. We don't expect our children to walk in their first six months, nor should we. Often, the problem with the major labels' expectations is the unrealistic sales goals set for their acts simply because the act is now in a 'major' system.

So often we've seen labels set their spending based on totally unrealistic sales expectations. All too frequently, a label declares that its sales goals have not been met and drops the act. Is it any wonder that our industry has produced fewer and fewer career artists over the last fifteen years? That is also why all of the major label artist rosters have continued to get smaller and smaller. Like we said, they no longer have the desire to be in the career-building, artist development business and, as such, no longer need the enormous infrastructures they once had when they needed to support two-to-three hundred artists on a roster. With the labels continuing to operate in this manner, you have to wonder where will the great catalogues of the future come from? Well, it won't be from the major labels, that's for certain! They have no interest in this process, wanting instead for the natural forces of the marketplace to develop talent for them. It is a truly fascinating phenomenon to watch the major labels put time, money, energy and focus into developing up and coming independent labels rather than develop artists themselves, something they did so well at one time, when they faith in the process of developing talent and in the Artists they signed. What's been forgotten by most labels today is that THIS WAS THE PROCESS THAT THEY REAPED HUNDREDS OF MILLIONS OF DOLLARS FROM and developed many of the greatest and the process of developing careers for them!

The most fascinating aspect of this particular process today, is how many artists and bands truly WANT NOTHING WHATSOEVER TO DO WITH MAJOR LABELS AT ALL! The illusion that a MAJOR LABEL CAN MAKE ALL OF THEIR DREAMS COME TRUE is over. So many artists today have seen too many acts during the last 10 years break up, implode or simply get lost in a system that they truly had no business being a part of in the first place.

If major labels are to survive in the future, they are going to have to come out of denial about the world in which we live and completely re-invent themselves. They are going to have to start seeing their business as it truly is today - not how they would "like it to be" or "how it was," but how it actually is. As Werner Erhart so brilliantly said, "The Truth will set you free, but first it will really piss you off!"

Provided by the Music Registry. Copyright 2004 - Republished with Permission

Ritch Esra and Stephen Trumbull are publishers of the A&R Registry and and several other music industry directories and may be reached by phone at 818-995-7458 or online at Music Registry

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