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COVER STORY : Rock's Top 40 Power Players : Time again for Calendar's survey of who has the most clout in the record biz. This year, more than half the names are new. Why the shakeout happened and why the news is good for music fans.

August 28, 1994|Robert Hilburn and Chuck Philips | Robert Hilburn is The Times' pop music critic. Chuck Philips writes about pop music for Calendar. and

Two years ago, the record industry in America was wearing a black armband. Reeling from seeing companies gobbled up by foreign conglomerates, countless executives worried about their jobs and the fate of the music itself.

There were ominous predictions that the new bosses, derided as "corporate suits," would squeeze the creativity out of the business by bringing in faceless number-crunchers who prized only bottom-line results.

Today, the armbands are off.

With profits soaring and confidence at a record high, many of the same executives now speak of how healthy the mood is in the industry.

Modern sales tracking systems imposed by the giant firms have helped identify massive growth potential in musical genres once considered on the commercial fringe--notably country, rap and alternative rock.

This emphasis on diversification has led to an explosion of new million-sellers at the top of the charts--from rap's Dr. Dre to alternative rockers Pearl Jam--as well as a battery of fresh faces in the corporate boardrooms.

The shake-up has been so extensive that more than half of the names on Calendar's list of the industry's 40 most powerful people are different from a similar roll call two years ago.

The changes haven't been painless. Some industry legends have fallen as a new generation of executives assumes the mantle of leadership.

"There's been a revolution in music and it has forced major changes in the way the industry operates," says Doug Morris, who last month was named to head the domestic division of Warner Music Group, the world's largest record firm.

"We're on a real roller-coaster ride. Musical tastes have changed dramatically and some of the people who have been in power for many years didn't see it coming and they didn't adjust."

Sums up Clive Davis, head of Arista Records and one of the industry's most successful figures for more than 25 years: "There's much more opportunity for original, cutting-edge thinkers to make it out there these days. Music is what record corporations sell and they must count on entrepreneurs who have ears to find the best stuff to market. The future of these corporations doesn't hinge on who's writing the check, it hinges on who's writing the music."

*

From a distance, the story of the last two years in the record business is simply a tale of the rich getting richer.

Warner Music and Sony--the industry leaders since the '60s--continue to dominate the domestic and global musical market, accounting for more than a third of of the $10-billion U.S. recording market.

But it hasn't been business as usual in the '90s at either recording titan.

Both firms have gone through such major reorganizations that, in the words of one rival corporation, it's as if Sony and Warner Music were both "gutted with grenades."

The first shake-up began at Sony when Thomas D. Mottola, a former talent manager with scant record company experience, was tapped in 1988 to succeed Walter Yetnikoff, an industry kingpin who had ruled the former CBS music empire for more than a decade with an iron fist.

Mottola raised eyebrows by quickly installing a team of largely unproven executives in key roles, causing many in the industry to openly predict disaster for the already slumbering Japanese giant. The jokes were not kind.

Mottola is enjoying the last laugh, however. In the last two years, his team--Michele Anthony, Don Ienner and Dave Glew--has restored credibility to Sony by generating heat in a variety of areas. The team is admired by competitors for both the aggressive pursuit and marketing of such hot young acts as Pearl Jam and the revitalization of such veteran artists as Billy Joel. The result is Mottola and his three key aides have burst onto the Top 40 list. Sony Music's 1993 global revenue: $4.48 billion.

The lesson of Sony's reorganization wasn't lost on Robert Morgado, chairman of the Warner Music Group, whose chief labels--Warner Bros., Elektra and Atlantic--are home to such acts as R.E.M, Madonna, Metallica and Snoop Doggy Dogg.

Although his multibillion-dollar conglomerate was already the strongest music combine on the planet, Morgado felt that a shake-up could help him slash costs and bolster an even bigger market share. Warner Music's 1993 global revenue: $5.4 billion.

To spearhead the changes, Morgado turned in 1990 to Atlantic Chairman Doug Morris, with whom he had the best relationship of the three firms.

Like Mottola, Morris turned to a trio of untested young executives--Jimmy Iovine, Sylvia Rhone and Danny Goldberg--who, over the last three years, helped the Atlantic Group deliver an avalanche of hits and nearly double revenues. Morris was rewarded last month by being named the head of Time Warner's new domestic music division.

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