Antonio "L.A." Reid remembers the day six years ago when he and his partner Kenneth "Baby Face" Edmonds struck the ceiling.
After helping mastermind commercial breakthroughs for such recording stars as Bobby Brown and Paula Abdul, the hot African American production team had reached what many considered to be the pinnacle of their profession.
But Reid and Edmonds had bigger goals. They saw themselves as entrepreneurs who deserved more than creative freedom. They wanted economic control over the music they produced.
Few black producers have been able to break through the stranglehold of the white power brokers who control the nation's $12-billion record business.
While no statistics are available regarding the number of minorities working in the industry, no major company has an affirmative action program to advance blacks, Latinos, Asian Americans or women. The number of top-level black music executives at major labels can be counted on one hand, and there are even fewer Asian Americans, Latinos and women.
Locked out of the system, talented young minority entrepreneurs have begun to find success by cutting joint venture label deals with major companies, which provide financing, manufacturing and distribution in exchange for a share of the profits.
And these black-run labels are being viewed as the training ground for a new generation of African American executives.
With few options available in the corporate pop world, Reid and Edmonds decided to roll the dice and launch their own label, with financing from German-based Bertelsmann Music.
"It used to be that the guy who made the music was the guy who died broke, but these days, creative producers understand what they're worth," said Reid, whose La Face Records has earned more than $200 million since its inception in 1989.
"This is a software-driven business where the hit-makers hold the key to the profits," Reid said. "With black music being such a huge revenue source, you'd think that the record industry would be doing everything it could to prepare creative African American executives to assume positions of power. But unfortunately, that's just not the way it works."
Popularity of Black Music
Even more than films and TV shows produced by African Americans, black music is a product that appeals to consumers of all colors and generates billions in annual revenue around the globe. In the United States alone, nearly one-quarter of the best-selling albums on this week's pop chart were written and recorded by black artists. So far this year, black music has accounted for more than 20% of the 495 million albums sold by retailers across the nation.
The Rock and Roll Hall of Fame, however, is overflowing with examples of black artists who lived and died in destitute conditions, abandoned by the same industry that sings their praises now. Pop music continues to draw heavily on such black musical traditions as blues, jazz, gospel, soul and rap, but only a handful of black executives hold senior positions in major record companies.
The problem, African Americans say, is that the music industry's infrastructure was shaped by whites, who have generally been reluctant to groom blacks for top executive positions.
There has been advancement by blacks and women in the companies' legal divisions, but most black employees remain "ghettoized" in black music departments, where salaries are comparable, but budgets for recording, marketing and promotion are often lower than in the pop and rock areas.
And rising executives in black music are often stymied by another problem: When a black artist such as Michael Jackson or Whitney Houston becomes a star, the black music department loses them to the record company's pop star-making machine. As a result, few black executives learn the mass-marketing and promotional skills needed to affect the corporate bottom line.
"There is tremendous disparity and inequality regarding the treatment of black music executives in the industry," said Sylvia Rhone, Elektra Entertainment chairwoman and the only black or woman to head a major record label.
"The racism out there may be subtle, but it is still a problem. . . . It's extremely difficult, if not impossible, for any black executive to move up in a record company outside of the black music division."
Rhone's promotion to chairwoman of Elektra last year prompted grumbling in the industry's "good ol' boy" network, where many predicted she could not live up to the achievements of the label's illustrious white male executive alumni.
Women Find More Success
Some white record chiefs interviewed for this story privately questioned whether any African American executives who honed their skills in black music departments had the qualifications to navigate a pop division.
Nevertheless, white executives acknowledged that few minorities have been given a fair shake in the record business.