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WALL STREET, CALIFORNIA | COMPANY TOWN / THE BIZ

To Def Jam Chief, Seagram Rocks

July 14, 1998|CHUCK PHILIPS

As Seagram Co.'s acquisition of PolyGram edges closer to completion, many of the latter's music executives are getting anxious about the massive consolidation looming on the horizon.

Not Russell Simmons, the outspoken founder of PolyGram's Def Jam Recordings Group, home to such controversial rap acts as Def Squad, Public Enemy, Onyx and DMX. Simmons, whose label this week has the No. 2 album in the nation, says he can't wait until Seagram takes over and cleans house.

"We're like soldiers just waiting for our orders," Simmons said. "We think the consolidation is going to create terrific opportunities for real record people like us. By the time this thing shakes out, there will be no room left for any of the complacent career employees here who care about nothing but saving their own hides."

It's no secret that Simmons has been unhappy at PolyGram, which acquired half of Def Jam following a 1994 falling-out between Simmons and Sony Music. He contends that PolyGram has failed to promote Def Jam's music properly and complains that the Dutch-owned conglomerate reneged on an oral promise to underwrite his firm's expansion into film and fashion. Simmons stepped up his criticism of PolyGram in March after its board of directors decided to veto a $60-million proposal to buy the remainder of Def Jam.

For many at PolyGram, the feeling is mutual. In an interview earlier this month with The Times, former PolyGram chief Alain Levy dismissed Simmons as a professional whiner "who has made a career out of being a malcontent."

In the 14 years since launching Def Jam, Simmons has broadened his career horizons beyond music into movies, advertising, publishing, clothing, artist management and television--all under the umbrella of his Rush Communications corporation. The man who gave black comedians an outlet in the early '90s on HBO's outrageous "Def Comedy Jam" will debut a new television show on WB in September called "One World Music Beat."

But Simmons is still best known for his accomplishments in the music business, where--along with his original Def Jam partner, Rick Rubin--he pioneered a new strategy for promoting rap records in the 1980s without the aid of radio airplay. Employing posters and videos to promote street buzz, Def Jam was able to turn such underground acts as Public Enemy, the Beastie Boys, LL Cool J and Run-DMC into stars who sold millions of albums.

Def Jam applied the same techniques last week to help Def Squad capture the No. 2 spot on the Billboard pop chart, selling an estimated 153,000 copies of its "El Nino" album in its first seven days in U.S. stores. That was just 31,000 copies fewer than Sony's "Armageddon" soundtrack, which had the benefit of a blockbuster movie blitz as well as a hit single on radio and MTV by Aerosmith.

"Unlike other companies, radio is the last stop for us," said Def Jam Chief Executive Lyor Cohen. "We invented this kind of marketing technique. Not because we are brain surgeons, but because we were economically forced to do it. Over the years we have learned what it takes to excite our core audience. If we were ever able to access all of the resources that are available to our competitors, I promise you it would be very scary."

Def Jam, which is distributed by PolyGram's Mercury Records Group division, has been on a roll this year, churning out a series of Top 10 albums by hard-core rappers DMX, Onyx and Def Squad. According to SoundScan, the company garnered an estimated 1.17% of total sales in the U.S.--about a fifth of Mercury's entire share.

Both Simmons and Cohen say Def Jam could be selling a lot more records if Mercury showed more interest in promoting Def Jam product. Because Def Jam is a joint venture with PolyGram, Mercury makes only about half the profit when they dedicate their resources to pushing Def Jam releases.

"We've lost a lot of records here that should have crossed over into the pop mainstream," Simmons said. "It means nothing to [Mercury Group chief] Danny Goldberg to try to push our records. The fact is he makes a lot more money hyping Hanson, from whose records Mercury reaps all of the profit and glory and from which he gets a bigger bonus under his contract. If I've been a malcontent, it has a lot to do with being stuck in this joint-venture status where you are never treated equally."

Goldberg and PolyGram declined comment.

Simmons said he was shocked to see himself characterized as a "malcontent" in a July 1 interview in The Times with Levy, the executive who lured Def Jam into the PolyGram fold with a $33-million deal for half a stake in Simmons' label. The quote came in response to a question about criticism of Levy's management style from Simmons and other founders of labels purchased by PolyGram, such as Island's Chris Blackwell and A&M's Jerry Moss.

Simmons contends that Levy never made good on an oral pledge to help Def Jam branch out into film and clothing ventures.

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