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Reprinted with permission from Hits Magazine

December 16, 2005

2005—ANOTHER ONE BITES THE DUST: The music industry lost ground again in 2005, with year-to-date sales off around 10%. Nonetheless, for some it was a decent year and for a handful it was cause for celebration. Here are the major plotlines of 2005...

UMG: Marketshare baron Doug Morris had another sensational year, far outdistancing the competition as the orchestrator of what can now legitimately be called a dynasty. Not content to rest on the laurels of a stunning 35% piece of the current pie, up from 32%, Morris found time to lead the charge on VOD, which was quickly adopted by the other majors, opening up a brand-new revenue stream. He's also out in front in proposing a world without SoundScan in a confrontation still to be resolved... Morris has two of the four active world-class record men in IGA's Jimmy Iovine and IDJ's L.A. Reid, as the pair claimed the top two spots in current marketshare, with 11.3% (from 10.5% last year) and 7.3% (vs. 5.9%), respectively. Iovine has cobbled together a powerhouse by merging the disparate pieces of his empire—Interscope, Geffen, A&M, MCA and DreamWorks—into a seamless whole, scoring some of 2005's biggest albums with 50 Cent, 4.7m; Black Eyed Peas, 2.4m; Gwen Stefani, 2.2m; The Game, 2.1m; and Eminem's Encore, 1.3m. Reid was responsible for one of the biggest turnarounds in recent history, performing a Lazarus-like miracle with Mariah Carey by restoring her to superstardom in a year that was capped by eight Grammy nominations. And when all is said and done, her comeback LP will be the year's biggest seller, Reid's third in a row, following OutKast in 2003 and Usher in '04. Additionally, IDJ was the only label group to break a new rock band, with The Killers and Fall Out Boy. Reid's biggest albums are Carey, 4.2m; Kanye West, 2.1m; Killers, 2m; Fall Out Boy, Nickelback and Young Jeezy, all 1.2m; Ludacris, 1m... The UMG juggernaut was further fortified by Mel Lewinter's Universal/Motown, down a point with 4.4% (top sellers: Jack Johnson at 1.6m and 3 Doors Down at 1.2) and Luke Lewis' Nashville label group, holding steady at 1.9%, with Toby Keith at 1.3m and 1m, Sugarland at 1.2m and Shania Twain at 1m...

SONY BMG: Though led by Sony's Don Ienner and BMG's Clive Davis, the industry's other elite dynamos, the merged music group slipped this year, dropping from a combined 30% in current marketshare last year to 25%, split evenly between the Sony and BMG sides. Most of the fall-off came from BMG, which dropped from 17.8% to 12.5%, while Sony was up a half point from 12% last year to 12.5%... But declining marketshare wasn't the biggest problem in SBMG's first full year as a combined entity. The year's major plotline involved a clash of cultures between a pair of strikingly dissimilar companies in a roiling controversy that has come to be known as "Andygate." Bertelsmann head Gunter Thielen has been pushing Sony chief Sir Howard Stringer for Lack's removal since the announced resignation of COO Michael Smellie, BMG's highest-ranking executive, this summer. Adding to the furor was Lack's re-signing of Bruce Springsteen in a deal some believe is worth $100m, supposedly angering the German high command. Then came the XCP "rootkit" fiasco, now manifesting itself in a barrage of lawsuits, which is not likely to go away any time soon. Insiders say Lack's biggest problem is his inability to manage those working for him, along with his apparent disdain for some of the key music business players. Bertie remains firm in its insistence that Lack be removed, with former BMG topper Rolf Schmidt-Holtz taking his place and Smellie remaining as COO. But the Beemers may not be pushing for too much by insisting that their men hold the top two positions at the merged company. According to those in the know, Sir Howard has the unilateral authority to appoint the CEO of SBMG until 2009, and Lack cannot be fired by the BMG partner until next August. Thus, Sir Howard seemingly has quite a bit of leverage as he plays his strategic hand during the subsequent scenes of Andygate, which is becoming one of NYC hottest cloak-and-daggers of this Broadway season... Meanwhile, at 550 Madison, Sony Music N.A. ruler Ienner showed that he remains fully in charge of his own empire, appointing S-Curve chief Steve Greenberg as President of the Columbia Records Group early in the year, and ending 2005 with a complicated maneuver that put Epic's Steve Barnett atop CRG as Chairman, replacing Will Botwin, with Columbia's Charlie Walk becoming President of Epic. Additionally, he awarded Michele Anthony with the presidency of Sony Music Label Group. Sony's hits included System of a Down's Mezmerize (1.5m), John Legend (1.4m), Destiny's Child, Gretchen Wilson and Il Divo, (all around 1m). Down the street at BMG, Davis hit paydirt with Kelly Clarkson (2.8m), Dave Matthews Band (1.3m) and Foo Fighters (1m)... Davis was supported by the talents of his key executives, Charles Goldstuck and Zomba chief Barry Weiss, who hit with Ciara (1.5m), Usher (1.2m), R. Kelly (1m) and Fantasia (1m). Joe Galante's Nashville operation had a pair of million sellers from Kenny Chesney...

WARNER MUSIC: It was a roller-coaster year for WMG, but the company still managed to increase its share a half point to 13.5%. A disappointing IPO was preceded by the very public threatened defection of Linkin Park, one of WMG's top-selling bands (eventually resolved), which did little to instill confidence among prospective investors... Tom Whalley's West Coast operation was up .5% to 6.4%, led by Green Day (3m), Faith Hill (1.1m) and Michael Buble (1m), but he had the advantage of two promotion departments... The situation was much shakier on the East Coast, which was virtually flat at 4.5% despite its own two promo staffs, as North America boss Lyor Cohen oversaw the ongoing dismantling of the combined Atlantic and Elektra, whose only million-seller was Rob Thomas. Cohen brought in his functionaries Julie Greenwald and Kevin Liles, and he fired Co-Chairman Jason Flom, a 26-year Atlantic veteran and one of the most respected A&R execs in the business. While the chatter from WMG was that Flom's removal had improved the situation at Atlantic, this attempt at scapegoating was neutralized as EMI, UMG and SBMG actively vied for the services of the free agent... There's continuing talk of a merger with EMI, but if it does happen, the smart money says it will be EMI taking over WMG. The company's other big seller was Mike Jones, on incubator label Asylum, at 1.4m. Warner's biggest problem remains the lack of capable leadership...

EMI MUSIC: The British company may once again be pulling up the rear in current marketshare with 8.4%, down from 9.3%, but North American chief David Munns has made some solid moves for the future. He renewed the deal of highly regarded A&R/marketing whiz Andy Slater at Capitol (holding steady at 3.4%), which has thus far sold 2.5m Coldplay albums. More recently, Munns installed Flom as the new top dog at Virgin, replacing Matt Serletic, who'd seen his marketshare slip .2% to 1.3%, despite a hit with Gorillaz (1.3m). Additionally, he promoted well-liked veteran Phil Quartararo... Along with solidifying his executive lineup, Munns greenlighted a nontraditional revenue-sharing deal with Korn dreamed up by the band's manager, Jeff Kwatinetz, which got off the launching pad encouragingly this week, as the band's first Virgin album debuts at a robust 226k... Moving southward, EMI's Nashville operation scored with Keith Urban, who sold 1.4m... Looking ahead, Levy and Munns know full well that the only way to compete with giants UMG and SBMG is to get bigger, making EMI's desire for a partnership with Warner Music a no-brainer. But they now realize the inevitable problems resulting from a merger of equals, having witnessed the stormy relationship between Sony and BMG, and they're not about to repeat history...

SANCTUARY: The long-profitable indie saw the bottom drop out this year, as the company overextended—including investing heavily in an urban division that proved to be a disaster—and is now hanging on by a thread. It was all too much for Sanctuary head Andy Taylor, who stepped down following several failed attempts to locate a fiscal savior...

iTUNES: Downloads accounted for a substantially increased percentage of overall sales via iTunes and the services chasing it, but more and more executives have come to believe that, rather than being the answer, a la carte downloads are contributing to the problem as they increasingly cannibalize album sales...

AZOFF/KWATINETZ: For a time, it appeared that Irving Azoff and Howard Kaufman's Front Line and Jeff Kwatinetz's Firm, the two big management powers, would be rolled into one, with Azoff heading the combined company, resulting in a stand-alone IPO or an add-on to the Warner offering following Thomas Lee Partners' investment in the re-formed Front Line. But none of the above scenarios took place, as rumors of mutual unhappiness between Azoff and Scott Sperling swirled. Now, many expect Azoff to buy out Thomas Lee, and at a greatly reduced price...

SPITZER CHANGES THE RULES OF ENGAGEMENT: Only two of the Big Four have settled so far, but the rulebook has been rewritten for the entire industry. Previously, the majors believed they were operating within the law, but that was before the New York Attorney General made up new laws, and they are being followed scrupulously both by those who have settled and those who await the knock on their doors. Despite published allegations that certain leading executives knew of now-outlawed promotion practices while others remained blissfully unaware, anyone with even a passing acquaintance with the music industry knows full well that every top exec knew exactly what their promotion departments were doing. Another effect of the Spitzer settlements is that they've leveled the playing field for the indies, because it's no longer about how fat your checkbook is; instead, it's about how well you know your sector...

NAMES IN THE RUMOR MILL: Craig Kallman, Michele Anthony, Monte Lipman, Bruce Tyler, Steve Bartels/Jay-Z, Sylvia Rhone, Jim Urie, Michael Rapino, Tony Brummel, Merck Mercuriadis, Rob Light and Peter Grosslight.


HITS magazine is the most powerful information vehicle in the music industry, and is read religiously by all the top executives and everyone else.




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Reprinted with permission from Hits Magazine

December 15, 2005
By Rodel "Elfin" Delfin

RICE & BEANS—THE INDIE REPORT: Before you start downing the eggnog to work yourself into a holiday drunken stupor, we've decided to do something a little different with our year-end report. Since we've been covering the growing relationship between indie acts/labels and the majors over the past year, we felt the need to give the indie voice their own space. As an adjunct to Wheels, expect to see our Rice & Beans report on a frequent basis in 2006. It's like ordering the combo with your burrito at El Compadre on Sunset (the HITS cesspool is in Hollywood now; no more Casa Vega for us). But this week, my indie reporting colleagues (Pedro, Pablo y Juanita) and yours truly are just dishing the indie stuff—so no Wheels burrito for you until the start of next year. But before you go into weasel withdrawal, here are a couple of tidbits to keep you barfing chunks into the new year... Virgin kingpin Jason Flom and A&R player David Wolter bring Leftwing Records dude Steven Melrose to the label's A&R team as a consultant. Barrister Steve Sessa mediated the deal... Expect the highly pursued, Randy Nichols-repped Starting Line to have a new label home in the new year. Inside sources share that the deal is done... Meanwhile, lots of buzz building on indie band From First to Last. We hear this one is starting to get nutty. We'll keep you posted... AND NOW FOR THE FIRST BITE: The Steve Reddy-run Equal Vision Records has reportedly renewed their distribution arrangement with RED; however, said deal no longer includes an upstream component to the Sony majors. EVR was reportedly unhappy with their upstream situation and would only renew with RED without it. Meanwhile, Sony brass were apparently not happy with EVR opting out of their uplift arrangement, since they only acquired one act from the indie's roster during their upstream term together... Lots of chatter at one L.A.-based, high-profile indie where an A&R staff member was recently fired due to an altercation with a fellow employee in marketing. The terminated staffer was reportedly escorted out of the building after he trashed the office of the other while in a fit of rage. Boy, we haven't heard of this much anger since David Adelson walked into his office to find it completely filled with packing peanuts. Ah, those were the good ol' days at this trade rag... Speaking of upstream, several majors are apparently talking with Fearless Records about an uplift arrangement. Fearless is home to Gatsbys American Dream, Rock Kill's Kid and Plain White T's, among others. Is the Bunny leading the charge on this front? And is the interest being spurred by the buzz on PWT's?... Rich Egan and company at Vagrant Records are launching an integrated online store where customers can purchase digital downloads and artist-related merchandise with a single credit card. They are also launching a mobile phone fan club in the coming year. Meanwhile, expect a new Dashboard Confessional album in spring '06, as well as some new signings in the new year... Punk stalwart SideOneDummy celebrates its 10-year anniversary. Look for a four-night celebration at L.A.'s Key Club in March featuring the label roster. The show will be filmed for a DVD documentary and retrospective. In addition, SideOne will be issuing vinyl releases by veterans MXPX and the Steve Albini-produced gypsy punkers Gogol Bordello. The label will also release full-lengths by the Casualties and the Briggs, along with Warped '06 and Atticus 4 compilations, plus a retrospective DVD from Flogging Molly... Kid Millionaire/superstar DJ Steve Aoki and his Dimmak label have signed the London-based, '80s synthpop-obsessed White Rose Movement. Expect their first album on Dimmak in the new year. By the way, did you see the L.A Times two-page feature on Aoki a few weeks ago in the paper's Weekend section? The dude is blowing up... The Sal Villanueva-produced full-length from Folly will be released in January on Triple Crown Records. Lima, OH-based, emo rockers Hit the Lights are putting the final touches on their debut album, set for release next year. In January, Triple Crown will release The Triple Crown Video Files: Volume 1, which will feature videos from Brand New, Northstar and Death Threat and exclusive live videos from Kevin Devine, Folly, Receiving End of Sirens and more... Lastly, the Saddle Creek-signed Two Gallants will release their next album in the new year after flirting with numerous interests from majors stateside and across the pond earlier this year. And expect a '06 release by Cursive on the Omaha label as well... And that's all folks. We'll see ya in the '06... HOLIDAY BUZZIN': Surfing Puerto Escondido and desert chillin' in Palm Springs... Hit me up: brotherxx@earthlink.net


HITS magazine is the most powerful information vehicle in the music industry, and is read religiously by all the top executives and everyone else.




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Reprinted with permission from Hits Magazine

December 14, 2005

Looks like American Idol has launched yet another career, and, like Clay Aiken before him, long-haired rocker Bo Bice (RCA/RMG) seems to have gotten a lot of mileage out of the underdog status of being the runner up in the 2005 edition of the show. From the early data pouring in from retail, Bice may have enough fans to give Idol winner Carrie Underwood a run for her money, career-wise, as he boogaloos to a first-week total of 180k-200k on his debut album. Not only that, but our boy currently has the inside track to the #1 position next week. That said, he's competing in a particularly crowded field of bona-fide hits as we hit the home stretch of the holiday gift-giving season.

Bice's rivals include practically the entirety of this week's Top 10, including current chart-topper Eminem, steady sellers like Now 20, Kenny Chesney, Nickelback, Mariah Carey and Black Eyed Peas, all of whom are seeing sizable sales increases, as are Bo's buds Underwood and Kelly Clarkson. This horse race could be a thriller.

Tuesday's other notable debuts include Def Jam/IDJ's Ludicris, who's looking 110k-120k-ish, So So Def/ZLG's Anthony Hamilton (100k-110k), reggaetron up-and-comer Daddy Yankee, on Interscope (50k-60k) and Jive/ZLG's Youngblood (45k-55k).

As usual you can count on us for updates, but, as always, dson't believe everything you read.

But believe this: Weekly album sales were up a whopping 23.7%, or 3.7 million, over last week, but before you start popping the Dom, it should also be noted that this week's total of 19.2 million units was 2.6 million less than the same week of 2004 (that's an 11.9% deficit, BTW). That means year-to-date sales remain 10% below last year—a fraction over 10%, to be perfectly frank about it. The tally so far is 544.1 million units. But hey, here's a stat that might perk you up: digital sales on the year are up 200%... Is that the sound of one hand clapping...?


HITS magazine is the most powerful information vehicle in the music industry, and is read religiously by all the top executives and everyone else.




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By Kenny Kerner

Hard to believe that the TAXI Road Rally is over. I'm still coming down. Man, what a ride! If you're a TAXI member and you missed it—or if your friend is a TAXI member and you didn't go, shame on you. Whew!

It's a brand new year and lots of things are already developing in the Biz. The Warner Music Group had to shell out $5 million dollars and vow to overhaul its radio promotion methods after New York Attorney General Eliot Spitzer busted them for payola. Spitzer alleged that the WMG "engaged in bribery, fraud, and illegal payments to get its songs played on the air." Ouch!

Barry Manilow is back with Clive Davis as the artist inked a new deal with Arista. Manilow was the first Arista recording artist way back in 1974. His first CD about to drop is called The Greatest Songs of the Fifties. Notice any similarities between Clive's marketing plan for Rod Stewart and Barry Manilow??? Not really. If it worked once, it'll work twice.

Holiday CDs from Kenny G and Regis Philbin did unusually well at retail... Sir Paul McCartney continued to do SRO concert sales with all 37 U.S. shows completely sold out. He was followed close behind by Celine Dion (whose Vegas show is astonishing thanks to her incredible voice and the production by Dragone which is worth the price of admission alone) and Queen + Paul Rodgers.

Alligator Records has just signed former Stray Cats' bassist Lee Rocker while another indie, Rounder Records inked Nova Scotia act the Cottars... MCA Nashville dropped two country acts after one CD each. They were Jedd Hughes and the very talented band, Hanna-McEuen.


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