Record Sales Up, Executives’ Mood Down at Labels

Romance sold a lot of records this year--the “Titanic” soundtrack and Celine Dion’s related “Let’s Talk About Love” album alone generated more than 15 million U.S. sales.

But the romance of selling records pretty much evaporated for huge chunks of the $12-billion-a-year music business in 1998.

Sure, album sales were up around 9% over 1997, with Sony Music Chairman Thomas D. Mottola earning bragging rights as his company led the Big Six distribution groups in market share for new releases. Through Dec. 20, Sony’s 17.46% just squeaked past Warner Elektra Atlantic’s 17.29%, but was a big rise from last year’s 12.8%.

The story, however, wasn’t what happened in the stores, but in the corporate boardrooms. An industry that thought it had adjusted to a series of shake-ups earlier in the ‘90s witnessed its most dramatic upheaval ever.

With Universal Music Group’s year-end, $10.4-billion acquisition of PolyGram’s assets, it will surely be the industry leader in 1999. The combined Universal/PolyGram sales in the U.S. in 1998 would have given the new behemoth a whopping 24% of U.S. music market share.

Univeral’s move has left much of the industry numb because of an expected 3,000 lost jobs at the two companies and massive artist roster and staff slashes at A&M;, Geffen and Island--three of the most respected names in music business history. And more of the same is likely for 1999 if a long-rumored sale or merger involving EMI occurs.

With all that, it’s been hard for industry executives to keep their mind on the music.

“With corporate responsibilities, you have to forget about the artistic development,” said one top New York executive, summarizing a generally glum mood among even 1998’s most successful label figures.

“Now that we’re in the far end of a decade in which multinational corporations became the cornerstones of the business, it’s financial accountability of profit and loss that rules,” says Mike Shallett, CEO of SoundScan, the firm that collects sales and demographic data for the music business. “I think it can be as much fun as it was before, but it requires a different approach. We’re selling beaucoup records, a ton, and there’s no indication of that stopping. We just need to sell them more efficiently.”

The sales figures are from SoundScan, with rankings based on new product. Total sales, which includes older catalog items, are also noted.

Sony Music

(new releases 17.46% market share, total sales 16.57%)

Columbia

When everyone else is cutting back, Chairman Don Ienner is adding a new promotional staff and starting a new label imprint, tentatively called C2. That confidence follows a year in which the label had four of the 15 top-selling albums (Will Smith, Savage Garden, Lauryn Hill and the “Armageddon” soundtrack) and is now on a roll with the Offspring. Though Ienner’s moves are against the tide, critics are hard to find. With a 7.57% market share, Columbia was the nation’s No. 1 individual label for the year.

Biggest 1998 seller: Will Smith’s “Big Willie Style,” 3.4 million. Number of albums in the year’s Top 200 sellers through Dec. 13: 14.

Epic/550 (incudes the Work Group)

Celine Dion, with three albums in the year’s final Top 200, would make any label look good by herself. Though Pearl Jam failed to rebound to its multi-platinum status, the label registered solid numbers with Korn, “Godzilla” and “Ally McBeal.” Polly Anthony continues to gain fans as president of the combined labels. The Work Group has key albums coming from Fiona Apple and Jamiroquai, though 1999 could also include renegotiations with label heads Jeff Ayeroff and Jordan Harris, whose deal expires in a year.

Biggest seller: Celine Dion’s “Let’s Talk About Love,” 5.7 million. Top 200 albums: 14.

WEA

(current 17.29%, overall 18.22%)

Atlantic

After ruling as the No. 1 label for new releases in 1997 with 8.13% market share, Atlantic (which includes much of Curb’s country roster, including LeAnn Rimes) slipped to 6.42% this year. Still, continued strength from Matchbox 20’s 1997 debut and strong showings from Brandy and the “Dr. Doolittle” soundtrack kept co-chairman Val Azzoli and his staff well regarded. And the year-end splash of Jewel’s “Spirit” takes the label into 1999 with a rush.

Biggest seller: Matchbox 20’s “Yourself or Someone Like You,” 3.1 million. Top 200 albums: 13.

Elektra

After a year of rumors that Sylvia Rhone would be lured away by Universal, the highly prized chairman and CEO seems to be staying put--for now--at Elektra, where she captains a varied roster of successes including rock’s Third Eye Blind, hard-rock dependables Metallica and R&B; supergroup Levert, Sweat & Gill. And a seven-month commitment to the debut of hard-edged rocker Vast is starting to pay off. On the so-so side, Natalie Merchant’s “Ophelia” is still under 1 million. The year ends on a strong note with Busta Rhymes’ “Extinction Level Event.”

Biggest seller: Third Eye Blind’s “Third Eye Blind,” 1.6 million. Top 200 albums: 10.

Warner Bros. (Warner Bros., Reprise, Maverick)

Phil Quartararo’s first full year as president after coming from Virgin was strong, with the “City of Angels” album, Madonna’s “Ray of Light” and Barenaked Ladies’ left-field breakthrough. The big challenge: maximizing the sales potential of Alanis Morissette’s new album. The Bunny’s Burbank offices are still widely seen as a site of uncertainty, especially in light of another round of layoffs that saw marketing vice president Jon LeShay--a key Quartararo hire--shown the door after just months on the job.

Biggest seller: “City of Angels” soundtrack, 3.9 million. Top 200 albums: 18.

EMI

(current 13.81%, overall 13.12%)

Capitol

Gary Gersh and his alternative-rock cred are out, Roy Lott and his Arista pop marketing background is in. Will the Tower finally get the make-over many have felt it’s needed for years? Garth Brooks’ monstrous numbers from Nashville and the Beastie Boys’ smash “Hello Nasty” gave the company solid figures, and the Gersh-shepherded Marcy Playground and Everclear both became modern-rock staples with sales around the million mark. But mainstream pop and R&B;/hip-hop--the hottest-selling sounds--are still absent at Capitol.

Biggest seller: Garth Brooks’ “Double Live,” 3.2 million. Top 200 albums: 11.

Virgin

With new leadership team Ashley Newton and Ray Cooper in a learning mode after arriving from England, high-profile Virgin continued to be viewed around the industry as an underachiever. Two Spice Girls albums totaled more than 3.6 million and Janet Jackson’s “The Velvet Rope” sold steadily. But the failure of the Smashing Pumpkins’ “Adore” to reach the million mark was a big blow.

Biggest seller: Spice Girls’ “Spice World,” 2.3 million. Top 200 albums: 9.

Priority

Bryan Turner’s hip-hop upstart continues to be one of the industry’s biggest winners, outperforming major majors. If Capitol Nashville was treated as a separate company (as it was in 1997 figures), Priority--with 3.77% U.S. market share--would rank over Capitol and Virgin as EMI’s top U.S. division, with Master P’s No Limit stable leading the way.

Biggest seller: Master P’s “MP Da Last Don,” 1.9 million. Top 200 albums: 8.

BMG

(current 14.31%, overall 12.13%)

Arista (includes Bad Boy, LaFace)

Clive Davis’ juggernaut slowed a bit in ‘98, primarily due to less new product from Sean “Puffy” Combs’ Bad Boy. And a sluggish start by Whitney Houston’s first non-soundtrack album in eight years makes for a disappointing holiday season. Still, the Arista formula of diva stars and explosive label deals remains solid. Coming in February: the much-anticipated return by La Face’s TLC.

Biggest seller: Usher’s “My Way,” 2.5 million. Top 200 albums: 13.

RCA (includes Loud)

Would you believe rival executives are actually saying nice things about RCA? After years of floundering, there’s a sense that the venerable company is building a foundation with pop phenoms Natalie Imbruglia and ‘N Sync, continued strength from the Dave Matthews Band and growing momentum for young rock band Eve 6. Meanwhile, Loud, which last year gave RCA its biggest seller in the Wu-Tang Clan, this year provided a million-seller in Big Punisher.

Biggest seller: ‘N Sync’s “ ‘N Sync,” 3.7 million. Top 200 albums: 10.

Zomba (includes Jive, Volcano)

Jive’s Backstreet Boys had the year’s third-biggest album, helping offset a slow start for R. Kelly’s much-anticipated “R.” And Volcano is now being run by management powerhouses Cliff Burnstein and Peter Mensch, with an album by hard-edged Tool due in 1999.

Biggest seller: Backstreet Boys’ “Backstreet Boys,” 5.3 million. Top 200 albums: 5.

PolyGram

(current 12.99%, overall 13.82%)

A&M;

A sad end to one of the industry’s keystones, which will be folded into Universal’s Interscope group: It had no million-sellers in 1998, and its current top release, Sheryl Crow’s “The Globe Sessions,” is losing momentum after just three months in the stores.

Biggest seller: “The Players Club” soundtrack, 890,000. Top 200 albums: 2.

Island

A similar situation to A&M;, as the onetime leading independent is set to be absorbed into Mercury under the new Universal world order. On top of that, its franchise act U2 is set to shift to Interscope.

Biggest seller: U2’s “Best of U2: 1980-90,” 773,000. Top 200 albums: 5.

Mercury (includes Mercury Nashville, Def Jam, Motown)

Danny Goldberg relinquishes the helm with mixed notices. Nashville-released Shania Twain soared in country and pop and Def Jam’s Jay-Z and DMX were two of the year’s big hip-hop arrivals. But Mercury proper had nothing to follow up last year’s Hanson explosion--in fact, other than three Hanson titles, no Mercury pop or rock albums were among the year’s Top 200.

Biggest seller: Shania Twain’s “Come On Over,” 4.5 million. Top 200 albums: 13.

Universal

(current 10.84%, overall 10.44%)

MCA

The eye of the Universal hurricane, MCA quietly put together a nice year and earned respect for President Jay Boberg. K-Ci & Jo Jo paved the way, MCA-distributed Mojo Records’ Cherry Poppin’ Daddies scored a million-seller out of the swing revival and Semisonic and Blink-182 grew into modern-rock stalwarts.

Biggest seller: K-Ci & Jo Jo’s “Love Always,” 2.3 million. Top 200 albums: 12.

Geffen (includes DreamWorks and Outpost)

See A&M.; The home of Guns ‘N Roses and Nirvana plays out its last days before virtual assimilation into Interscope. Rob Zombie’s solo debut is approaching the million mark, but Hole’s “Celebrity Skin” is stalling. DreamWorks impressed critics with Eels, Elliott Smith and Rufus Wainwright but failed to reach many consumers.

Biggest seller: Rob Zombie’s “Hellbilly Deluxe,” 976,000. Top 200 albums: 3.

Interscope

Jimmy Iovine, Ted Field and Tom Whalley are being handed a huge task as West Coast anchors of the reorganized Universal Music Group, but it wasn’t exactly a banner year for their label, which dipped from 1997’s 3.65% market share to 2.76% this year, in part due to the end of its partnership with rap label Death Row. The bright spots: swing revivalist Brian Setzer and the hip-hop-fueled “Bulworth” soundtrack. The disappointment: the drop of Marilyn Manson’s “Mechanical Animals” from the Top 50. Firepower on the way: Nine Inch Nails, No Doubt and Smash Mouth.

Biggest seller: The Brian Setzer Orchestra’s “Dirty Boogie,” 1.5 million. Top 200 albums: 9.