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Cuts Laying Label Era To Rest - Arista
submitted by: Lisa D.
source: Billboard
Date: January 16, 2004
New Industry Economics Spell End to Reid Reign
By Gail Mitchell
The ouster of Antonio "L.A." Reid at Arista Records is one more death knell to an era when free-spending label execs made big bets on rising stars in hopes that mega-album sales would lead to huge payoffs.
Reid is highly regarded in the industry and known to possess an astute eye for talent. But in an era of declining sales, a tough economy and corporate mandates to cut costs, his spendthrift style was out of step with the times.
BMG is declining to comment on mounting bets that Arista may merge with RCA/J or Jive following the completion of the BMG/Sony Music merger.
"Any discussion of the post-merger management structure of Sony BMG is premature," BMG said in a statement. "No integration plans or discussions have taken place as yet."
Reid was named Arista president/CEO in July 2000, succeeding founder Clive Davis, who now heads the RCA Music Group.
Prior to that, Reid was co-president of Atlanta-based LaFace Records with partner Kenneth "Babyface" Edmonds.
BMG bought and later incorporated the label into Arista. At the time, it was home to such acts as OutKast, TLC and Usher.
During his nearly four-year tenure at Arista, Reid achieved notable sales success with albums from Avril Lavigne ("Let Go") and Pink ("M!ssundaztood").
Ironically, his ouster comes as one of the label's major success stories is still unfolding. OutKast's double-CD "Speakerboxxx/The Love Below" is up for multiple Grammy Awards and has sold 3.3 million units, according to Nielsen SoundScan.
Reid also inked several label joint ventures with heavy-hitting production operations, including Jimmy Jam & Terry Lewis' Flyte Tyme, Arista senior VP Jermaine Dupri's So So Def and the Neptunes' Star Trak.
But Reid also endured heavy criticism. He raised eyebrows with his $100 million deal with Whitney Houston, as well as his signing of Boyz II Men. Much-touted new albums by Houston, TLC, Aretha Franklin, Santana and Pink did not perform as expected.
While the U.S. industry was down 3.6% in overall album scans last year, Arista was down 11.1% for the year. According to reports, the label lost as much as $110 million in 2003.
The end of the era of big-spending label execs was heralded by the ouster of Tommy Mottola as head of Sony Music two years ago. His replacement, former TV executive Andrew Lack, has been reining in costs ever since.
With the merger, both companies are looking for further cost cuts and, just as likely, a change in corporate culture. Nonetheless, Reid will be missed.
"It's a shame to see Reid go," says Terry McBride, who manages such artists as Sarah McLachlan and Dido. "He's a very likable and talented person." McLachlan's "Afterglow" has sold 1.6 million units to date, with Dido's "Life for Rent" close behind at 1.4 million, according to Nielsen SoundScan.
Up-and-coming acts like Kelis and Anthony Hamilton could be affected by Reid's departure. "L.A. Reid championed the project even before we signed," Hamilton's manager Eli Davis says.
Reid's ouster coincides with the exit of senior VP of marketing and artist relations Mark Shimmel.
The company stated that COO Michael Smellie will oversee Arista's executive management team "until further notice." Executive VP/GM Larry Mestel will continue to oversee the label's day-to-day operations.
Additional reporting by Ed Christman in New York and Margo Whitmire in Los Angeles.
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