By Steve James

NEW YORK(Reuters) - It's a battle between bottom-line corporate interests and a rugged, go-it-alone individual for control of one of America's most successful record labels.

And the struggle between detached efficiency and creative spontaneity, between youth and age, even between rock and rap, could be decided early next week.

That's when Clive Davis -- legendary producer of hitmakers such as Barry Manilow, Janis Joplin, Whitney Houston and Aretha Franklin -- sits down with executives of BMG to determine his future as head of BMG-owned Arista Records.

According to reports, BMG wants to replace him with a hip, young rap executive while 66-year-old Davis wants to see out the last seven months of his contract at the label he founded 25 years ago and sold to BMG, a unit of German media group Bertelsmann AG.

At issue is said to be BMG's wish to buy LaFace Records, a successful R&B/rap label distributed by Arista, and replace Davis. BMG chief Strauss Zelnick reportedly wants to replace Davis with Antonio "L.A." Reid, who co-owns LaFace with fellow producer Kenneth "Babyface" Edmonds.

For more than a week, BMG has refused to confirm or deny it was buying LaFace or intended to replace Davis, still riding high after more than 40 years in the pop music business.

His latest success is the Carlos Santana comeback album "Supernatural," which Davis produced with the legendary guitarist. The album spent three weeks at No. 1 on Billboard's Top 200 chart, marking Santana's first No. 1 album since 1970's "Abraxas" and "Santana III" in 1971.

Davis was also behind the recent new album reunion of the Eurythmics and wooed the singer who used to be called Prince to Arista to record his new album "Rave Un2 the Joy Fantastic."

One of Davis' long-time producer friends, Atlantic Records Senior Vice President Arif Mardin, mocked BMG's position.

"Company rules for retirement should be flexible when it comes to a genius like Clive Davis," he told Reuters. "Clive is one of the rare people in the business who's a music person."

Mardin noted he himself was 67 and had just produced Jewell's Christmas album. "And my boss, (Atlantic chief) Ahmet Ertegun, is still there! Young executives should look up to people like Clive and emulate him."

For his part, Davis was welcomed back from a European trip with a champagne party by Arista employees this week. The company said in a statement that he "fully intends to run a major music entertainment company under any scenario, as the calls and very attractive offers are flooding in."

"I have no plans whatsoever to retire," Davis said in a statement. "I will be weighing BMG's offers to me, which involve both preserving my legacy and, ironically, major support for a new public media company that I would be forming. I fully intend to live up to my contract ending June 30, 2000."

Davis, an attorney himself, has assembled a legal team for his showdown with Zelnick expected early next week.

The tabloids in New York, home to pop music's hit factories of Tin Pan Alley in the 1950's, have salivated over the story.

"The execs in Germany believe in a distinct succession plan as a matter of corporate responsibility," one insider told the New York Post. "Clive... has been running the company for 25 years and still has not named a successor."

Another source told the Post that contrary to what BMG has said, Davis had indeed asked BMG's European head Richard Griffiths to line up a management team to succeed him at Arista.

But the source said BMG quashed the effort because Zelnick thought Griffiths was too independent and powerful.

"BMG has been saying throughout the whole battle that Clive is a control freak -- but he tried to appoint someone," the pro-Davis insider said.

Still, the newspaper quoted another music industry source as saying: "Clive has always run Arista as a one-man show. This man refuses to let go. He wants two things -- to be left alone and to be paid absurd amounts of money."

The whole situation has prompted several of Davis' musical proteges to publicly defend him.

Manilow blasted BMG's "mean-spirited, disrespectful actions," and said in a statement: "It makes no sense to oust a talent like Clive. With his proven record of success, it would seem that most companies would be begging Clive to stay instead of using an arbitrary policy regarding age to oust him."

And Houston, whose recording contract is reported to include a get-out clause if Davis leaves Arista, scolded BMG. "It hurts me to think he's being treated with disrespect," she said of Davis. "He deserves total honor and respect from everyone, including BMG. And as far as his age is concerned, he's younger (at heart) than me, so maybe I should be retired."

Reuters/Variety