I.B. BAD ON THE YEAR IN MUSIC

CHANGE IS GONNA COME: The scene was set in 2011, when Lucian Grainge’s UMG acquired EMI’s recorded music assets, while Marty Bandier’s Sony/ATV added EMI Music Publishing. Once those deals were approved this year, a whirlwind game of musical chairs ensued, with labels, artists and executives shifting from one company to another. In the executive sector, some but by no means all of this transition was merger-related. Among the rainmakers who made unexpected moves, vertical and otherwise, were Steve Barnett, Lyor Cohen, Joel Klaiman, Roger Faxon, Charlie Walk, Todd Moscowitz, Big Jon Platt, John Janick and Cameron Strang. That was just the tip of the iceberg in a wild and crazy year.

UMG + EMI: Lucian Grainge has made Universal Music his own during his two-year reign, putting an all but obsessive emphasis on A&R, relocating company headquarters to Santa Monica, making plans to open an office in Silicon Valley and, in what presently stands as the defining element of his legacy, taking ownership of EMI’s recorded-music operation for $1.9b. But this game-changing victory didn’t come quickly or without sacrifice.

After winning the auction in Nov. 2011, UMG then entered into a prolonged and frustrating regulatory process with the European Commission, finally taking formal possession of the prize this September. The cost of the merger turned out to be considerably greater than the dollar amount, as the EC demanded and got significant concessions, starting with EMI’s flagship U.K. label Parlophone and its roster, including multimillion-selling rock band Coldplay and the Pink Floyd catalog (which sold 770k albums, including TEA, in the U.S. this year) on Harvest. Total divestitures are valued at $600m, and if UMG can sell off these assets at this figure or more, the deal will look even better. Not surprisingly, Grainge refused to even discuss parting with the crown jewel, the Beatles catalog (984k albums, including TEA, this year in the U.S.).

When the smoke cleared, the Universal empire had grown even more colossal, with the next order of business being the integration of the expanded company’s numerous pieces into a smooth-running machine.

Soon after the merger was finalized, Grainge chose a fellow Englishman, the highly regarded Steve Barnett, to lead EMI in the U.S.—now known as the Capitol Label Group. According to the new way CLG is calculating its marketshare, using overall plus TEA, the group has registered 6.7% year-to-date, with Katy Perry’s perennial chart hit Teenage Dream moving another 607k and Coldplay’s 2011 LP Mylo Zyloto selling an additional 496k. CLG also placed three Now compilations in the Top 50.

The former Columbia Co-Chairman/COO, who started his new job in late November, now oversees all of CMG’s domestic businesses, including Blue Note, Caroline, Astralwerks and the Christian Music Group, as well as flagship labels Capitol and Virgin. Barnett is expected to elevate Capitol EVP/GM Greg Thompson, who will be moving to L.A., where label President/A&R head Dan McCarroll has already taken up residence. While it now appears that there will be sizable job losses in duplicated services, the core A&R and marketing teams will be significantly expanded. And EMI’s U.S. company will be situated in the Capitol Tower, where it belongs.

As for the East Coast Uni labels, Republic and IDJ, ruler Barry Weiss has taken to heart Grainge’s mandate to beef up A&R, bringing in Joie Manda to head Def Jam, while adding The-Dream, Dallas Austin, Steve Yegelwel and Matt Galle to an already pumped-up IDJ creative team. IDJ topper Steve Bartels has led the company to #6 with 4.9% behind Justin Bieber (#5, 1.14m), Rihanna (whose 2011 LP Talk That Talk is #32 on 534k, while the new Unapologetic is at 369k and rising fast), Rick Ross (#40, 478k) and 2 Chainz (#47, 428k). But the biggest story at IDJ is Frank Ocean, whose Channel Orange is both a building hit (now at 396k) and a Grammy favorite, as is his growing single “Thinkin Bout You.”

Monte Lipman’s Republic showed a knack for breaking acts—including Gotye (#17, 689k), Of Monsters and Men (#35, 497k) and PSY (now at 3m singles)—and selling tonnage on superstars Taylor Swift (#2, now at 2.38m), Nicki Minaj (#16, 749k) and Drake (#19, 681k). That string of successes has vaulted the label to #2 in the 2012 marketshare race with a robust 8.5% on the new-release side, putting it behind only Columbia. Republic will continue to benefit from its array of associated labels, including Scott Borchetta’s Big Machine, Slim and Baby’s Cash Money, Tom Whalley’s Seven Four (whose Soundgarden LP is 125k after four weeks), Rick Rubin’s American Recordings (Avett Brothers, 225k), and Scooter Braun and Bieber’s Schoolboy (home of PSY and IGA’s Carly Rae Jepsen).

John Janick, the handpicked choice of Jimmy Iovine to oversee IGA as President/COO—and Iovine’s possible successor at some point in the future—is now in full control at the label group, with all key execs reporting to him. Vice Chairman Steve Berman will continue to play a major role in leading the company, which is #3 in new-release marketshare at 6.3%, its biggest sellers Madonna (#33, 521k), the breaking Kendrick Lamar (#37, 481k), Lana Del Rey (#46, 437k) and Van Halen (#51, 409k). And in a surprising move, Janick has reportedly signed longtime promotion head Brenda Romano to a new deal.

In the long run, UMG-EMI may well have north of 36% in the U.S., but at this point, the addition of EMI’s post-merger percentage, less than four months’ worth, brings the combined companies to 31.1% overall (31.7% with TEA), not quite a dominant figure, but enough to put Universal back on top.

SONY MUSIC: During his first full year as commander in chief, Doug Morris led the venerable music group to one of the best years in its storied history. The ageless wonder galvanized Sony and its not-so-collegial sister, the former BMG, into an efficient, responsive operation, while putting strong hit-making teams in place and consolidating backroom functions. Morris’ plan worked like a charm, as Sony Music led mighty UMG in overall marketshare for most of 2013 and was overtaken only after the EMI acquisition was finalized, which added the British company’s post-merger marketshare to the Universal total.

The primary contributor to Sony’s impressive 30.4% overall share (29.3% with TEA added) was Columbia, far and away the #1 label with a 10.3% year-to-date share, as Rob Stringer and, until his departure, Steve Barnett consistently put big numbers on the scoreboard. The label rode the Adele phenomenon for the second straight year, taking 21 past 10m domestically—4.26m this year alone—while breaking One Direction wide open (the boy band’s two albums are the year’s #3 and #9 albums at press time, with collective sales of 2.38m) and doing solid numbers with critically acclaimed artists like John Mayer (#34, 516k), Bruce Springsteen (#39, 479k), Jack White (#49, 420k), Bob Dylan (224k) and The Shins (216k).

On the heels of Barnett’s exit, Stringer tapped red-hot Republic promotion chief Joel Klaiman as EVP/GM, reporting directly to Stringer, in a significantly expanded new role for the savvy exec. Meanwhile, at Peter Edge and Tom Corson’s surging RCA, Joe Riccitelli recently inked a new deal as that label’s EVP/GM. The Riccitelli/Klaiman combo gives Sony Music two of the top hitmakers in the business, according to many observers.
Contributing to RCA’s 5.4% (tying the label for #4 with Atlantic) were albums from Whitney Houston (#10, 877k), P!nk (#14, 776k), Kelly Clarkson (#30, 536k), Dave Matthews Band (#42, 465k) and Usher (#45, 438k), along with strong new releases from Alicia Keys and Ke$ha.

And at long-struggling Epic (1.6%), L.A. Reid has been reshuffling the deck in search of a winning hand, and most believe it’s only a matter of time before the vaunted creative exec duplicates the success he had at Arista and IDJ with his current label. Reid and #2 Mark Shimmel will have another source of potential hits following the arrival of Sylvia Rhone, whose Vested in Culture imprint will go through Epic.

Two other major players in the Sony world are the highly respected Simon Cowell and his Syco joint venture, which yielded One Direction this year, and Kemosabe, launched by mega-producer Dr. Luke, which insiders predict will have a massive 2013.

WARNER MUSIC: After Len Blavatnik failed in his attempt to get EMI, many expected him to throw in the towel and sell off the company piece by piece. Instead, the Russian billionaire turned his attention to lobbying the EC against the merger and expanded the authority of CEO Stephen Cooper. A turnaround specialist, Cooper may be a music business novice, but he’s acted decisively nonetheless, forcing out Lyor Cohen, his chief rival (insiders claimed their relationship was like oil and vodka, as Cohen might put it), reorganizing the company into three divisions and completing a refinancing that reduced the cost of borrowing by 40%, saving the company around $50m a year.

The refi puts Warner in a better position to make acquisitions, potentially including Parlophone, backed by Blavatnik’s deep pockets. Such a move would dramatically strengthen WMG’s European operations, while also potentially boosting Warner’s share in the U.S. by virtue of the addition of Coldplay.

But Cooper’s most significant move may well turn out to be the anointing of Cameron Strang as the company’s heir apparent, in recognition of his rapid turnaround of Warner/Chappell, which he transformed into a creative force while also boosting the bottom line. In rapid succession this fall, Strang, who’d risen to prominence as an indie entrepreneur, was given responsibility for Rhino and for Warner Bros. Records, though he wasn’t given all of WMG, as had been rumored; Atlantic remains in the hands of Craig Kallman and Julie Greenwald.

WBR’s share has slipped to 2.8%, with its biggest album The Black Keys’ 2011 release El Camino (#22, 615k on the year), on Nonesuch. Strang’s arrival resulted in the immediate departure of Co-President/CEO Todd Moscowitz, a Cohen protégé, while every remaining label exec, including Chairman Rob Cavallo and Co-President/COO Livia Tortella, now reports to the new boss.

It remains to be seen whether Greenwald (another former Cohen lieutenant) or Kallman will stick around for the long haul at Atlantic, whose 5.4% share is practically double that of WBR, with Bruno Mars’ second album hitting this week. But Greenwald has supposedly signed a one-year extension, giving her time to decide whether she wants to stay at Warner. It wouldn’t be a shock if both Greenwald and Moscowitz were to join Cohen in his new venture, or if Kallman makes the move to Sony or UMG when his deal is up. At this point, the only certainty is that further changes are in store for the company and its executives.

PUBLISHING: As the longtime head of EMI Music Publishing, Marty Bandier became accustomed to holding the #1 position in marketshare, and now, with EMP added to his Sony/ATV, he’s back on top, surrounded by his capable team of Jody Gerson and Danny Strick. Universal Music Publishing, now headed by Evan Lamberg, is #2… After stepping down from EMP in June after 17 years, most of them spent working under Bandier, Big Jon Platt assumed the top creative post at Warner/Chappell, and with Cameron Strang getting both Warner Bros. Records and Rhino, it’s quite conceivable that Platt could take reins of the pubco… Hartwig Masuch has built BMG Rights Management into a major pubco, and he’s said to be eager to add major catalogs to the company’s holdings, starting with making a run on Parlophone. And Larry Mestel’s relatively recent entry Primary Wave continues to be a presence

NASHVILLE: Music City’s power brokers flexed their muscles this year. Mike Dungan left Capitol Nashville to succeed Luke Lewis as the head of UMG Nashville (biggest seller: #6 Lionel Richie, with 1.05m), only to be reunited with his EMI roster (led by #8 Luke Bryan, with 967k) following approval of the merger, winding up with a 1.8% marketshare, which will likely increase in 2013. Gary Overton kept Sony Music Nashville (biggest seller: #7 Carrie Underwood, with 1.04m) on top with 2.8%, making it the #8 label group. Big Machine/Republic Nashville’s Scott Borchetta had the year’s biggest debut with Taylor Swift’s Red, the best-selling album released this year by a country mile. And Jason Aldean, on RED-distributed Broken Bow, had another big year, his two albums totaling 1.4m).

TOURING: Live Nation had a huge 2012, handling such lucrative tours as Madonna, Roger Waters, Dave Matthews Band, Van Halen, Coldplay, Barbra Streisand, Jason Aldean and Brad Paisley. Chief rival AEG Live promoted Kenny Chesney with Tim McGraw (in partnership with the Messina Group) and Justin Bieber. Cirque de Soleil’s Michael Jackson The Immortal, behind only Madonna in the States this year, was promoted by Cirque itself. While the Jackson tribute grossed $200m worldwide this year, production expenses were said to be gigantic. On the agency side, The clients of Rob Light’s CAA included Bruce Springsteen (booked in conjunction with Barry Bell), Bieber, Van Halen and McGraw; Peter Grosslight’s William Morris Endeavor repped Waters, Paisley and the Red Hot Chili Peppers; the Marty Diamond-led Paradigm handled Dave Matthews Band and Coldplay.

THE NEXT GENERATION: Scooter Braun has taken the talent he’s wrangled—including Justin Bieber, Carly Rae Jepsen and The Wanted—and masterfully spread it around the individual UMG labels, with the explosive success of PSY causing those skeptics who doubted that the dynamic young entrepreneur was the real deal to eat their words. Braun is part of the youth movement that is now beginning to make deep inroads into the mainstream music business. Joining Braun in the next generation of movers and shakers are Interscope’s John Janick, IDJ’s Brandon Creed (who manages Bruno Mars) and Karen Kwak, Troy Carter (Lady Gaga, John Legend), Jordan Feldstein (Maroon 5, Robin Thicke), Roc Nation’s Jay Brown (Rihanna, Shakira), Dave Holmes (Coldplay) and Warner Music’s Cameron Strang.

LEGAL: John Branca is having a mega year as caretaker of the Michael Jackson estate, while Joel Katz had a hand in a number of the highest-profile executive negotiations, and Aaron Rosenberg rose to prominence. Meanwhile, Peter Paterno, Don Passman and Eric Greenspan, three respected veterans, continued to lead their respective firms. The low-key Steve Shapiro and Peter Lewitt continued to play a major role. And Allen Grubman, the Godfather, once again had his fingerprints all over the music business.

DIY: In Lyor Cohen’s first post-Warner move, the record mogul turned would-be entrepreneur took up residence in the N.Y. offices of private equity firm TOMS Capital, headed by another of his billionaire buddies, Israeli hedge-fund manager Noam Gottesman, where he’s in the process of forming a talent management company that will reportedly serve as an intermediary between artists and their labels. While Cohen wants to involve artists in his new deal, he’s reportedly looking for others to be their managers. Rumor has it, for example, that he’ll pick up Kanye West for management while also bringing in West’s manager, Izzy Zivkovic. Is Cohen trying to steal a page from Irving Azoff’s playbook by rolling up management companies?

Continuing the remarkable second act of his career, former major label exec Daniel Glass has enjoyed enormous success this fall with Mumford & Sons’ sophomore album, Babel, one of the year’s best-selling releases (#4, 1.24m) and the biggest RED-distributed album ever. Glassnote’s deal with RED is up soon, and most expect the indie label’s next deal, with either Sony or UMG, to redefine the model. Talks are now taking place at the highest level, which will probably result in Glass getting an offer he can’t refuse.

In September, The Lumineers’ “Ho Hey,” on Scott Robinson and Paul Roper’s maverick Nashville label Dualtone (1.8m and counting) topped the Modern Rock chart, followed by Mumford & Sons’ “I Will Wait,” marking the first time a pair of indie records had ever held the top two spots at the format. That was just the beginning for “Ho Hey,” which is now a Top 10 song at Pop, an unprecedented crossover move orchestrated by promotion legend Richard Palmese, who has taken up residence inside Irving Azoff’s Front Line.

The Civil Wars, on Nate Yetton’s indie sensibility, won two Grammys and were nominated for two more on next year’s slate. Their highly anticipated second album is expected to hit in 2013.

PROMOTION: In the mainstream music business, if you don’t have a top exec like Steve Bartels, Greg Thompson, Joel Klaiman, Joe Riccitelli or the returning Charlie Walk to oversee your promotion activities, you’re playing the game at a distinct disadvantage. Even as the majors have focused on building their A&R teams and stockpiling rainmakers, old-school radio promotion has demonstrated its ongoing central role in building marketshare and profitability by its unparalleled ability to break records and fast-track artists’ careers. Much has changed in the music business in recent years; what hasn’t changed is that nothing sells records like radio.

DISTRIBUTION: Jim Urie’s UMGD and Darren Stupak’s SMD were once agin the dominant players in the field. In the indie-distribution sector, Bob Morelli and Alan Becker’s RED had a milestone year, racking up 5.2%, while INGrooves acquired Fontana from UMG, with Robb McDaniels leading the combined company.

DIGITAL: While iTunes remains the 800-pound gorilla in the digital music space, two of the most viable recent entries were launched by old-media powers: Sony and UMG’s VEVO (conceived by Doug Morris and led by Rio Caraeff) and iHeartRadio, a digital initiative from Clear Channel’s Bob Pittman and Tom Poleman. Thirteen years after the Napster revolution, which threatened the very existence of the music business, the remnants of the old mainstream have managed not only to survive but also to show renewed signs of life by adapting to the new realities.

TV: During its two “seasons” this year, The Voice has become increasingly popular, while significantly boosting the fortunes of Adam Levine and Maroon 5. The band scored the #10 album in Overexposed (834k), as well as two smash singles. The Voice has consistently pulled better ratings than season two of The X Factor, though the latter show’s ratings are improving leading up to this month’s finale. The judges’ panel was revamped, as pop divas Britney Spears and Demi Lovato (who’s rumored to be one and done) were paired with industry heavyweights Simon Cowell and L.A. Reid. American Idol, which returns for its 12th season in January, lost a sizable portion of its once-massive audience last year, but it still drew far more viewers than either of its challengers. Will this trend continue with new judges Mariah Carey, Nicki Minaj and Keith Urban? In its last two seasons, Idol yielded a pair of potential career artists in Scotty McCreery and Phillip Phillips—an achievement neither of its challengers can yet claim… Lest there be any doubt about the potency of music on TV, consider that the Grammys generated bigger ratings than the Oscars this year.

THE TOP DOG: A tsunami wave of chatter surrounds Irving Azoff's next major move, though no one has a clue what that might be. Will he buy or sell, expand or contract? Only Big Shorty knows for sure.

NAMES IN THE RUMOR MILL: Chris Blackwell, Richard Branson, Clive Calder, Clive Davis, Ahmet Ertegun, David Geffen, Berry Gordy, Goddard Lieberson, Jerry Moss and Mo Ostin.