By LARRY KANTER
The music business is the only business Amy Welch has ever known. Fresh out of college, she took an internship at PolyGram Records and spent the next decade bouncing around four other labels, hobnobbing with such artists as Ben Folds Five and the Chemical Brothers, and eventually landing in the publicity department of the West Hollywood office of Island Records.
Now, Welch faces a horrifying prospect: a job in the straight world.
“It’s a little intimidating. I’ve had to wear a business suit maybe twice,” said the 32-year-old publicist, who was among the hundreds of employees recently let go in the wake of Seagram Co. Ltd.’s $10.4 billion acquisition of PolyGram from the Dutch conglomerate Philips NV. “But with the labels shrinking, the number of positions is shrinking. There really aren’t that many places to go. Maybe it’s time to grow up.”
The music industry may be as fast-paced and competitive as any other, but it has always been a world apart. After all, where else can you listen to music all day long, stay out club-hopping until dawn, rub elbows with rock stars, show up at the office tie-less at 11 a.m., and still legitimately call it work?
That’s a question resonating through local record-business circles, as Seagram begins to consolidate its sprawling Universal Music Group with PolyGram’s music holdings. The restructuring already has led to the shuttering of A & M; Records, resulting in the loss of 170 jobs in Los Angeles, and a severe downsizing at Geffen Records, where 110 employees were dismissed. All told, some 3,000 employees worldwide will be let go as Seagram attempts to unload enough assets to save $300 million a year.
As in most industries, record labels regularly undergo structural changes after a new owner takes over. But never before has the industry witnessed so sweeping a reorganization. For many, it’s like a desperate game of musical chairs: The music has stopped, and there aren’t nearly enough seats.
“There’s no place for a lot of these people to go,” said Scott Becker, a longtime industry observer and editor of “We Rock So You Don’t Have To,” a recently published history of alternative music. “They may never work in the music business again.”
Few of the downsized workers are likely to wind up at the unemployment office, at least not just yet. Universal is providing a fairly generous severance package said to be 3.75 weeks pay for every year served giving most employees time to consider their next move. But whether there will be any room for them in the music industry is an open question.
Many of them have never worked anywhere else. Drawn to the business by their passion for music, their career tracks often begin as interns right out of college and then on to a full-time job at a major record label. Once there, it’s not uncommon to go from label to label, picking up experience, responsibility and pay raises along the way.
“It used to be that when you got laid off you just went to another label. But the business isn’t like it used to be,” said Liz Morentin, who was fired from the publicity department of A & M; Records last month. Though she would prefer to remain in music, Morentin plans to pursue opportunities in film, event planning and even corporate P.R.
Welch also is contemplating a career outside of music. Like many of her peers, she is a rabid music fan who spent much of her energy shepherding the careers of underground, little-known artists. She may continue doing that, as an independent publicist, but she also plans to take advantage of the outplacement services Universal is offering.
The layoffs “have left a lot of us pretty gun shy” about the music industry, Welch said. “I don’t know much about the corporate world, but I’m definitely curious.”
Robert Bellano, managing director of cFour Partners/ITP, an executive search firm in Santa Monica, has seen a big spike in the number of job seekers with music-industry experience. He believes that many of the downsized workers particularly those with marketing, promotion and distribution skills will have little trouble finding work in the corporate world, particularly in entertainment and new media.
“They bring a keen sense of how to distribute a product,” Bellano said. “They bring a keen sense of street smarts. They understand promotion. They understand how to move fast.”
Far less certain are the fates of those on the creative side, particularly for those involved in artist-and-repertoire work who make their living by scouring nightclubs in search of fresh talent a skill not particularly sought-after in corporate America.
“I certainly don’t feel secure,” said a young A-and-R executive who managed to survive the latest round of layoffs. “If I can’t stay at a record company, I’m not sure where I’ll end up. Our skills are kind of intangible.”
In addition to the thousands of employees being let go, at least 200 artists are expected to be dropped by their labels as well. Even record companies not actively restructuring are signing fewer bands and releasing fewer albums in an effort to control costs.
Rather than seeking out a slew of new artists, “we’re spending more time per act,” said Val Azzoli, co-chairman and co-CEO of the Atlantic Group, a New York-based division of Warner Music Group, which is owned by the media conglomerate Time Warner Inc. “What I’m trying to do is capitalize on our hits” artists like Jewel and Matchbox 20, both of whom sold in excess of 7 million albums.
In 1994, Atlantic released more than 150 albums; last year, the label released fewer than half that number.
Fewer releases mean less need for A-and-R types. But it also opens up a host of opportunities for independent labels. Many of the bands being dropped are experienced artists with an established fan base. While they may not be the million-sellers demanded by major labels, many can be counted on to sell 20,000 or 30,000 albums a year respectable numbers for a small, independent company with less overhead.
As a result, many indies are likely to go on a signing spree, and could emerge stronger as a result.
“There is going to be some opportunity out there to sign some bands,” said Kathy Koehler, spokeswoman for Silver Lake-based Epitaph Records, the punk-oriented label whose roster includes Rancid, Pennywise and Hepcat and recently lured Tom Waits from his longtime home at Island Records. “There are going to be artists who feel burned looking for someplace more artist-friendly.”
The presence of artists on the marketplace also opens things up for industry veterans with the entrepreneurial bug, said Larry Weintraub, an artist development executive who received his pink slip from A & M; last month.
Weintraub predicts a flurry of music-oriented start-ups in the months to come the direction in which he is leaning.
“I see huge selling potential and lots of great avenues on the Internet,” he said. “If you can find a way to sell 20- or 30,000 records, you can make money. I’ve learned a big chunk of this business and I know there’s a way to sell less and still make a profit until you get that surprise hit that can carry everything else.”
Nonetheless, most start-ups are headed for failure, and even the most dogged entrepreneurs never make it past their first or second year. In a shrinking industry, beset by competition from video games, satellite television and the World Wide Web, countless dreams are likely to go unrealized.
“People are going to have to look at what they do and reevaluate it,” said one executive whose future with a major label remains in limbo. “The coolness factor may go away. But there are other ways to make an honest living.”