It's the beginning of the end for approximately 500 workers and hundreds of artists associated with the newly merged record giant, the Universal Music Group. Owned by the Seagram Co., Universal recently took control of international music powerhouse Polygram, which Seagram purchased last spring for $10.4 billion. As part of the unprecedented merger, fifteen affected record companies, including such familiar names as A&M, Geffen, Mercury, Motown and Island, are being drastically downsized and consolidated into four major label groups. The result is a sea of pink slips (the 500 expected this week are the first of an estimated 3,000 layoffs worldwide) aimed at label staffers from sales, marketing, publicity, A&R, publishing and every other department.

Artists are also on the firing line. Although many won't be notified for weeks to come, in recent months Universal executives have been poring over their label rosters, determined to keep only essential acts. And while obvious stars such as Sting, Sheryl Crow, U2, Hanson, Beck, Bon Jovi and Hole aren't going anywhere, dozens of others are anxiously awaiting word. Sources close to labels suggest acts once considered borderline, such as Tonic, Monster Magnet, Patty Griffin, Remy Zero and PJ Harvey, appear to have made the cut. However, according to sources, those still facing an uphill battle to retain their major label status include some critically acclaimed acts who've struggled commercially, such as Del Amitri, Lisa Loeb, Weezer, Tracy Bonham, Tripping Daisy, Steve Poltz, Roni Size and Orbit, among others.

There also seems to be an awful lot of artist jockeying going on between labels behind closed doors. Almost as soon as the blockbuster merger was announced, U2 made a dash from its longtime home at Island to Universal's Interscope Records. That got Sting to thinking about leaving A&M for another label within the Universal family. Why? Because according to his manager Miles Copeland, A&M, which will be just a shadow of its former self once the consolidation is completed, "no longer exists -- period." No decision has yet been made as to who will release Sting's new album, due this spring. Meanwhile, Boyz II Men and 98 Degrees, two of Motown's biggest acts, have bolted for Universal Records. And sources report fellow Motown artists Diana Ross, Queen Latifah and Brian McKnight all want to leave the shrinking label and find a new home within Universal.

And then there's the uncertainty swirling around Def Jam Records. As part of the master consolidation plan, Universal was set to purchase the forty percent of the legendary rap label it didn't already own, and was willing to pay Def Jam founder Russell Simmons approximately $70 million for the remaining stake. But sources say he's demanding $100 million, which, if true, is an extraordinary amount, considering that when Simmons sold sixty percent of the label back in 1993, the sale price was $33 million. Annoyed Universal execs are balking. Part of the problem may be that if Simmons agreed to sell the rest of Def Jam, Universal bosses have made it clear the rap impresario would have virtually no role in running the company he helped build. Meanwhile, Universal was hoping to tap Def Jam's No. 2 executive, Lyor Cohen, to run Universal Records. But with the Def Jam deal on ice, Cohen's not going anywhere.

In other words, the headaches may just be beginning. Or, as one surviving Universal executive put it, "I'll be happy if I never live to see another label merger."

ERIC BOEHLERT
(January 21, 1999)