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L.A. Reid Exits Arista

Label head leaves amid huge losses

January 14, 2004 12:00 AM ET

When Antonio "L.A." Reid took over the helm of Arista Records four years ago, it was framed as a generational passing of the torch, as he supplanted Clive Davis, the legendary exec who established and nurtured the label into a powerhouse. Though Reid cultivated his own new talent, breaking artists like Avril Lavigne and Pink, Arista lost a reported $100 million over the past two years, prompting his departure yesterday.

Reid got his start in the industry producing albums, and in 1989 he co-founded Atlanta-based LaFace Records with fellow producer Kenneth "Babyface" Edmonds. The label, a joint venture with Arista, launched the careers of TLC, OutKast, Toni Braxton and Usher. In 2000, parent company BMG bought out LaFace and made Reid CEO and president of Arista, which Davis (who that year reached BMG's required retirement age) had run for twenty-five years.

Davis went on to found J Records (also under BMG) and found success with newcomers like Alicia Keys, as well as the American Idol franchise. Though Arista continued to cultivate successful artists -- OutKast's latest album was the fifth best seller of 2003; Lavigne and Pink released the third- and sixth-best-selling records of 2002; and Alan Jackson, signed to Arista's Nashville division had the eighth best-selling record of 2002 -- the label has been hit particularly hard by the industry slump. The losses also fall during a period where BMG's market share for new albums was growing (from 17.02 percent in 2001 to 18.39 percent last year).

Part of the problem can be attributed to Arista stars whose sales under Reid failed to match those they posted years earlier. Reid re-signed Whitney Houston (a Davis discovery) to a reported $100 million contract in 2001; the first album she recorded under the new deal, Just Whitney, barely scratched into the Top Ten last year (at Number Nine) and is her worst-selling album to date, only reaching platinum status. And while OutKast proved positive last year, Pink's 2003 release, Try This, has so far failed to match the success of its predecessor; after two months in stores, the record is sitting at Number Ninety on the charts, selling just 13,000 last week.

BMG chief operating officer Michael Smellie will run Arista for the immediate future, though a permanent replacement has not yet been selected.

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