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By finally closing their deal to buy Def Jam Records, executives at the newly merged Universal Music Group may have their final consolidation piece in place. But it came at a high price. |
Universal reportedly paid Def Jam founder Russell
Simmons $100 million for the forty percent of the company
that Universal did not already own. That's about $30 million more
than Universal had wanted to pay. Not a bad payday for Simmons, who
founded the legendary label with Rick Rubin back
in the Eighties and ran it out of a New York University dorm,
especially considering Simmons first sold sixty percent of Def Jam
for just $33 million back in 1993.
But the music industry is all about who's hot, and right now Def
Jam seems hot. Label sales jumped more than 200 percent from 1997
to 1998, as the company rolled out massive hits from
Jay-Z and DMX and led rap's march
into the mainstream. (Combined, the two hardcore acts sold more
than six million copies last year.)
Simmons is expected to remain chairman of Def Jam, while his No. 2,
Def Jam CEO Lyor Cohen, takes over running urban music at
Universal. In another change that reflects the deal's importance,
Universal's recently merged Island-Mercury group will now be called
the Island-Def Jam group.
Despite Def Jam's hot streak, there are some causes for concern at
the label. Longtime act and rap pioneers Public
Enemy recently left the company, with leader Chuck
D badmouthing Def Jam and its inability to promote the
group. Meanwhile, Def Jam's rap diva Foxy Brown is
battling weak sales. Her much anticipated release, Chyna
Doll, did debut at No. 1 four weeks ago, but since then the
album has steadily slid down the charts. It's currently at No. 16.
She's also reportedly unhappy with her current management team. Def
Jam releases by Redman and Method
Man also sold disappointingly last year.
As for Jay-Z, the rapper has clearly been a windfall for Def Jam.
But the truth is Jay-Z is actually signed to Roc-A-Fella Records,
which has a distribution deal with Def Jam. That means Def Jam
doesn't pocket nearly as much money on every Jay-Z record sold, and
it means if Roc-A-Fella's deal with Def Jam expires, Jay-Z could
one day leave.
ERIC BOEHLERT(February 26, 1999)