The record industry was a few years into its decline when Lyor Cohen took over as the Warner Music Group recorded-music division's chairman and chief executive in 2004. Although Warner's roster contained some of the world's biggest pop stars, from Madonna to Metallica to the Red Hot Chili Peppers, Cohen saw music fans were switching from highly profitable CDs to $0.99 downloads. He was in a cost-cutting mood.
"You're stuck with a really funky industry that has lost its way," he told Rolling Stone at the time. "Our ability to bring enormous profitability is by signing really spectacular artists that sell numerous records. [It's] not having a huge and bloated infrastructure of ego. None of us are jetting around in private planes and we're not in back of limousines. This is blue-collar support of our artists... and we feel like the digital transformation of this industry [brings] a great opportunity for us long-term."
Cohen was on the right track, but he may have been too late to save Warner. He and his highly effective teams, especially at Atlantic Records, broke artists such as T.I., Death Cab for Cutie, Wiz Khalifa, the Black Keys and Bruno Mars, but they couldn't withstand the headwinds facing the record industry over the past decade. The company's digital revenue grew steadily but its overall revenues dropped steadily, too. Cohen will resign at the end of this month, according to an announcement made on Monday that shocked even top artists.
"I didn't have any inkling that this was going to happen," says Tim Smith, manager of Skrillex, the electronic dance music superstar who has a joint-venture deal with Warner-owned Atlantic Records. "They just had their international meeting, and he oversaw it with their entire team in Berlin. It's odd to do that and the next week be gone."
Cohen, 52, is a record-business throwback – a big, brusque personality, according to Fred Goodman's 2010 book Fortune's Fool, who has easy relationships with artists but appears to coworkers "like trying to wrest a scrap of meat from a panther." Son of Israeli citizens, he moved to New York City as a young man and ingratiated himself to Def Jam Records founders Rick Rubin and Russell Simmons. Starting as Run-D.M.C.'s manager, Cohen eventually took over the label, running it for Simmons, then Sony and other labels.
When billionaire Edgar Bronfman, Jr., and other investors bought Warner in 2004, Cohen joined the company and began implementing his own ideas – such as making deals with indie "incubator" labels to break younger acts, such as the Houston rapper Mike Jones and the punk band Paramore. "What was appealing to us about Atlantic Records and Lyor was what he brought historically with him – a very forward-thinking, marketing-centric approach to breaking bands," says Jordan Kurland, manager of Death Cab for Cutie, which signed to Atlantic in 2004. "He really empowers his people and encourages them to do their thing and looks at them for ideas and feedback. He is a great leader that way."
Cohen and his staff broke big hits and new artists but, despite his early talk of cost-cutting and house-cleaning, he was a record-industry throwback in another way, too – he made $5 million annually, plus stock options, as of 2008. According to the Wall Street Journal and other reports, after billionaire Len Blavatnik's Access Industries bought Warner last year, Cohen clashed with new CEO Stephen Cooper, also an aggressive cost-cutter. (In a statement, Cooper said Cohen "has built something very special here.")
Cohen hasn't announced his next move, and Warner hasn't commented on who will replace him or whether Cohen loyalists such as Warner Bros. Records CEO Todd Moscowitz and Atlantic group chairman Julie Greenwald will follow him out. Billboard speculated that his replacement candidates could include Roger Faxon, former CEO of EMI (the major label about to merge with Universal) and former Warner chairman Roger Ames.
Whatever happens next at Warner is unlikely to affect artists, their managers insist. "I have no idea why he's leaving. Much as I would have liked to have known, nobody clued me in," says Cliff Burnstein, manager of top Warner stars Metallica and the Red Hot Chili Peppers. "But for us, it makes no difference, long story short. We're going to deal with the same people we deal with now, to a large extent, unless they're thinking of somehow cleaning house – which I doubt, because they've already cleaned house."