Lowering the Volume

Most music industry veterans know this much: When David Geffen is selling, it’s probably not wise to be buying.

The legendary entrepreneur, who built three major labels from scratch and nurtured talents from Jackson Browne to Guns N’ Roses, headed for the exits this year, orchestrating the sale of his DreamWorks Records label for $100 million in the most dismal music market on record. Time Warner Inc., the media conglomerate that once distributed Geffen’s albums, soon followed his lead and stunned the industry by dumping its global music division after three mostly lucrative decades in the business.

The industry still has at least a few believers. Former Seagram Co. chief Edgar Bronfman Jr. headed an investor team that bought the Warner operation, and Vivendi’s Universal Music Group picked up DreamWorks from Geffen.

But the music business still is being rocked by a brutal purge that has left executives and employees to question whether they’ll survive long enough to see a turnaround in sales, which are projected to fall about 10% to $28 billion worldwide for the year. Old regimes collapsed, most notably that of Sony Music Chairman Thomas D. Mottola, and others trembled as the industry scrambled to keep pace with technology and consumers’ tastes.

Nothing was more dramatic, or more telling, than the sale by Time Warner, which just a few years ago preached that music would entice new subscribers for its America Online service and feed corporate synergy. The debt-addled media conglomerate peered into music’s future and decided to lessen its exposure to the business, ultimately selling to Bronfman.

Industry watchers now are waiting to see how Bronfman fares against Universal Music, the giant he built and then sold to Vivendi. Universal’s 50 Cent claimed the top spot on the sales chart with his debut, “Get Rich or Die Tryin’,” ringing up more than 6.4 million copies. But all year long, the rapper’s chosen title also posed a stark choice for the industry as a whole -- and the major record conglomerates don’t look to be getting richer.

Here’s how the companies fared during the last year, based on interviews with key industry players. The corporations are listed in order of their share of new-release sales in the U.S. -- which does not include older albums -- through Dec. 21, as estimated by Nielsen SoundScan.

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Universal Music Group

Share of new-release sales: 30.1%.

Worldwide sales through Sept. 30: $3.7 billion, down 22%.

Operating loss through Sept. 30: $43 million, down from an operating profit of $207 million.

As the world’s biggest record conglomerate, Universal Music rightly bills itself as the industry leader. But nobody is yet emulating Chairman Doug Morris’ most dramatic public move -- the decision to slash the suggested retail price of CDs to $13. The price cut has yielded mixed results, and rivals expect Universal’s bottom line to take a nasty hit. On the charts, though, Morris’ team continues to score.

That’s one reason Vivendi is expected to agree to a new contract with Interscope Chairman Jimmy Iovine, whose label continues to defy industry weakness, notching another year as the top seller of new releases. Big hits included 50 Cent, G-Unit, Sheryl Crow and DreamWorks’ Toby Keith. Iovine’s hot label earned breakthroughs for Black Eyed Peas and Dashboard Confessional, though Enrique Iglesias fell short.

Geffen Records, which absorbed the stagnant MCA label, is struggling to return Limp Bizkit to its glory days but has enjoyed brisk sales of Blink 182. The labels under Iovine’s control together outsold British giant EMI Group’s entire record division.

Vivendi also remains in contract talks with Lyor Cohen, the Island Def Jam chairman who weathered a tough year, losing out to maverick TVT Records in a fraud lawsuit and watching a federal money laundering probe of the Def Jam-distributed Murder Inc. label. The new CD from Ja Rule, the rapper at the center of both of those controversies, is tanking, though Cohen rang up major hits from Ludacris, Ashanti and Jay-Z and, sources say, plans to bolster sales with a hip-hop clothing line.

Over at Universal Records, 3 Doors Down’s blockbuster album has things looking up for Mel Lewinter and Monte Lipman, who also enjoyed hits from Nelly and Michael McDonald, although sluggish sales held back Erykah Badu. Universal’s new venture with former Sony Music Chairman and diva maker Thomas D. Mottola has been quiet so far. Its other high-priced label deal -- Sean “Puffy” Combs’ Bad Boy -- delivered a quick hit with the “Bad Boys II” soundtrack, but rivals are wondering whether there will be a second act.

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Bertelsmann Music Group

Share of new-release sales: 18.3%.

Worldwide sales through June 30: $1.2 billion, down 8%.

Operating loss through June 30: $131 million, contrasted with a loss of $50 million a year before.

Perhaps the only people enjoying Clive Davis’ long career more than the man himself are the aging stars whose livelihoods he keeps reviving. RCA’s muscular marketing machine powered big sales for Rod Stewart, Luther Vandross and Annie Lennox, as well as younger stars Christina Aguilera and Alicia Keys. One possible goof: the label’s expensive deal with Wyclef Jean, whose new album sank. Critics would like to say Davis got lucky by inheriting BMG’s deal with a once-unknown TV show called “American Idol.” But it’s not luck that’s kept “Idol” winner Kelly Clarkson and runner-up Clay Aiken near the top of the chart for months after their release. Recent winner Ruben Studdard has started strong but remains a question mark.

Over at Arista Records, Antonio “L.A.” Reid cranked out one of the few albums to draw both critical acclaim and sales success with Outkast’s double CD, but not before suffering a sharp reversal of his past good fortune. A string of duds from TLC, Toni Braxton and Whitney Houston forced BMG to take more than $50 million in write-offs this year. Now Pink’s new album is off to a weak start, and sources say hot producers the Neptunes are pushing to end their Star Trak joint venture with the label.

For BMG’s Jive Records, the clearest sign of how executives are straddling the worlds of kids and adults is in the deals they’ve been striking: Label chief Barry Weiss cut agreements this year to release CDs from the “American Juniors” TV show (a flop) and, soon, from the “Girls Gone Wild” series. Big sales came from Justin Timberlake, and Britney Spears’ new album defied poor projections. R&B; singer R. Kelly’s sales soared to an estimated 2.4 million copies in spite of an indictment on child pornography charges.

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Warner Music Group

Share of new-release sales: 16.8%.

Worldwide sales through Sept. 30: $2.9 billion, up 0.01%.

Operating loss through Sept. 30: $9 million, down from an operating profit of $71 million.

It will take time to determine whether Edgar Bronfman Jr., scion of the family that built the Seagram liquor fortune and occasional songwriter, has the vision to revitalize Time Warner’s music unit, once the most respected operation in the business. The early talk after his $2.6-billion purchase has focused on cuts -- and a likely realignment of labels -- that appear to loom in the weeks ahead.

Bronfman is inheriting another big headache: a fight with pop icon Madonna, who had been pressing Time Warner to buy out her stake in Maverick Recording Co., her joint-venture label with Warner Music. Insiders expect Bronfman to reach a deal with the star, but the fact that her own Warner Bros. Records CD missed expectations hasn’t helped matters.

Under Chairman Tom Whalley, Warner Bros. did deliver a smash from Linkin Park and a pair of big sellers from Josh Groban, also posting strong sales for Trapt, Michael Buble and Maverick’s Michelle Branch. The label re-signed Cher, whose greatest-hits record was one of the year’s top sellers, but rivals are waiting to see if Whalley, who has completely restructured the label, can score with younger signings, including Bonnie McKee.

Over at Atlantic Group, persistence paid off as the label wrung an additional 1.9 million copies in sales out of Kid Rock’s last album after rivals wrote it off. Chairman Val Azzoli and Co-Presidents Ron Shapiro and Craig Kallman hit upon a whopping success with dance-hall sensation Sean Paul and pumped out hits from Lil’ Kim, Matchbox Twenty and a new Led Zeppelin release. Weak sales tarnished Jewel, and Sugar Ray bombed. Jason Flom put his Atlantic-affiliated Lava Records label on the map with Simple Plan.

As for Elektra, new CDs from Missy Elliott and Staind have fallen far short of industry projections. But rapper Fabolous and rock war horse Metallica registered strong sales while Chairwoman Sylvia Rhone broke new act Jason Mraz. Elektra may yet take off with costly signing Jet.

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Sony Music Entertainment

Share of new-release sales: 13.7%.

Worldwide sales for the six months through Sept. 30: $2.08 billion, down 9%.

Operating loss for the six months through Sept. 30: $49 million, up from a loss of $133 million.

Nowhere was the industry tumult more dramatic than at Sony Music, where respected veteran Thomas D. Mottola was forced out after 14 years at the helm in a move that sent shock waves across the industry. In the sweeping restructuring that followed, Sony cut 1,000 jobs after installing new chief Andrew Lack, and amid the chaos slipped to fourth place from third place in U.S. sales of new releases. But Lack, a music business rookie, deftly maneuvered in the industry’s merger mania, striking a deal with Bertelsmann Music Group that’s now facing regulators.

In the reorganization, aggressive former Columbia Records chief Don Ienner took charge of a consolidated Sony Music U.S. division, eyeing new acts, shaking up the company’s moribund Nashville unit and overseeing the resolution of a contract dispute with rock band Incubus.

With President Will Botwin stepping up to bat, Columbia remained a hit factory, ranking as the nation’s bestselling label, including catalog sales, for a stunning sixth year in a row, thanks to big scores from Beyonce Knowles and John Mayer. Train’s new CD got off track, but Sony’s savvy marketing team may rescue its Jessica Simpson album. The Dixie Chicks -- in spite of the backlash after their criticism of President Bush -- still managed to rack up an additional 2 million units in sales. But they may be edged out of the year’s overall top 10 by pro-administration rival Toby Keith.

With Epic Chairman Dave Glew retiring and President Polly Anthony departing for Interscope, Sony still has a ways to go in restoring the label’s luster. Epic nudged along rock hits from Good Charlotte and Audioslave, but expensive new signing Vendetta Red bombed, Macy Gray stumbled (again) and even Celine Dion underperformed. The unfortunate timing of its Michael Jackson greatest-hits CD -- released the day authorities raided his Neverland ranch -- amounted just to kicking a label when it’s down. Rivals are closely watching Ienner’s plans to bolster the label’s hip-hop presence.

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EMI Group

Share of new-release sales: 10.2%.

Worldwide sales for the six months through Sept. 30: $1.6 billion, essentially flat.

Operating income for the six months through Sept. 30: $129 million, up 40%.

One tune has eluded EMI Chairman Eric Nicoli: “Wedding March.” Three times he has tried, and failed, to merge his company -- most recently with Warner Music. Industry watchers say Nicoli’s London-based music giant now may have to take a hard look at going private.

Still, the company’s prospects in the U.S. have brightened somewhat. Blue Note’s Norah Jones steamed to an additional 5 million units in sales. And is there anyone left who doubts Andy Slater’s chops? With two years on the job, the former artist manager put storied Capitol Records on track for its biggest profit from new releases in more than a decade. The key? Capitol’s home run with rapper Chingy -- a milestone for a firm that took the shortsighted step of closing its black-music division in the mid-1990s. Jane’s Addiction stalled, and hype surrounding Liz Phair didn’t translate to significant sales. But even critics credit Slater and his hands-on approach with transforming the label into a contender again. Already he appears to have another hit with rap act Westside Connection.

But it’s hard to believe that EMI once paid $1 billion for Virgin, whose domestic sector has fallen to last place among the major labels tracked by Nielsen SoundScan. Even with the return of veteran Phil Quartararo, Chairman Matt Serletic has been struggling to establish a presence for the label. Virgin failed to deliver a single new album that matched even the holdover sales of last year’s Rolling Stones compilation, and the best thing it can say about much-hyped pop princess Stacie Orrico is that she’s big in Japan.