Shift at Capitol-EMI Noted as End of an Era

Joe Smith’s confirmation that he is stepping down on April 1 as chairman and chief executive of Hollywood-based Capitol-EMI Music Inc. is widely seen as signaling the end of an era in the increasingly corporate, bottom line-conscious record industry.

Thorn-EMI, the multinational firm that owns Capitol-EMI Music, announced Wednesday that Smith’s duties will be taken over by Charles Koppelman, who since 1991 has run the company’s New York-based SBK, Chrysalis and EMI labels. Before assuming those duties, Koppelman was best known for “discovering” fly-by-night sensations Vanilla Ice and Wilson Phillips.

Smith chose resignation over accepting a one-year extension of his contract. Many industry observers take that as evidence that newly adopted corporate policies are driving many of the music industry’s most colorful founding fathers out of the business. In the changing industry environment, it’s fallen to smaller record labels to discover and develop new talent.

“In recent years, I find that my role has become mostly administrative and organizational,” said Smith, one of the industry’s most respected and charismatic executives. “I want to become more involved with music and creative areas and will be taking on various projects reflecting that interest.”

Taking the reins at Capitol in 1987, Smith was instrumental in the success of such EMI acts as country star Garth Brooks, the best-selling recording artist so far in the ‘90s, as well as rapper Hammer and singer Bonnie Raitt.

The promotion of Koppelman signals a shift in power at EMI from the West Coast to the East Coast, and insiders speculate that Smith’s resignation will be followed by executive changes at EMI Records next week. The management shake-up has been rumored since 1991, when EMI Music folded its SBK, Chrysalis and EMI labels together.

Koppelman, 52, is associated with the more corporate-created pop acts of today. He made big money for himself by scoring hits with Wilson Phillips and Vanilla Ice before selling SBK to Thorn-EMI, but those acts faded fast after the release of their second albums. Several executives believe that the same “number-crunching” mentality that caused Smith to resign will also haunt Koppelman in the future.

“The guys that run these corporations just don’t get it,” said one executive. “Koppelman, like Smith, needs a free hand to do what he has to do. But the corporate guys are making them crunch numbers so much it inhibits the creative process.”

Smith got his start in the business as a record promotion man in 1960, when rock music was still young and impulsive entrepreneurs ruled the market. He rose quickly to president of Warner Bros. Records before being named chairman of Warner-owned Elektra/Asylum in 1975.

“Joe is one of the true giants of the record business,” said music and film mogul David Geffen. “Under his stewardship, Capitol Records and Warner Bros. Records were allowed to rise to new heights. He’s not just a great executive, he’s a true gentleman.”

Giant records owner Irving Azoff agreed. “He was always an artist-friendly executive and a great motivator who knew how to help artists and managers achieve incredible commercial success and at the same time have fun doing it,” said Azoff, who as the former manager of the Eagles worked closely with Smith during the 1970s and ‘80s.

Smith is widely credited with transforming Capitol-EMI from a company in decline--subsisting primarily on the revenues from its classic Beatles and Beach Boy catalogues--into a vital, competitive firm with million-selling artists such as Hammer and Brooks.

The 64-year-old veteran turned around EMI’s U.S. labels--Capitol in Hollywood, Liberty in Nashville, Capitol-EMI in Canada and the firm’s once-floundering distribution network CEMA--by delegating power to executives he had hired, such as Jimmy Bowen, Hale Milgrim and Russ Bach.

Lisbeth Barron, vice president at S.G. Warburg & Co., a New York investment management company, said Wall Street analysts are unsure, as of yet, over what to make of the move.