A War of Words in the Music Industry

Earlier this month, after the president of V2 Records read a widely viewed website of the influential music publication Hits Magazine, he typed a short e-mail and launched a small war.

Hits’ website had joked that V2, the label releasing the new White Stripes album, “ought to be renamed V 1/2 as the understaffed company makes a desperate attempt to set up the most critical release in its brief history.... If V2 was a functioning record company, the Stripes release would be much-much bigger, critics criticize.”

V2’s president, Andy Gershon, thought he had a pretty good idea why his label, once praised by Hits, was now in the magazine’s cross hairs: He no longer was paying the publication’s owners for advertising and promotional services.

“You trash people that don’t pay you. Pure and simple,” Gershon wrote to Hits’ editor, Lenny Beer, in an e-mail copied to scores of music executives and journalists. “You used to be nice and write nice things, WHEN we paid you.... You are nothing more than a two bit hustler at the end of the day, relying on strong arm tactics of fear.”

A Hits executive called Gershon’s e-mail an untrue and inappropriate personal attack, insisting that the publication did not slam those who refused to purchase Hits’ services.

But that’s not the predominant perception among many industry insiders, who are relishing what they see as the publication’s long-overdue comeuppance.

“Andy Gershon’s stock has risen tremendously because of this letter,” said Bob Lefsetz, publisher of a widely read music newsletter that said in April that Hits praised paying clients.

The increasingly public criticism of Hits is a sign of how much things have changed in the way power is wielded and information flows in the music industry.

“Ten years ago, there is no way I would have sent out an e-mail like that one,” said Gershon, 40. “But today, I figure, what have I got to lose?”

The last time a record executive publicly challenged Hits was almost a decade ago. In 1997, A&M; Records Chairman Al Cafaro, faced with what he said was a shrinking marketing budget, severed his label’s ties to the magazine. Other executives thought he was risking his career, Cafaro said in a recent interview, because he and his label would no longer be the beneficiaries of Hits’ friendly coverage.

About a year later, when Cafaro and much of his staff were fired after Seagram Co. acquired A&M;, the perception among many industry veterans was that his break with Hits had contributed to his downfall.

Beer, Hits’ editor, said the publication had no role in Cafaro’s firing. He acknowledged that “we do support people who support us.” He said it was common for trade publications to award positive media coverage to clients who purchased consulting services or advertisements. “It’s one of the things that all industry magazines do, in our industry and lots of others.”

Not so in the case of the industry’s premiere trade publication, Billboard magazine. Tamara Conniff, co-executive editor, said Billboard had a strict policy of separating editorial content from advertiser influence.

“We would never change our coverage based on whether someone advertised with us or not,” Conniff said.

In Hits’ case, a review of its website showed that changes in coverage coincided with decisions by Gershon and another company to stop or vastly reduce payments for advertisements and promotional services.

In March 2003, when Gershon’s V2 released the first White Stripes album, Hits’ website praised the label by saying it “will take a ‘Seven Nation Army’ to hold V2 Records back from breaking cult band White Stripes wide-open this time around.” Back then, Gershon said, his company had paid Hits about $50,000 for ads and services.

Two years later, after Gershon had stopped paying the publication, Hits published the criticism that drew his ire and prompted his e-mail.

In another case, when Lyor Cohen became chairman of Warner Music Group in 2004, his company was paying Hits more than $2 million a year for advertisements and promotional services. The publication called his appointment a “blockbuster” deal and quoted Warner’s chief executive as saying that Cohen was “one of the most respected executives in the business.”

Within months, Warner significantly decreased its spending with Hits. Last month, the publication’s website described Cohen as “overly aggressive” and “untrustworthy,” mentioned his “inability to turn things around” and compared “the staggering list of bridges he’s burned to the Russian retreat in World War II.”

Cohen declined to comment on the record, as did Beer and Hits publisher Dennis Lavinthal regarding their coverage of Cohen and Gershon.

Publications such as Hits have traditionally played an important role in the music industry. Until the late 1990s, many music companies paid tipsheets millions of dollars to gather data from retailers and, just as important, to share gossip that could make or break careers.

But the publications’ influence began to falter as the Internet spread.

“Tipsheets were once the only source of insider information,” said Celia Hirschman, a former music executive who is now an independent consultant. “But now, in a digital world, everybody can talk to anybody and you can get real data from multiple sources.”

Hits executives said the publication’s fortunes had diminished. Hits grossed more than $10 million a year in the late 1990s. But in the last four years, revenue has declined significantly, according to a Hits executive. The publication’s staff has shrunk from 110 to about 20 and the once-weekly publication now is sent only twice a month to subscribers and a small number of newsstands.

“Our revenue has fallen because the whole industry has fallen,” Beer said.

Other tipsheets and newsletters, such as the Gavin Report, Album Network and Cashbox, have ceased publication.

Despite its financial decline and the recent public criticisms, Hits still has supporters, who commend the operation for offering objective sales data and limiting its criticism to executives and not artists. What’s more, Lavinthal and Beer are widely considered to be among the most knowledgeable people in the industry, offering useful perspectives on trends and industry gossip on who is feuding and how executives spend their weekends.

“Hits still has the music industry’s eyeballs, and that’s because they have good dirt,” David Munns, chairman of EMI Music North America, said in a statement. “A lot of times, Hits has it dead-on, weeks before anyone else.”

But in the age of e-mail, almost anyone can publish the latest rumors, and countless weblogs post breaking music news. As the uniqueness of publications such as Hits has waned, critics have become bolder, none more so than Gershon.

“You have run a business that has always played upon the insecurities of the executives of the record industry,” Gershon wrote in his e-mail, “and it is about time you get called out on it.”