After nearly a year of public sniping and speculation, BMG Entertainment and music industry giant Clive Davis have entered into a 50/50 joint agreement to form J Records.
Terms of the deal remained undisclosed, but industry sources place it somewhere between $100 million and $150 million — an unprecedented amount for a pure record company.
“We believe this is the biggest startup record label that’s ever been financed,” BMG Entertainment prexy-CEO Strauss Zelnick told Daily Variety. “But we’re in a growth mode. In the six years that I’ve been here, we’ve doubled our current market share from 10% to 20%, so this is the perfect time to invest money with one of the industry’s top executives to build for the future. I’m gratified this has come to fruition, and I’m happy for Clive, too.”
“It was very important to me to have an equity interest,” Davis told Daily Variety, “although I wouldn’t necessarily call this a startup — it’s more like an instant major. For one thing, the deal is three to four times larger than that for any previous record company.
“Second, we’ve assembled an incredible senior executive team as well as an incredible group of artists, and we’ll be announcing additions to both of those next week.”
Joining Davis at the new diskery — which takes its moniker from his middle initial (three of his sons’ names and three of his grandchildren’s names all start with “J” as well) — is former Arista exec veep-G.M. Charles Goldstruck, who’ll serve as prexy-chief operating officer of the new venture. Other erstwhile Arista execs making the transition are senior veep of promotion Richard Palmese, senior veep of worldwide marketing Tom Corson, senior veep of finance Alan Newham, senior veep of biz & legal affairs Julie Swidler, senior veep of A&R Keith Naftaly and A&R veeps Peter Edge and Hosh Gurelli.
The new diskery’s artist roster will include several former Arista acts (boy band LFO, R&B trio Next, soul diva Deborah Cox, teenage female blues guitarist-vocalist Shannon Curfman, country thrush Abra Moore and Wyclef protege Jimmy Cozier) as well as R&B singer-songwriter Alicia Keys, hip-hop veteran Q-Tip, and O-Town, the group featured in the ABC-TV series “Making the Band.” Young R&B diva Monica’s future discs will be joint ventures between Arista and J as well. Plans call for the diskery’s first records to be released in October. Davis also intends to establish a music-publishing component sometime “within the next year.”
Davis entered the disc biz as an attorney for Columbia Records in 1960, eventually serving as prexy from 1967 to ’74. He founded Arista a year later, selling it to BMG in 1979. This past year his accolades included a Lifetime Achievement Grammy and induction into the Rock and Roll Hall of Fame as a nonperformer. A 25th anniversary TV special devoted to Arista attracted 9.9 million viewers.
“I was offered presidencies of other labels; I was offered Wall Street and Internet money,” Davis said. “But “BMG Entertainment (chair) Michael Dornemann and Strauss Zelnick have always been behind me. I was never moved aside, and I very much want Arista to succeed under L.A. Reid — it was my label.
“But every label has to re-evaluate its artist roster every three years, so we intend to be extremely hospitable to new artists as well as those veteran artists such as Carlos Santana, who contributed about $260 million to BMG worldwide last year.”
No film production
Although he has been successful in the realm of soundtracks in the past with multimillion sellers “The Bodyguard” and “Waiting to Exhale,” Davis dismissed the idea of his new company getting into film or TV production: “We’re looking for long-lasting career artists who can be headliners; we’re going to be a record label.”
“It couldn’t have ended up in a better way,” Goldstuck told Daily Variety. “We’ve got the funding, the executives and the artists. Plus we’ve got BMG distribution in the U.S. as well as overseas, which we’re very comfortable with because we know all those people. And we’ll have all of BMG’s Internet deals working for us. By this time next year, we expect to employ 100 people.”
As for why, at age 67, Davis has opted to remain in the game, the answer is simple: “‘Cause I love it.”