As Doug Morris Prepares To Helm Sony, Urgent Hiring And Organizational Decisions Await

Outgoing Universal Music Group (UMG) chairman Doug Morris won't assume the CEO post at Sony Music Entertainment (SME) until July 1. But Sony's March 2 announcement of his widely expected appointment effectively means that the Morris era is already under way at the second-largest major label in the United States.

As Morris prepares to take the helm of Sony, four pressing issues surely sit at the top of his agenda: appointing new leadership at RCA/Jive Label Group, addressing lingering Sony-BMG integration issues, revamping Sony's A&R strategy and growing market share.

RCA/Jive chairman/CEO Barry Weiss' departure to head UMG's East Coast operations creates an executive vacancy that Morris will need to fill quickly. While the rumor mill has identified plenty of potential candidates to replace Weiss-including former Warner Bros. Records chairman Tom Whalley, ex-Virgin Records president Jason Flom and Island Def Jam Music Group chairman/CEO Antonio "L.A." Reid-it remains unclear who will fill the post.

Once he appoints a successor to Weiss, industry observers believe that Morris, who declined to comment for this story, must seize his appointment as an opportunity to finally do away with the remaining us-against-them mentality that persists between the old Sony and BMG elements in the company and to move it to a new structure that leaves its two-label system behind.

"SME has wonderful legacy artists there and has a bunch of great, smart and talented people working here, but it's a really old-fashioned structure and paradigm. Either the smart people aren't seeing it, or it's not in their own best interest to address it," says a longtime executive at the company who asked to remain anonymous. "Either he has to change the mind-set of the people here, or he has to change the structure-which will change the mind-set. But he has to get people to work together for a common goal."

If Morris changes the structure of Sony Music, one of the things he'll need to address is "to get everyone to agree on what's a central service and what's a label service," because there is too much duplication as everyone protects their own turf, says another industry executive familiar with the company.

Both Columbia/Epic and RCA/Jive have grown market share since 2008. The death of Michael Jackson helped lift the former's share of U.S. album and track-equivalent albums (or TEA, where 10 digital tracks equal an album) to 11.6% in 2009 from 8.8% in the prior year, according to Nielsen SoundScan. But Jackson sales weren't the only factor in the label group's recent success, with its market share remaining strong at 10.8% in 2010. Columbia/Epic Label Group chairman Rob Stringer and Columbia Records chairman Steve Barnett have made event albums a centerpiece of the label groups' growth strategy.

The RCA/Jive Label Group's share of U.S. album and TEA sales has grown from 6% in 2008 to 6.4% in 2009 and to almost 7% last year. But with Weiss' departure, rumors abound that he wants to take some of his executives with him. But a source says that key staff, including RCA/Jive COO Ivan Gavin, Jive executive VP/GM Tom Carrabba and RCA executive VP/GM Tom Corson, have long-term contracts, and could be in the running to helm the label group, some insiders say.

Despite speculation that Morris should move away from a two-label system-and perhaps fold Epic into Columbia-other executives point out that Morris loves to create multiple A&R centers, and they speculate that he might even consider changing the structure from two label silos to four or even more A&R centers, but without adding any more layers of marketing and business staffs.

"Doug has always said that the best record companies have the best rosters," say an industry executive who has worked with Morris. "And you do that with great A&R centers. He learned that at [Warner Music Group] and that's what he did at UMG. When he gets to Sony, he will start those creative centers right away, and he will plug them into great business centers."

As for growing market share, Morris was successful at UMG in spreading overhead by doing third-party distribution deals with such labels as Big Machine, Disney/Hollywood and Concord. While Sony has third-party distribution deals with Razor & Tie and Wind-up, it's been years since it has brought a new company into the fold for its major-label distribution company.

That, among many other things, could change under Morris.