The Day The Music Stopped

Arista CEO Clive Davis may have the sharpest ears in the music industry. For more than a quarter of a century the record executive has been keenly in tune with the nation's musical taste, launching such rock giants as Janis Joplin and Billy Joel. Whitney Houston owes her career to him. He backed Puffy at Bad Boy Entertainment. And this year he resurrected the flagging career of guitar legend Carlos Santana by pairing him with buzzy young singers like Lauryn Hill.

But last week Davis, 66, needed to turn his attention to another career--his own. A messy effort by Arista's corporate parent, Bertelsmann Music Group, to bring in new label management left the music industry in an uproar over the perceived shabby treatment of Davis. BMG chief executive Strauss Zelnick has long been worried about Davis's failure to groom a successor. With Davis's Arista contract expiring in June, Zelnick brought the issue to a head in recent weeks by openly courting a protege of Davis's to take over Arista's day-to-day operations. While Davis was traveling in Europe to help the Artist Formerly Known as Prince promote his latest album, it leaked out in New York that Zelnick had offered Antonio (L.A.) Reid the presidency of Arista. Reid, 43, currently heads the hot label LaFace, which Arista partially owns.

Clive, as Davis is universally referred to in the business, isn't one to quietly saunter out to pasture. "At age 66, I am absolutely at the peak of my powers,'' he said in a statement. Davis said he expects to remain CEO until his contract is up. After that, he acknowledged that his role at Arista will change, noting that he will weigh numerous offers from BMG, including its "major support" of a new public media company that he would form.

Lurking below the surface of the drama are two disturbing biases that many in- siders believe permeate the music industry. The Davis affair quickly reignited a debate because many in music circles thought Davis was being pushed out because of his age. "I never knew that age had anything to do with hearing a hit or identifying a star," Sony Music Group chairman and CEO Thomas Mottola remarked to one interviewer about the move on Davis. The showdown also obliquely raised the longstanding issue of the music industry's racial divide. For years many blacks in the business have complained that, despite their large presence in the ranks of artists, few occupy powerful jobs in the front office at music companies. "It's nice to know that a black man [Reid] can not only be the source of music, but also a caretaker of the music," said Barry Hankerson, CEO of Blackground Entertainment, whose clients include R. Kelly, Toni Braxton and Aaliyah.

Yet the opposition to Davis's apparent plight was far more prevalent, with stars such as Santana and Aretha Franklin and record honchos lining up to praise him. Reacting to the outcry, BMG's Zelnick issued a contrite statement, declaring that he had no intention of disrespecting Davis and wants him to remain at Arista in a significant role. But he insisted it is his corporate duty to deal with succession at Arista, which accounts for one third of BMG's music sales. BMG sources add that Zelnick won't back away from appointing Reid. In a related matter, BMG is planning to buy the 50 percent of LaFace that it doesn't own and striking a management deal with Reid that would make that transaction go more smoothly.

In his career, Davis has faced difficult transitions. His legend began in 1960 at CBS Records (now Sony Music Group), where he started as a lawyer before rising to head the company's Columbia label. An amazing string of discoveries followed--Patti Smith, Lou Reed and the Grateful Dead, among others. But in 1973 Davis's career shattered when the label fired him, alleging financial abuses. Davis later pleaded guilty to charges of tax evasion and paid a $10,000 fine. Soon after, he launched Arista, now one of the industry's most successful labels, with Whitney Houston, Sarah McLachlan and Monica on the roster.

Part of the Davis formula for dominating music included financing smaller la- bels launched by shrewd entrepreneurs, including 10-year-old Atlanta-based LaFace. Reid established the label with his partner, Kenny (Babyface) Edmonds, and launched the careers of, among others, Toni Braxton and TLC, OutKast and Usher.

Reid seems destined to emerge from the swirl of events with a much bigger job, plus a half share of an estimated $100 million from BMG's expected purchase of LaFace. With all that momentum, perhaps Reid will have a run that lasts as long as his mentor's.