DEF JAM'S NEW TUNE

It's near midnight on a recent Wednesday, but for Antonio (L.A.) Reid, the new CEO of Island Def Jam music--he took over in February--the workday isn't done. He's spent hours with young staffers critiquing music to be released soon on Def Jam, the hip-hop label. He's dancing in his seat and issuing sharp opinions on everything he hears. "I like this record, but sometimes he gets too wordy,'' Reid says of a cut by rapper Joe Buddens. Despite his take-charge approach, others are openly skeptical about Reid. For one, Russell Simmons, the hip-hop icon who cofounded Def Jam but sold it years ago, worries the stylish Reid may be ill-suited for the scrappy world of hard-core hip-hop. "L.A. Reid is one of the best record men in the business, but he doesn't hang out with [Def Jam artist] DMX. I'm with rappers every day. Managing them is a cultural process,'' says Simmons. "These are the things that made Def Jam.''

Now Reid gets to remake Def Jam in his image. It's a challenging transition in an industry that seems to be perpetually in a state of rough transition, thanks to piracy, shrunken sales and consolidation among major labels. All that turmoil has led to rounds of musical chairs for top execs, and Reid often ends up in the hot seat. He succeeded legendary Clive Davis at Arista Records in 2000. After delivering two best-selling albums--by Usher and OutKast--Reid was fired amid reports that Arista had lost as much as $200 million. But he was soon hired at Island Def Jam after its CEO, Lyor Cohen, jumped to Warner Music. Reid's arrival ignited a clash of management styles, tastes and egos. And he was greeted with the urgent task of bolstering Def Jam's ties to perhaps its most important artist, Jay-Z, and the Roc-A-Fella label he owns with partner Damon Dash. Late last week, Reid tells NEWSWEEK, Def Jam was close to buying out the partners from Roc-A-Fella and negotiating deals to keep them in the fold.

A lot is riding on Reid's ability to sail through the storm. Over the last 20 years, Def Jam became the most iconic label in hip-hop, with artists like Beastie Boys, Public Enemy, Jay-Z and Ludacris. Reid's background in R&B and pop, and his more structured management style, make him an unlikely casting choice for Def Jam's free-wheeling, harder-edged culture. But his bosses have given him free rein. "Do what you have to do to make yourself proud,'' he was told by Doug Morris, CEO of Universal Music, which owns Island Def Jam. "You are L.A. Reid.''

And who is L.A. Reid? The Cincinnati native started out as a drummer in a soul band in the 1980s. He and bandmate Kenny (Babyface) Edmonds later became a successful songwriting team, penning R&B hits (33 No. 1 singles). In 1989 they launched LaFace Records, a joint venture with Arista. By 2000 their stars included TLC, Toni Braxton, OutKast and Usher. BMG bought out Reid and Edmonds, and dumped Davis at Arista for Reid. There, he signed a new talent named Avril Lavigne (Lavigne and Pink, another Reid discovery, have sold more than $250 million worth of records alone). But the losses were piling up, so BMG fired him. His defenders say talent spotters like Reid are usually paired with a disciplined financial type. By all accounts, Reid didn't have one. Strauss Zelnick, the former BMG boss who hired Reid at Arista, says: "Hit making is a much rarer skill than bean counting."

Reid's talent lies in being able not just to recognize a fresh sound, but to get the most out of artists. He made Usher, his star at Arista, promise to stay in the studio until Reid told him the album was finished. "Confession" is this year's biggest seller, at 5.1 million copies so far. "I'm going to miss him on the next album," Usher says. Reid recently dropped by Mariah Carey's apartment with a song from her upcoming album on the Island label and played it twice, each time rewinding to a subtle verbal twist. "Most people wouldn't have appreciated it," Carey says.

Reid says that hit making will be his sole focus at Def Jam, signaling a slight shift in direction for the label. Reid says it's been run largely as a marketing company for the Def Jam brand, which has stood for grimy, honest street lyrics and reverence of the ultraluxury lifestyle. Reid says: "It's about hits and stars.'' Def Jam, he says, will return to its 1980s roots, when it had more diverse acts, including the politically charged Public Enemy and the mass-appeal LL Cool J.

If Reid could just focus on music, his job might be easier. There's been a stream of high-level departures from Def Jam, and he recently fired Kevin Lyles, Def Jam's president. Lyles and Reid had petty differences, insiders say: Lyles sat in a prime seat next to Chris Rock and Russell Simmons at the recent BET Awards, not several rows back next to Reid. Simmons says it was just a clash of styles. "Kevin didn't know how to report to L.A.," Simmons says. "He was trained to be independent. We had a culture."

Simmons, who is hugely influential in the hip-hop community, is uncertain whether he will have a role at the company he cofounded. His position as Def Jam chairman was cut short late last year when, he says, Universal Music ended his contract without notice. "I don't know what's going to happen," Simmons says. Reid says he wants to work with Simmons, though they have not talked at length. "I'd love to keep that relationship," says Reid.

Their apparent differences may be difficult to bridge. "What new thing are we trying to build?" Simmons asks. He worries that the Def Jam brand may be diluted with smooth and styled R&B stars. "You have to protect rappers from the polish," he says. Simmons may also hold something of a grudge against Reid and his pop sensibilities. When Reid was at Arista, the label released an album with Run DMC rapping over "Let's Stay Together," a pop classic by Al Green. The song alienated rap purists, and Simmons felt the sting, too, because his brother, Joseph, is a Run DMC member. The question for Reid now is whether he can make that Al Green hit the theme song for his tenure at Def Jam.