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Who Destroyed Epic Records?

It started outlike any label showcase at October's CMJ, the five-night music conference that's been held every year since 1980, drawing hundreds of industry professionals, influencers, fans and upstart bands to New York City's clubs, all looking to find -- or become -- the next big thing. A few dozen T-shirt-and-jeans-clad college reps gathered on the Bowery, next to the space that used to house legendary punk club CBGB, and Augustana, the latest pop-rock priority on Epic Records, prepared to take the stage. Guitar techs finished tuning, the sound guy prepped the board, and band members mingled then made their way toward the front -- excited if not a little anxious.

The San Diego-based five-piece, which had achieved a modicum of success with its 2008 album Can't Love, Can't Hurt (its first single, "Sweet and Low," reached No. 34 on the Billboard Hot Adult Top 40 chart), had a lot riding on this performance -- and so did the label. Epic has had declining sales and a dearth of hits at a moment when the entire industry is struggling to adapt to a new model -- one in which monetizing physical product is secondary to marketing and branding. The 57-year-old label was fighting for its life. It was a long way from the Sony-owned company's heyday in the '80s and '90s, when such artists as Michael Jackson, George Michael, Pearl Jam and Rage Against the Machine were racking up combined sales in the hundreds of millions worlwide.

Epic's current roster still features a superstar or two (namely Shakira), but they're far outnumbered by developing acts like Augustana, who knew this performance was crucial as an opportunity to motivate the people who would be representing their new music to radio, retail, press and the online world. One song in, singer Dan Layus' microphone experienced some feedback -- a technical glitch about as common as a guitarist breaking a string. But what happened next was anything but.

According to eyewitnesses in the crowd, Epic Records president Amanda Ghost, 36, a career songwriter who had held the top spot at the label for 20 months, stepped onto the stage, grabbed the microphone and, with her native North London accent, spoke her mind. Among a string of expletives, says a source: "She was screaming: 'Who booked this fucking place? It sounds like shit! We don't treat our artists this way at Epic. I'm not letting them play another minute!' " -- and pulled the plug on the show. "The room just got silent."

Six days later, a memo issued by Sony Music Label Group chairman Rob Stringer -- brother of Howard, CEO of Sony Entertainment -- announced that Ghost would be leaving the company at year's end. "Amanda has been an important creative force at Epic in the past two years," it read. "In returning to the natural focus of her artistic career, I look forward to us working together in the future."

For a woman who had a penchant for profanity and a reputation for unpredictable, sometimes violent outbursts, it was a surprisingly quiet firing -- and with it, the latest trial in unconventional management was over. The result? Sad and seemingly conclusive: that Epic Records most likely will become an imprint of Sony Music's flagship label Columbia, its departments forced to merge, its artist roster cut by two-thirds along with the president position. At least that's what staffers are predicting, even as Stringer puts on a brave, hopeful face.

"I owe the people at Epic, some who've worked for me for many years, to get it right," he says. "I have a responsibility to balance the ship, so we're going to sit down, not make any rash decisions, shore up the roster and hopefully make some progress in the next six months. ... It would be wonderful to start again, but I have a responsibility to the artists to do the right thing, and I'm really going to try."

It was a huge leap to think Amanda Ghost could have done it. Compared to her more seasoned peers -- like Universal Motown's Sylvia Rhone, a 35-year veteran who excels at the delicate dance that is artist relations; chart rulers Monte and Avery Lipman of Universal Republic; and Atlantic president Julie Greenwald, who's famous for meeting her numbers -- Ghost seemed completely out of her league. Indeed, says a confidante: "She never should have taken that job. It was a no-win situation."

Ghost was hardly the first creative type to run a label. Jimmy Iovine was a producer before he started Interscope; same for Rick Rubin, current co-president of Columbia Records, and Rob Cavallo, recently named chairman of Warner Bros. Records. And, of course, there is Jay-Z's successful three-year stint as president of Def Jam. But in these shaky economic times, handing a portfolio of more than $50 million, along with the responsibility of overseeing no fewer than six departments -- marketing, A&R, publicity, retail, promotions and new media -- to someone with zero management experience made the decision to hire Ghost an even riskier gamble. Even Stringer acknowledges that. "I'm the first to admit that I made an experimental judgment that possibly wasn't fair on Amanda," he says. "She struck me as a tour de force and a creative whirlwind -- which the industry needs more of -- and she was very keen to do the job and super-excited and confident about it. But in the last few weeks, we both agreed it was too big a mountain to climb."

In a way, the writing was on the wall. As the music business continues to collectively downsize -- the RIAA estimates the value of the industry as a whole has diminished by nearly 50% during the past decade, from $14.3 billion in 2000 to $7.7 billion in 2009 -- Epic's place in the label hierarchy has become increasingly marginalized. Founded in 1953 as a home for jazz and classical music, it expanded its scope during the 1960s and '70s to include such influential rock acts as the Yardbirds, the Clash and Cheap Trick. By the mid-'80s, Epic was just hitting its stride, releasing massive worldwide successes like Michael Jackson's 1982 album Thriller (28 million sold and counting) and George Michael's Faith, which moved 7 million copies in 1988 alone -- a year after Sony inherited the label when it bought CBS. But its best days were yet to come: the 1990s brought game-changing bands like Pearl Jam and Rage Against the Machine to the roster, and they, too, sold in the millions.

It didn't last. In the post-Napster years, Epic's market share dipped dramatically, from slightly more than 3% in 1998 to 1.58% a decade later. It was a fraction of Sony Music's overall share of 28.3% (second only to Universal), and being an independent entity, Epic was doing little for Sony's bottom line. Bold changes were made to the rap-rock-heavy roster, and it went decidedly pop under the watch of veteran Columbia promotions man Charlie Walk when he took over in 2005. In his three years on the job, he acquired radio-ready acts the Script, Sean Kingston and Sara Bareilles. By the time he left, some of the label's functions, like promotion, had been integrated with its big brother, Columbia, signaling a possible future absorption. In fact, rumors of Epic folding had been swirling for about six years.

But in speaking to Epic employees past and present -- the staff has dwindled from 150 during the mid-'90s to slightly more than 60 today -- they blame Ghost, not the economy, for putting the nail in the coffin and bringing an end to an era in 20 months flat (though some point to Stringer as an accessory for hiring her).

When Ghost was tasked with running Epic in February 2009, she was a virtual unknown outside her native England. A former artist -- her debut album was released on Warner Bros. in 2000, after four years in limbo -- she had gotten her start in the mid-'90s writing with Ian Dench, the former frontman of EMF (1990's "Unbelievable"). Ten years later, the two scored a hit with Beyonce's "Beautiful Liar," which led to industrywide accolades and a Grammy nomination.

But Ghost's greatest claim to fame came by way of a career-defining credit as one of three writers on James Blunt's 2005 international smash "You're Beautiful," which garnered three Grammy noms, helped spur worldwide sales of 13 million for his Atlantic Records debut, Back to Bedlam, and made Ghost an instant millionaire. It was her shining moment after years of false starts, and it led directly to the Epic presidency.

"She found James Blunt, wrote with him and shopped him around," Ghost's attorney Michael Guido says. "Everyone passed except for [Atlantic's] Linda Perry. Once the song became a hit, Amanda got called by all the labels, and some didn't remember it was offered to them first. That's the music business for you." Her approach, says Guido, was to represent the other side of how the industry operates. "She understands what it's like to be treated badly as an artist -- to be thought of as a commodity one day and nothing the next."

Still, her past as an artist did little to endear her to the Epic staff, some of whom have described her as "flighty," "abrasive," "arrogant" and "unpredictable," and what could have been a bold move soon began to look more like an epic disaster. (Ghost declined to be interviewed for this story.) Upon relocating from England to New York City with her husband, a television and events producer, and daughter, Ghost took residence in a swanky corner office with an estimated million-dollar salary where her unorthodox methods were pretty much left unchecked. An example: It was commonly known among Epic and Columbia employees from all ranks that Ghost was a more than casual marijuana smoker who would regularly light up in her office and admonish so-called creatives who didn't partake. "Her motto was, 'If you don't smoke pot, you can't work here,' " one former staffer says. "In her A&R meetings, she'd say things like, 'If you're not high, like, how do you like music?' " Stringer, who says he's never seen Ghost smoke pot, surmises the conversation went more like this:

" 'You guys have brought nothing good to the table, you ought to smoke pot and hear some better music.' It was a taste issue." During another meeting, a staffer recalls Ghost throwing a CD across the room to make a point. "She thought it was cool and edgy to do stuff like that. She'd say, 'This is shit; you know we can't put this out!' Amanda was a little manic. One minute, she's totally cool, the next she'd say something completely inappropriate then deny having said it. She was a real loose cannon." But Stringer sees conviction and confidence. "Calling her abrasive could mean she's not afraid of confrontation," he says.

Ghost has spun it that way herself. In 2009, she made a last-minute decision to add a track to Shakira's album She Wolf, after it already had been mastered and ready to ship -- pushing release back by nearly two months, despite key bookings she had locked in like a performance slot on Saturday Night Live. Ghost's explanation, via an interview for a Rolling Stone cover story on Shakira, "The music business is the Wild West right now, so I'm ripping up the rule book and starting again."

As a music-maker, Ghost was adventurous. One listen to the quirky title track and first single off Shakira's album, written by the Bravery's Sam Endicott and featuring a midsong howl by the Latin superstar -- a bit of caterwauling that Ghost championed despite the artist's skepticism -- is proof of that. But most of her gambles didn't pay off. To wit: She Wolf, which included a third single co-written by Ghost, failed to break the top 10, selling a disappointing (for an artist on Shakira's level) 379,000 copies in the U.S.

Ironically, Ghost's behavior -- which sources say included staying out until all hours of the night, smoking cigarettes in the strictly smoke-free Sony building at 550 Madison Ave. and regularly arriving to work at "around noon" -- looks a lot like a throwback to the industry's good old days that so many vets still pine for, back when albums consistently sold in the millions with just as many fans buying T-shirts and filling arenas from coast to coast.

But the looks of things, especially in the music business, can be deceiving. Guido insists that Ghost's twice-a-week morning absences actually were because of her 2-year-old daughter, who was diagnosed with Type 1 diabetes months after the family's arrival and required monitoring every two hours. In fact, he says Ghost would come home after work to take care of her daughter, then go out to see shows, which naturally went late. "We're talking about 15- to 16-hour days." For his part, Stringer says he "could speak to Amanda any time of the day about any issue. There was never a point when she wasn't lucid or sensible or that I couldn't have a dialogue."

Spend a couple of hours with a music industry old-timer, and the conversation inevitably comes around to the days when the artist -- not the music video or download or ringtone -- mattered. When executives shaped careers rather than massaged spreadsheets. It's the energy Stringer had hoped Ghost would bring to an aging brand. "The reason I made a radical decision with Amanda, rightly or wrongly, was that I wanted someone to try and inject that adrenaline back into the creative side of it," he says.

The challenge, according to Stringer, stems from a collective "hangover" that's unique to American record labels. He explains: "In the early '90s, Epic signed an incredible string of rock acts like Incubus, Korn, Rage Against the Machine and Pearl Jam. Incredible for that period of time, they sold catalog, they toured and put records out frequently, but it dried up: Rage broke up, Pearl Jam's options ran out, Korn sold fewer records, Incubus puts out a record every four years, and we've been fighting that hangover ever since." In fact, some contend that if Michael Jackson hadn't died, sparking brisk sales of his catalog, Ghost might have been out sooner.

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But if Sony worried that Epic was underperforming when Ghost took over, by the time she left, bad went to worse as the lack of quantifiable hits became painfully obvious. "She spent weeks in the studio with Matisyahu working on one song to get it right," says a high-ranking Sony source about Ghost's collaboration with the Hasidic rapper on the song "One Day." "The track was eventually chosen as the theme song to the 2010 Winter Olympics, selling close to 500,000 copies, but the trick is to do that four times on a record. Sure, we went from nothing to one hit, but that process is exhausting, and if you're the executive as well, you sacrifice something at the label."

Industry politics were another nail in Ghost's coffin. When it came to playing the game -- with colleagues, underlings and artists -- Ghost lacked the finesse of a seasoned Sony executive like Walk, say Epic staffers who worked under both. "She was a little immature," claims one such source. "Charlie was immature, too, but he knew how to play the politics. She didn't know or care." Walk also knew the players, but as a British transplant who had never lived in the U.S., Ghost was at a disadvantage from the get-go. "It takes years and years to learn the American market, to get to know the people and make your way around such a vast space," a former executive says. With that theory in mind, it didn't help that one of Ghost's few hires was the British Dench to a top post in A&R, the department whose responsibility it is to find and nurture talent, while baby-sitting albums-in-progress one track at a time -- though, to her credit, she didn't decimate the existing staff as many new chiefs often do.

And while it's worth noting that many of the successes that Epic was built on were born in the U.K. -- Michael and Culture Club during the '80s, Oasis during the '90s -- more recent hits were of the pop, all-American variety, like the Fray and Bareilles, who is said to have butted heads with Ghost on more than one occasion as her second Epic album, 2010's Kaleidescope Heart, was coming together. In fact, it's an oft-stated theory -- at least internally at Sony -- that her song "King of Anything" was written with Ghost in mind. Sample lyric: "You've got opinions, we're all entitled to 'em, but I never asked/So let me thank for your time and try not to waste any more of mine."

What did Bareilles find so offensive about her new label boss? For one thing, her bossiness. "Amanda would force herself into writing with the artists," a Sony source says. "She would over-A&R and be super-opinionated. Sara couldn't stand her." (A rep for Bareilles declined comment.) Again, Stringer defends his hire's intentions: "I'm not saying her management style was necessarily the best way of going about it, but she tried to do the right thing: to write with people, to get to know artists. ... Some of them worked, and some of them didn't."

Even the artists Ghost got along with seemed to cause friction with the people who eventually would take their music to market. An extreme example is the matter of Epic's Hugo, a 35-year-old neo-blues singer of Thai descent with whom Ghost shares writing credits on an astounding 18 songs. Signed to Ghost's publishing company in 2005, four years before she joined Epic, it was in her best interest for him to join the label's roster -- which he eventually did via a Sony-backed distribution deal with RocNation, the entertainment company formed through Jay-Z's $150 million Live Nation partnership representing such artists as Rihanna, Mark Ronson and Willow Smith. Now the more Hugo's songs get played, bought and synced, the more Ghost stands to pocket, potentially hundreds of thousands. While there's nothing illegal or even discouraged about the practice -- in fact, music creatives commonly work on projects outside their own labels -- some staffers felt like they were forced to work with a vanity artist who was, essentially, Ghost's "baby."

With complaints mounting along with reports of erratic behavior -- one observer recalls witnessing a Ghost "fit" involving backstage passes to Shakira's show at Madison Square Garden (the boss, apparently, wasn't on the list) -- several sources say Stringer slowly had distanced himself from Ghost during the past few months and that the Augustana showcase turned out to be a convenient excuse for what was already a fait accompli. "It had been building," says the insider. "He picked the wrong person who had a lot of problems and her own agenda. It was a short but very shaky ride."

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What does having a record deal really mean these days, when the cachet and glory is all but gone and marketers and social networkers have more drawing power than the irresistible hook of a good chorus? And where is Epic's place in this new world order of constant layoffs and budget constraints? "I saw the writing on the wall when we were told to cut back using FedEx and messengers and informed that we'd no longer have free bottled water at the office," recalls a former department head. "But there was plenty of frivolous spending, too. Jessica Simpson's hair, makeup and entourage alone cost so much, it was ridiculous."

Epic may be a small fish, but the label's problems are no different from those affecting the big guys; the three other majors also are suffering from a shrinking market, cutbacks and looming corporate shake-ups. Universal is about to hear the dreaded C word (consolidation) when new Universal Music Group CEO Lucian Grainge replaces Doug Morris in January; following Tom Whalley's recent exit, Warners went through a round of layoffs last month as a new executive team was put in place; and EMI is fighting just to stay in the game. And the biggest question mark of all is Sony Music's own succession plan come 2011, when Germany-based CEO Rolf Schmidt-Holtz's contract expires in March. Everyone from Whalley to RCA Music Group head Barry Weiss to Island Def Jam CEO Antonio "L.A." Reid and even Stringer himself are rumored as possible replacements.

These days, the halls of Epic Records, high above 55th Street on the 22nd floor, are quiet -- not a good sign when your business is what some might call making noise. "The place is just kind of dead," one recent roamer says. "No one's in their offices, Amanda isn't there, there's no energy. ... Most of the people still there have been through it all; they're numb at this point." Another described it this way: "Ding dong, the witch is dead!" Fortunately for all who remain, the label is about to ship 900,000 copies of the posthumous Jackson album Michael, out Dec. 14, which is expected to sell north of 400,000 in its first week.

As for whether Epic will exist a year from now, Stringer says he's "optimistic. Otherwise, it would be very difficult to work at a major corporation. That's why we get up in the morning: because something can happen the next day that can change the destiny of an artist, of a record, of a record label. That's what I believe in."

This chapter in Epic's history, he hopes, will remain just that. "With the greatest respect to Amanda, she's not the first executive to be fired in the last few weeks, she's probably the 20th," he says, referring to the recent spate of high-level exits at labels like Warner Bros. "Every day there's a story about people getting fired, so I don't take on that responsibility single-handedly. When I got into this business, I didn't think I'd be having to downsize 20 years later because it's screwed up. I just wanted to stand in the back of a hall watching the Clash."

Seeing the explosive punk-rock pioneers in their heyday has been a notch on Stringer's belt for more than three decades, so he's not about to let a simple personality problem define his career. "The legacy of the roster goes back more than 20 years," he insists. "Not two."

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