COMPANY TOWN : THE BIG Q & A : Sony Chief Tuned In to World Beat

Anyone looking for proof that music is a global business need look no further than the phenomenal success of Latin sensation Ricky Martin.

The Puerto Rican heartthrob recorded his new self-titled album in English for a Japanese conglomerate run by an Italian American who grew up emulating black musicians. Thanks to an elaborate, multicultural marketing campaign, Sony Music Entertainment, the company for which Martin records, has already sold an estimated 10 million copies of his pop crossover debut around the world since it was released in May.

Martin is just the latest in a steady stream of global blockbusters for Sony--including multimillion-selling mega-hits by Mariah Carey, the Fugees, Lauryn Hill and Celine Dion--since New Yorker Thomas D. Mottola took charge of the Tokyo-based electronic giant’s worldwide music division in 1995.

Mottola, a former guitarist and artist manager who joined the company as head of CBS Records Group in 1988 and took over as chief of Sony Music in 1995, is credited with transforming the once-stodgy, superstar-driven corporation into a fierce global competitor with a diverse roster of young pop, rock, rap, R&B; and international acts.

He restored Sony’s credibility by installing one of the industry’s most aggressive and stable management teams--revenue has nearly tripled on their watch from $2.4 billion in 1989 to $6.3 billion in the fiscal year ended March 1999. Sony is the second-largest record company in the world and currently ranks third in the United States, capturing about 16% of the domestic market with hits by such artists as Offspring, Macy Gray, Jennifer Lopez, Korn, Elvis Crespo and Nas.

In his first extensive interview in several years, Mottola, 50, discussed the global consolidation of the music business, its impact on artist development and, for the first time, spoke about the breakup of his marriage to Sony superstar Mariah Carey.

Question: Everybody in the media is

acting like Ricky Martin’s huge Latin pop crossover success just spontaneously happened.

Answer: Yeah. We have a laugh around here when we see all the hoopla about the Latin explosion. We’ll take the hype, but the truth is Sony Discos, our Latin division, is celebrating its 20th anniversary, and we mapped out this entire marketing campaign very specifically. The Latin market has been a long-term development process for this company, and over the last five years, a lot of our concentration has gone into looking at Latin artists with mainstream potential. Ricky Martin was already a superstar in the Latin world who had sold 15 million Spanish-language albums before we hit the ground with the Grammy telecast launch of “Livin’ La Vida Loca.” But this isn’t just about Ricky. We’ve got Marc Anthony, Elvis Crespo, Alejandro Fernandez, Shakira and Jennifer Lopez. If you look at the Latin music chart, you’ll notice that at least 20 of the top 50 best-sellers are Sony acts. The corporation views our Latin division as a giant reservoir of talent that we can cross over into becoming the pop global superstars.

Q: Seagram became the biggest music company in the world last year after it merged PolyGram with its Universal Music Group. But many in the industry still single out Sony’s global machine for rolling out projects.

A: When I arrived here 11 years ago, our international division was a completely separate operation run by a team of individuals who looked upon themselves as a totally different company. By the time I became CEO in 1995, I had a pretty good read on the flaws of the system. My team and I set out to turn Sony into one seamless company. We broke down all the walls and opened up communication with everybody in every territory around the world. Now when we have a priority, it’s like we can push a button and the entire global operation moves as one. Any artist who considers coming to Sony knows we view every signing as a potential global signing. We pick out four projects each year and devise specific strategies to push them around the world.

Q: What are the other big changes in the music business in the 30 years since you started?

A: It’s a completely different business now. Back then, the disposability factor didn’t exist anywhere near what it does now. That was a time when companies actually treated an artist’s first album like it was the start of a career. The idea then was that you tried to develop an artist over time. Executives would say, “OK, when we get to the second album and third album, we’ll develop them to this level and that level.” That practically doesn’t exist anymore. You’ve got to come out with guns blazing today.

Q: Why?

A: The competition is so much stiffer. The costs are 20 to 40 times higher. The consolidation of the record companies has altered the texture of everything. Plus, MTV and the Internet have changed the audience’s input factor. Kids want things quicker. Instead of latching on to one artist and saying, “This group is my icon and I will believe in them and follow them,” kids want hits. And that’s where the disposability factor comes in. Lots of one-hit wonders. Lots of records you hear, or videos you see, it could be this four girls or that four girls. It doesn’t matter. There might be 10 of them out right now. But when you have 10 things that are exactly the same, probably only one will endure. Maybe none. Real superstar artists like Lauryn Hill and the Fugees can still break through, but you see much fewer of them these days.

Q: Wall Street analysts aren’t crazy about artist development. Explain why Sony keeps sinking money into an act such as Keb’ Mo’, a relatively unknown blues singer who has released two acclaimed but poor-selling albums so far.

A: I don’t have to explain it to Wall Street because our hits make up for everything else. We have the luxury to do it. Keb’ Mo’ is incredible. I believe we really have to try to go the distance with him. I can’t sit here and promise you he is going to be the next biggest thing. But I can tell you this: He’s one hell of a talented musician and an amazing entertainer. And if he comes up with that one right song that clicks with the public, who knows what could happen. I believe that having an artist like him on our roster is an asset for the company.

When you’re running a company this size, you have to know what your budgets are and what your numbers are and always try to live up to that and beat it. But at the same time, we have just as much of a responsibility here to build and develop great artists and to give unique talent a chance. Because if we don’t do that, the music will just die someday. Take Pearl Jam, for example. Their first album took 18 months of work before we even reached a few 100,000 in sales. We stuck behind Pearl Jam and Korn, the Fugees and Fiona Apple. Those are just a few examples of acts who didn’t make it big on the first shot. Now they’re multimillion sellers. You’ve got to stick with unique artists that you believe in. That’s part of the mix of our development plan.

Q: It took a while to develop your own career. You were a guitarist, a singer, a song publisher and a manager before you became an executive. Talk about how you got started.

A: Music was in my blood from birth. My dad was a customs broker who played piano and guitar at home. My mom wanted to be a singer, and my three sisters all loved to harmonize. On the weekends, my relatives would come over and bring their instruments. So there was always a lot of music in the house. I was the baby, born 13 years after my last sister. I grew up in the Bronx, where I would hear my teenage sisters blasting the radio along with all kinds of pop and rock and Latin music filtering through the neighborhood. As a kid, I played piano and trumpet and I was completely moved by Elvis Presley. When I was 8 years old, I used to come home and put on a leather jacket and paint sideburns on my face and stand in front of the mirror and emulate Elvis.

Q: What other musical heroes did you have?

A: My heroes were guys like James Brown, Joe Tex and all the great black artists of the 1960s. I loved Elvis and came up thinking Tom Jones was pretty cool too then.

Q: You ended up signing a contract as a singer with Epic, a company now owned by Sony.

A: Yeah. I did some records under T.D. Valentine, which was a very silly name given to me by my producer. He said, “We need something flashy.” He took the initials from my name, Thomas Daniel, and said: “Valentine’s Day is next week. OK, your name is T.D. Valentine.” I said: “OK, great. No problem. Just put my record out, man. You can call me anything you want.”

Q: Your breakup with Mariah Carey, one of the biggest stars on the Sony roster, got a huge amount of public attention. Have you gotten that behind you?

A: Well, there was a lot of love and affection in the relationship and, as in anybody’s personal life when there is a breakup, that can bring pain. Like all couples, we were a couple that made mistakes. It was tough. But right now, I’m really happy that she is doing well in her personal life--and similarly I’m doing well in my personal life.

Q: Your marriage broke up just before the company was about to release a new Carey album. Most of your competitors thought Mariah inserted a character into the first music video that appeared to be making fun of you. How did you feel when you saw it?

A: To be honest with you, I saw the video, and I didn’t get it. . . . I think people love to create gossip and take shots. I don’t think that there were similarities. I didn’t have any problems with it.

Q: Was it a problem running the company and being married to your biggest star?

A: That became a little difficult sometimes because it didn’t give us much of an opportunity to have a separate life from our business life. It would happen during the day, and then it would happen at night. So, in the respect that all couples have problems, that compounded it. There’s no question. But I really believed in Mariah’s talent right from the very beginning. I still believe in her talent. She has built an incredible career, and I’m really happy that I was a part of that.

Q: When you started at Sony, competitors used to talk about how people were counting the days until you’d be fired. How does it feel 11 years later to end up running what is considered be the most stable executive team at the second-biggest record corporation in the world?

A: Yeah, people used to take a lot of shots at us. Not anymore. I always looked up to the guys at Warner Music. Mo Ostin and Ahmet Ertegun and the rest of those guys. I tried to build and structure a team like they had under Steve Ross. It feels great to have people finally recognize this team.

Q: Your team is made up of international head Mel Ilberman, second-in-command Michele Anthony, Columbia chief Don Ienner, Epic Group heads Dave Glew and Polly Anthony. These people have a reputation for being strong-willed and hard-headed. Competitors often compare your team to a strict military operation.

A: It’s almost like a big family, and just like any family, there are fights that go on every day. But there is so much talent in the organization. Starting with Mel. He’s like our guru. He has a broad range of knowledge that spans across every operation. He has guided me through many decisions. Michele is so smart, and she has killer instincts. I’d hate to be on the other side of a negotiating table from her. Donny is a pit bull, never afraid to raise his voice. Opinionated as hell but always delivers on his opinions. Dave is like a football coach who runs Epic with Polly, who has unbelievable people skills. In international, we also have Bob Bowlin and Rick Dobbis. They all have different skills and styles. My view is that it’s good to disagree because it sparks ideas. I like that and encourage it. But at the end of the day, it isn’t unusual to see us sitting together in one restaurant having dinner like friends. There’s a tremendous sense of loyalty between all of us.

Q: How big a factor is luck in the success of a music company? Your competitors say Sony benefited greatly a few years ago from the “Titanic” soundtrack, an unexpected worldwide hit that ended up selling more than 30 million copies.

A: It’s funny. We had a record year that year, and all anybody ever talks about is “Titanic,” “Titanic,” “Titanic!” We had a bunch of hits, including a Celine Dion album that sold 30 million, plus hits from Will Smith, Savage Garden, Mariah Carey and Jamiroquai.

Q: Nobody had a clue, though, that the “Titanic” album would be such a huge hit when you signed the contract, right?

A: I thought the single was a hit, but no, I had no idea that the soundtrack was going to sell 30 million. I’m happy it did. It was an amazingly pleasant surprise. No one can ever predict that they are going to have a windfall like “Titanic.” You have to go with your best educated assumptions as trained executives, and you’ve got to be right more times than you’re wrong.

Q: So luck doesn’t help?

A: Luck always helps. But you can’t operate a company on luck.