News

Hilary Rosen's 17-year tenure with the Recording Industry Association of America (RIAA) will come to an end this year.

On Wednesday, January 22, the 44-year-old chairman and CEO of the music industry trade organization announced that she would leave at the end of 2003. Rosen's official explanation was that she wished "to spend more time with her family," a reason often cited by departing executives.

The real reason may be closer to battle fatigue. Rosen joined one of the nation's most contentious industries as the compact disc was beginning its ascent, displacing the cassette tape as the audio format of convenience, and almost making the vinyl record extinct. The CD revived the recording industry, which had hit its first slump in decades at the end of the disco era—in 1979, for the first time, the industry produced more records than it could sell.

In the decade from 1985 to 1995, millions of music lovers methodically replaced their analog record collections with CDs. The period was enormously profitable for the music industry, which had no trouble selling multiple reissues of "back catalog" material unburdened by development costs, as well as plenty of works by new artists. "Perfect sound forever," the industry's tag line for the CD, also implied "perfect business model forever," because unlike LPs and cassette tapes, digital discs couldn't be easily copied.

That all changed in the mid-to-late 1990s, as CD-ROM drives, CD burners, and high-speed computers proliferated. The Internet revolution that began around 1996 blindsided the music industry to such an extent that it may never recover. More than two years of declining sales have been accompanied by the industry's inability to develop new superstar acts, by mutinies from formerly complacent artists, and by hideously expensive copyright violation lawsuits launched against any perceived threat.

As head of the association, Rosen was attacked by civil libertarians and home recording rights activists for her strong stance on copyright protection. She also took flak from recording artists for her support of legislation that cut them out of profits generated from their own work—such as the "works for hire" provision that rode on the coattails of the Satellite Home Viewer Act of 1999, and was repealed by the The Works Made for Hire and Copyright Corrections Act in October 2000. (Still unresolved is the exemption of musicians from California's general seven-year limit on labor contracts.) Rosen's legislative achievements haven't endeared her to consumers, but they do serve as a sort of tribute to her relentless attention to her lobbying duty. During her stint as CEO of the RIAA, she helped push through the Digital Millennium Copyright Act and the Sonny Bono Copyright Term Extension, and worked to iron out the Small Webcaster Amendments Act of 2002. She also presided over the litigation-induced demise of Napster.

The battle continues, and the war it's part of will probably never end. It's enough to exhaust the most tenacious and tireless warrior. "This has been the most exciting job I can imagine," Rosen stated. "These have been some dramatic years in the music business and the RIAA has been an important part of it . . . . This has been an extremely difficult decision but I know it is the right one for my family." Industry insiders quoted by The Hollywood Reporter insisted that she wasn't being forced out, but was walking away from the job "because she had tired of the continuous grind."

The RIAA has not indicated who will lead in Rosen's absence, but the organization's president and general counsel Cary Sherman seems the most likely choice. Whoever it is will have a far worse time of it than Rosen had—difficult as that is to imagine—and will undoubtedly look back at her reign with admiration and awe. "She'll be a hard act to follow," said Motion Picture Association of America (MPAA) president Jack Valenti.

"I will always have the utmost respect, admiration and affection for Hilary Rosen. She has long been a strong, creative, and effective advocate for the recording industry. While we have not always seen eye-to-eye on certain issues, I have always admired her spirit, intelligence, and dedication to her cause. Moreover, our debates have never interfered with a warm friendship and great mutual respect," said Consumer Electronics Association (CEA) president and CEO Gary Shapiro of Rosen's resignation.

Two days after Rosen's announcement, the Bertelsmann Music Group announced a massive reorganization intended to streamline its global operations by eliminating regional management. The music label's regional teams for Europe, Asia, and Latin America, will be divided into four operating groups: the office of the chairman, the label group, territory management, and corporate center, with all group leaders reporting to the office of the chairman, headed by BMG CEO Rolf Schmidt-Holtz. The executive shuffle also moved Thomas Stein from president of BMG Europe to the new position of president of BMG's operations for Germany and Austria.

The management shakeup at BMG reflects a similar one that took place last year at the top level of Bertelsmann AG, parent of BMG. Thomas Middelhoff, who guided the German media conglomerate through the Internet's adolescence, was deposed as CEO in that bit of palace intrigue. The music unit's new structure will allow BMG "to be closer to artists while allowing us to better support our creative executives," Schmidt-Holtz said. BMG was among four of the music industry's "Big Five" to go profitless last year. In 2002, only Universal Music Group managed to see black ink, despite the deep financial woes of parent organization Universal Vivendi SA.