20 Biggest Record Company Screw-Ups of All Time

Youth Movement
#10 Columbia Records loses Alicia Keys, drops 50 Cent
Columbia had a way with young talent in the late ’90s and early ’00s. First, after plunking down a reported $400,000 to sign Alicia Keys, they turned her over to high-priced producers who tried to transform her into Whitney Houston. Frustrated, she bolted—and signed with J Records, where she has sold more than 20 million albums to date. Around the same time, another languishing Columbia prospect, 50 Cent, recorded “How to Rob” in a desperate attempt to get his label to notice him. But when he was shot nine times in 2000, skittish execs dumped him—and then watched as he became an unstoppable one-man money factory at Interscope.
Unintended consequence Fedoras and bullet­proof vests become essential urban-fashion accessories.

Spy Game
#9 “Digital-rights management” backfires even more badly than usual
In a 2005 effort to combat digital piracy, Sony BMG packaged millions of CDs with copy-protection software that automatically installed a “rootkit” on users’ PCs, which, in addition to preventing consumers from making more than three copies of their legally purchased CD, also made them vulnerable to viruses and hackers. Sony BMG initially downplayed the problem, but after the Department of Homeland Security issued an advisory, the label recalled more than 4 million CDs. Sony was accused of spying on its customers’ listening habits and was forced to pay several million dollars to settle class-action lawsuits that alleged violations of spyware laws and deceptive trade practices.
Unintended consequence Radiohead offer up In Rainbows for a bargain pay-what-you-like price.

Rap Attack
#8 Warner junks Interscope
When anti-rap crusaders wanted to deliver a body blow to hip-hop, they took aim at the Warner Music Group, because its corporate parent, Time Warner, was American-owned and publicly traded. When Ice-T’s “Cop Killer” became too hot to handle, Warner Music dropped him, but the label still enjoyed huge rap hits—particularly through Death Row Records, partially owned by their Interscope label. But when Republican presidential candidate Bob Dole attacked Warner Music in his stump speech, Time Warner panicked, ordering the sale of Interscope to rival Universal. Universal soon became the biggest record company in the world—in large measure due to Interscope hits by Tupac, Dr. Dre and Eminem. Warner Music went on a long slide and was finally sold in 2004.
Unintended consequence Time Warner shareholders never have to worry about who killed Tupac.

Something’s Happening, But You Don’t Know What It Is
#7 Music publisher gives away Bob Dylan
In the early 1960s Leeds/Duchess was a legendary music-publishing company but far from the hippest: It knew Tin Pan Alley but couldn’t find a Greenwich Village coffeehouse with a compass. Yet when Columbia signed Bob Dylan in 1961, they steered him to Leeds, where he happily signed a publishing deal with a $1,000 advance. The following year, Dylan’s new manager, Albert Grossman, got out of the deal with the disinterested publisher simply by repaying the $1,000. Dylan’s new publisher, the savvier M. Witmark & Sons, received 237 songs—many of them future standards worth tens of millions of dollars—in just the first three years.
Unintended consequence The receptionists at Leeds/Duchess never have to field calls asking what “All Along the Watchtower” is really about.

Nothing Exceeds Like Excess
#6 Casablanca rides strong sales straight to the poorhouse
No record label represents the coked-up inanity of the late ’70s like disco-driven behemoth Casablanca. In 1978, the label simultaneously shipped a million copies of four solo albums by each member of their biggest rock act, Kiss, so they could justifiably claim the records “shipped platinum.” The albums sold well—but not that well. Record stores returned hundreds of thousands
of unsold copies, inspiring comedian Robert Klein to joke that Casablanca’s releases “shipped gold and returned platinum.” The label continued to lose millions a year throughout the late ’70s, until part-owner PolyGram Records bought out founder Neil Bogart for $15 million in 1980.
Unintended consequence Hey, man—400,000 extra surfaces to snort drugs from!