Three music legends, Elektra Records founder Jac Holzman, Sire Records co-founder Seymour Stein, and Atlantic Records co-founder Ahmet Ertegun spoke separately with BusinessWeek Senior Writer Tom Lowry to discuss the past and future of the business. Here are edited excerpts from those conversations.
On how the business has changed:
Basic fundamentals don't change. The toolbox is different. We embrace the Internet. We embrace downloads. The record industry has never had decent ancillary rights. The movie industry has [been] saved by ancillaries over the years, but resisted most of them.
On two Time Warner (TWX ) bosses:
[Former Time Warner boss] Steve Ross realized it was music, not film, that was the engine of growth. We threw off so much cash that we were self-funding as we went along. Jerry Levin [the former Time Warner CEO who succeeded Ross] didn't have a clue about what the music business was about. He didn't respect it. He didn't care, and it showed.
On why he pulled back from the music industry:
I didn't like where the business was going. I didn't like lawyers and managers who enhanced their own position by interposing themselves between the artists and me.
On his first meeting with Edgar Bronfman after sending him a congratulatory e-mail on buying Warner Music:
Three weeks later, we did meet for what turned out to be a three-hour lunch. Immediately we began sharing our mutual passion for great songs and singers. Edgar enthused over Joni Mitchell's "A Case for You." I agreed and raised him Leonard Cohen's "I'm Your Man." This enormous fun went on for close to an hour.
Know the music he loves, and you begin to know something of the man. But as a founding member of the original Warner/Elektra/Atlantic trifecta, I was also grateful and relieved that someone who loved music at that root level of sensitivity would guide the company.
When the conversation inevitably segued into a more business-oriented discussion, every problem we talked about -- and let me say that the music industry has always had more than its fair share of problems and doom mongers -- Edgar astutely linked to an opportunity [in a new digital world].
His assessment of the music industry today:
We have really turned a corner as an industry. I think it has been helped by the fact that we have gotten downloads under control to the point where they are now working for us. Look, I have records from the 1920s, and there is a warning printed on those records that they could not be played on the radio. People were afraid radio would kill the music business.
Now for the past 50 years, we have done everything we could to get music on the radio, including at one time payola. People were afraid it was the end. People were afraid of the cassette. They were afraid of the CD. As we know, the CD was the biggest boon in so many auxiliary ways. A lot of money got plowed back into signing and developing new artists. That is what you will see from the downloads and from the ring tones.
His first favorite song:
"Why Do Fools Fall in Love" by Frankie Lymon and the Teenagers.
On the Ramones and hearing the Talking Heads for the first time:
I owe so much to the Ramones. It was at a Ramones gig that I first heard the Talking Heads. I thought the opening act was a different band [at New York City club CBGB]. It was the middle of November but a beautiful night. I was outside talking to Lenny Kaye, the guitarist for Patti Smith. All of sudden I hear "When my love stands next to your love" [from the song "Love -- Building on Fire"].
I said, "This isn't the Shirts." Lenny said, "No, they got a paying job in Staten Island." I felt myself moving as I was talking. The music just picked me up like dust in a vacuum cleaner.
On the next musical frontiers:
I spend a lot of time in England. I believe music knows no international boundaries. I plan to go to South Africa later this year. I think the MTV channel planned for there will be a catalyst for all kinds of music. I am close to MTV people in India. I believe India will explode. China will explode.
When I first went to India, when I first sold half of my company to Mo Ostin in 1978, there were probably about 30 million people living above the poverty line. Now there are about 300 million living well above the poverty line. That's [the equivalent of] Western Europe.
Once a year I go to Manchester [England]. You walk down the street [where] the Indian restaurants [are], and you hear the greatest music. Some of it is made in India and remixed in England. It's going to happen. It's going to break through. Talent knows no racial barriers.
On Edgar Bronfman's attempt to recruit him to Universal Music in the mid-1990s after Bronfman wooed former Warner Music exec Doug Morris:
You heard about that, huh? At the time, we had the music wars within Time Warner, and my friend and protégé Doug Morris was booted out of here. I was very happy to talk to Edgar [head of Universal at the time], making sure that he had a place for Doug. That turned out very well.
Edgar put together something people really don't give him enough credit for, which is putting together the company that has become the world's largest music company [now Universal Music Group, part of Vivendi Universal (V )]. Edgar tried to get me to come to Universal. But I started off with Atlantic. I will finish where I started.
On changes in the music business, good and bad, in the past 60 years:
We went from a $1 business to a $9 business to a $10 business to eventually a $15 business. And it stayed that way. With the cassette and the CD, it stayed. People kept buying the same stuff. Right now, it is a zero item because people are stealing the music. You can get any record you want for zero. Any price we put on it is not competitive. Even if it goes back to being just a dollar business, you can say bye-bye to us. If it goes back to a dollar business, Mariah Carey will have to live in a cold-water flat.
On his portrayals in last year's movies Ray, about Ray Charles, and Beyond the Sea, about Bobby Darin:
Somebody asked my wife, Mica, about my portrayal in Ray. "If that is what my husband looked like when I met him," she said. "I would not be married." Somebody asked me if those movies were truthful. If they were truthful, they would have been called documentaries. And neither you nor I would have seen them.
On one of his biggest regrets:
The promoter Bill Graham wanted me to listen to this seven-piece band. So I go out to California, and only this skinny kid with a guitar and a bongo player show up. A bongo player! I said to Graham, "Give me a break. I'm not signing this guy." It was Carlos Santana.
On his major influences:
My [older] brother, Nesuhi, had a big influence on me growing up. He exposed me to not only jazz but also literature, philosophy, and art.
Two kinds of people created a great deal of what is truly American. One is the black musician, especially Louis Armstrong. He upset the whole world. And today it [jazz] is the only music that travels. There is no other music that travels like that, that people play all over the world.
The second thing is the comedy of the Jewish people. The Jewish New York people from the 1920s and 1930s created what became vaudeville and eventually television. American humor is that. It's Jewish humor, but it is being told by a lot of people who aren't Jewish -- like a lot great jazz is played by non-black people.