COMPANY TOWN : A&M; Still Home to Hits : CEO Under PolyGram Gets Credit for Creative Success

Ever since Jerry Moss and Herb Alpert sold A&M; Records to PolyGram International, insiders have wondered whether the Dutch-owned conglomerate could salvage the boutique identity of the revered Hollywood label--home to pop stars such as Cat Stevens and the Police.

Working in the shadow of music industry legends has been no picnic, but Al Cafaro, A&M;’s president and chief executive, has succeeded in capturing new talent as well as bolstering profits.

After four years on the job, Cafaro’s patient approach to artist development is paying off. Last year’s hits from diverse acts such as Sheryl Crow, Soundgarden and Barry White helped generate nearly $500 million in worldwide revenue--the best fiscal performance in the company’s 30-year history. For his efforts, Cafaro’s income is believed to have approached $1 million in 1994.

Transforming the label into PolyGram’s largest domestic profit center has earned the 46-year-old executive not only kudos from corporate brass, but also admiration in the creative community.

“Al is not one of those timid, hide-behind-the-desk executive types. He’s a real scrapper,” says singer Sheryl Crow, a new A&M; artist who scooped up three Grammys last month. “Al is the kind of individual you can count on to roll his sleeves up and get knee-deep muddy in a thing when you need his help. This is a guy who takes real pride in the artistic process, not just the commercial outcome.”

Cafaro went out on a limb for Crow two years ago, when he caved in to a request from the then unknown pop singer and allowed her to scrap the first collection of songs she had recorded for A&M; (at a cost of $500,000) and follow her muse on a new project.

“Tuesday Night Club Music,” the album Crow ultimately delivered, has since sold 3.5 million copies in the United States. It is still No. 3 on the nationwide pop chart more than a year after its release.

Crow isn’t the only A&M; artist with whom Cafaro has rolled the dice and scored big. The Seattle rock group Soundgarden, Christian music’s Amy Grant, R&B; crooner Barry White and pop star Bryan Adams have all reached multimillion-dollar sales levels under Cafaro’s watch. He is currently trying to pry open the door for less well known acts such as Ass Ponies and Blues Traveler.

A&M;’s revenue has risen more than 66% since Cafaro took over. Last year the label generated as much money as PolyGram paid for it six years ago. PolyGram, a subsidiary of the Dutch electronics company Philips, also owns Island, Motown, Mercury, Polydor and London Records.

Cafaro, a New York native and former radio deejay, joined A&M; in promotions in 1977. He attributes the company’s upsurge to the creative interaction and dedication of his staff.

“I think the biggest misconception in this business is that a record company’s success comes as a result of the singular vision of one individual,” Cafaro said. “That’s simply not true. The reason A&M; hasn’t gone stale is that we have an extremely talented artist roster and a great core of executives who remain committed to a vision. It’s a real team effort here.”

Some industry observers think Cafaro lost his chief asset in the vision department last year. Marketing whiz Jim Guerinot left to start his own label, which is being financed by competitor Bertelsmann Music Group. Guerinot had worked closely with Crow, Soundgarden and Barry White. He now manages Offspring, last year’s biggest alternative breakthrough band.

Geffen Records President Ed Rosenblatt disagrees, however.

“Al Cafaro is the vision at A&M;,” said Rosenblatt, whose cutting-edge roster includes Hole and Elastica. “Anyone who underestimates Al’s contribution to A&M;’s current success is out to lunch. The man is a serious competitor.”

Cafaro’s biggest problem, insiders say, may be in black music. The company has had lackluster sales there since Janet Jackson departed in 1991 for Virgin Records. While A&M; scored a hit with White’s million-selling “Icon of Love” album, sources say Perspective Records, the company’s joint venture with Grammy-winning R&B; producers Jimmy Jam and Terry Lewis, is drowning in red ink.

Cafaro would not say whether Perspective has been losing money, but he acknowledged “disappointment.”

The other main criticism of A&M; stems primarily from what insiders characterize as a “PolyGram-inflicted” problem.

In an apparent attempt to capitalize on Cafaro’s success in marketing and promoting new products, PolyGram has decided to feed releases from several of its other labels through A&M--an; action sources say could be a burden to A&M;’s staff of 200.

But Cafaro says he’s proud of what he has accomplished and remains optimistic about the future.

“I realize that four years on the job as president may seem like a blip on the screen compared to some of the legends in this business, but I feel comfortable with the job I’m doing at A&M;,” he said. “I don’t have time to ever really focus on where I sit in terms of other people’s shadows. There’s so much I need to do to keep pushing this label forward.”

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A&M;’s Growth

PolyGram holds nearly 13% of the domestic market in album sales. A&M; is largest unit of PolyGram, accounting for 22.2% of its sales.

U.S. MARKET SHARE

PolyGram: 12.9%

UNI (MCA): 10.7%

CEMA (EMI Music): 11.2%

Sony: 15.2%

Warner Elektra Atlantic: 21.1%

Bertelsmann Music Group: 12.9%

Others: 16.0%

POLYGRAM LABELS

A&M;: 22.2%

PolyGram Label Group: 19.5%

Mercury: 15.5%

Motown: 14.3%

Island: 9.8%

PolyGram Classic: 8.3%

Others: 10.4%

A&M; REVENUE (GLOBAL)

In millions:

1994: $500

Note: Market share figures are from 1994.

Source: SoundScan, Industry reports