Not partying like it’s 1999

In the music business, the industry party traditionally has been as much about showy chest-thumping and corporate symbolism as about celebration. So what might be read into the fact that this year the Warner Music Group’s Grammy after-party left the rarefied heights of the Sky Bar for a smaller, street-level restaurant nearby?

“Maybe,” one Sky Bar employee offered, “they were worried some people might jump.”

Ouch. It’s no secret that these are grim times for the major music labels, which after so many seasons of distress were clearly downsizing their budget for post-Grammy revelry.

For Warner, even the earthbound party at Katana presented a challenge: Can you tastefully hand out salmon sushi and pink slips in the same season? New ownership and label leadership are now sizing up the company and expected to make cutbacks of about $250 million in the weeks to come.

Sony Music Group’s party showed similar shrinkage this year and over at the Universal Music Group, the No. 1 label in the world, well, they decided for the second year in a row to skip a post-Grammy party altogether.

It’s a sensitive topic. A corporate spokesman for Universal, after several days of office inquiries, said that he could find no one to talk about the party-that-wasn’t-there. One executive at a Universal label who asked not to be named said what seemed obvious: “I think part of it is that there are some issues of taste. I mean, do you want to spend a ton of money on a party at the same time you’re telling everyone it’s a tough time?”

It has been a tough time. Global music sales peaked at an estimated $40 billion in 1999 and by last year that financial party had cooled considerably, down into the neighborhood of $28 billion. Not surprisingly, the international conglomerates and finance powers that keep close track of such matters have not been pleased, which has led to a flurry of mergers, cutbacks, layoffs and leadership scrambles. There have also been curtailed signings of new artists as well as a quicker hook for projects (or careers) that don’t yield quick hits.

Against that backdrop, you might wonder if some of this year’s partygoers might be making nooses out of those velvet ropes.

But whether it’s wishful thinking or early insight, many industry insiders were talking in upbeat tones in the days before the Grammys. At least, most of them said, things are better than last year.

“I think it’s clear that the difference between today and a year ago is change toward recovery,” said Rob Sisco, the chief operating officer of Nielsen SoundScan, which tracks retail music sales. “The [downward sales] found the floor, and in the last five to six months there’s been a stronger showing.”

U.S. sales of music have clearly perked up in comparison to the bleak statistics collected in 2002 and most of 2003. For instance, album sales in 16 of the past 19 weeks have topped the numbers from corresponding weeks a year earlier. The question is whether that shows an industry in rebound or just one rummaging around in a different section of its basement.

Although Wall Street remains cool to the industry, optimists make much of the new doings in the area of music and the digital download. The rise of Napster and the subsequent spree of unpaid downloads of songs by consumers are the most commonly accused culprits for the industry decline. Now, industry leaders say that the highly publicized and narrowly targeted legal actions brought against that pilfering culture have combined with the success story of Apple’s iTunes to create a new chapter in the digital music story.

“It’s all very encouraging, a sign that all of these challenges can be conquered,” said Clive Davis, the famous music impresario who in recent years added Alicia Keys to his long list of discoveries, among them Carlos Santana and Whitney Houston. “The appetite for recorded music has never been stronger, and the new technologies are now being understood and turning to methods of growing the business.... Success in this business remains the ability of recognizing unique artistry as well as understanding current trends.”

You expect the upbeat from Davis. Just this month, the seemingly unsinkable 70-year-old was named to his most powerful post -- chief of most North American operations of BMG, the music division of German conglomerate Bertelsmann. It was a triumphant moment for Davis, who founded Arista Records in the 1970s but in 2000 was forced to part with the company by his then-superiors in the BMG hierarchy.

On Saturday night, Davis staged his famous Grammy party at the Beverly Hills Hotel and the affair was opulent and as optimistic as its host. He was asked if his party is, like him, an exception to the industry rule, and he said that he expected the whole business to enjoy better times because prerecorded music thrives in “its place in the human heart.”

Another truism is that nature abhors a vacuum, and just because the music labels turned down the volume on their parties didn’t mean that Grammy weekend could pass without some major blowouts.

One of the hot invitations was for the mansion party thrown by OutKast. The rap duo’s party plans for late Sunday night included shuttle service to ferry partygoers from a parking lot to a “secret mansion” location, a six-figure budget, multiple dance floors and gaming areas featuring the entertainments of the Hard Rock Casino and Xbox video games.

One of the coordinators of the party was Kobi Wu, who had been following a career path in the music industry until a few years ago when she decided its future looked too glum. She said she hoped that a lot of label employees would come to the OutKast party to escape their own career concerns.

“This is the kind of party that the labels are not doing this time around, [because] for them to do it might be seen as a slap in the face,” Wu said.

The William Morris Agency, too, was throwing its first major post-Grammy event with a bash at White Lotus to assure that clients such as Eminem, Korn and Vince Gill have a proper destination after the show. Like OutKast, the agency has a sponsor in Budweiser to help foot the bill.

“One of the reasons we are having a party is because we have 84 nominations among our clients, probably the most ever,” said Chris Petrikin, a spokesman for the agency. “But one of the reasons is also that everyone among the music labels is scaling back their parties. The labels are not going all out like they used to. And, you know, who can blame them?”