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L.A. Comes to New York

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Lots of local stars deploy their talents on no grander goal than free drinks and freer girls, but Reid bonded with Edmonds over their seriousness of purpose. "Neither of us were big party guys," says Reid. "While the other guys in the band would go out and have fun, he and I would sit at home and write songs." Rather than the fleeting glamour of being a musician, Reid wanted ownership and equity, with their greater rewards and permanence.

In 1990, Reid's wife, Pebbles, located his father, who was living in Florida, and brought him to their house in Atlanta to meet his son for the first, and only, time. Had his father followed Reid's career? Did he know his son was successful? "I don't know how much he knew," Reid says thoughtfully. Then he suddenly laughs. "When he came to my home, he realized I was successful."

After several years of making hits, L.A. and Babyface "fell out," says Edmonds. He wanted to focus on writing and producing, and Reid wanted to run a record company. "It drove us in two separate directions." "I became a noodge," admits Reid, who pushed Babyface to write with new LaFace singers. " 'What do you want me to work with Damian Dame for when I can work with Madonna?' It was kind of a tug-of-war." It's rumored that the split turned bitter, with long silences between the two. "I never thought it got bad," says Reid, who insists he doesn't take conflict personally. "Maybe it did."

LaFace had other problems, most notably the bankruptcies of its two biggest acts, TLC and Toni Braxton. Both Reid and Edmonds shift responsibility to Arista, whose contracts the artists signed. "We weren't in the position of power," says Edmonds.

TLC was the more troubling case, because the trio was managed by Reid's first wife, Pebbles. The group had the standard low royalty rate new artists start with, and its contract with Pebbles' company, Pebbitone, gave her a substantial share of profits, too. "TLC wanted Pebbitone out of their lives," says Reid, "and the only way they could get out was to file bankruptcy." In turn, Pebbitone sued LaFace -- by then, Reid and Pebbles, who have two children, had separated, and Reid calls the dispute "one of the breaking points in my marriage." In the music business, lawsuits are often just negotiations by other means, and once TLC settled with Pebbitone, it signed another contract with LaFace.

"L.A. brought me to Clive," says Sean "Puffy" Combs. "It was gracious of him and also smart."

Soon after, Toni Braxton filed for bankruptcy in the midst of a contract renegotiation. It looked bad for LaFace, because Braxton had sold more than 16 million records. When Braxton went on The Oprah Winfrey Show to discuss the bankruptcy, a source adds, Oprah called LaFace "and said, 'Toni's on my show today; she intends to make you guys look really bad. But I think it's bullshit, so watch the show.' " Indeed, Winfrey scolded Braxton for excessive spending, saying, "I didn't know Gucci made silverware."

Braxton withdrew the bankruptcy claim when she got a new deal with Arista. She and Reid had been "so close, almost like relatives," she says, but during the dispute, they communicated only through lawyers. "For a long period of time, I was angry," Braxton adds. But now she coos lovingly about Reid; after all, she says, laughing, LaFace and Arista "gave me a really nice pay raise."

On a November night, L.A. Reid is hosting a raucous private party upstairs at Moomba to celebrate a new release by the brilliant Atlanta hip-hop duo OutKast, whose album had debuted at No. 2 on the charts. Reid arrives late, wearing sunglasses and a flashy four-button suit, and offers brief, proud praise of OutKast, predicting to the assembled staff and friends that album sales will top 6 million. Across the room, OutKast rapper Big Boi, outfitted in a camouflage jumpsuit, orders another Hennesy and raves about the wisdom and opportunities Reid has given OutKast since the duo auditioned in Reid's office eight years earlier: "It's like working with your uncle."

Reid merits credit for guiding OutKast's commercial and critical success, and the party marks one of the high points of his first six months at Arista. During that time, the label has also had success with two new singers, Pink, whom Reid signed, and Dido. Reid has also signed exclusive deals with producers including Kevin "She'kspere" Briggs and Janet Jackson's production team of Jimmy Jam and Terry Lewis and has also moved to mend Arista's weakness in rock.

This fall, he won a costly bidding war for Edema, a tough outfit led by the younger brother of Korn singer Jonathan Davis, though one competing A&R honcho says Arista overpaid for a mediocre band. Reid flew to Los Angeles to meet Edema and sell it on Arista: "I told them, 'Look, I haven't had success in your genre of music. But I won't lose. If you want to be on a team with a winner, you should be on a team with me. Because I just won't fucking quit.' "

There are signs 2001 might be a tougher year. Puffy Combs's Bad Boy label has stumbled, and there is no new album coming soon from Santana or Whitney Houston, who was nearly arrested with half an ounce of marijuana in a Hawaii airport and is persistently rumored to have a drug addiction. "Are you okay?" Reid asked Houston tactfully when he assumed the presidency of Arista. "Is there anything I can do to help you?" "Yes, I'm okay," she replied. "Just make sure my record's a hit."

"I see what people write and what people say about Whitney," Reid observes. "But then I look in her eyes, and I don't see it. She's the same girl I've always known."

Among his challenges, Reid has to adapt to new relationships with old friends. Combs, for one, bristles when it's suggested that Reid is now his boss: "Get the fuck outta here. I'm my own boss. He's my partner."

Reid has already shown he can navigate management obstacles. In November, a staff member leaked a new song by Usher to radio without the consent of Reid, who says, "I think people were trying to force my hand, and it pissed me off." The leak, he says, "cost a couple of people jobs. We'll never have that problem again." While Reid was struggling through an admittedly "tough" few weeks, J Records' first release, the debut single by O-Town -- the boy band L.A. Reid disdained -- was the top-selling single in the country in its first week in stores.

There's also a chance Reid hasn't seen the last of BMG's corporate intrigue. Though Zelnick turned BMG from a disaster into a success, he also "made one massive blunder after another," says a BMG source, including clashing with Davis, and, most notably, feuding with Jive Records CEO Clive Calder, described by the manager of one platinum act as "a bomb-thrower." Last year, when 'N Sync resolved to leave the BMG-owned RCA for the BMG-distributed Jive, home to the Backstreet Boys and Britney Spears, Zelnick retaliated by suing 'N Sync, Jive, and -- most provocatively -- Calder himself. "How do you sue your partner?" scoffs a BMG source, who estimates the company could lose as much as $100 million because of 'N Sync's defection. If Jive exercises its contractual right to end the distribution deal on six months' notice, it could lose even more.


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