Exposed! The Secret Committee That Selects the Now Compilation CDs
A multi-conglomerate, transnational collection of music execs has turned a kitschy, late-night staple into an industry powerhouse. Let the knockoffs begin.
by Warren Cohen

Friday, September 15 04:45 P.M.

It's not as clandestine as the Trilateral Commission, but a semi-secret music committee is in session at this very moment. The group, composed of representatives from Universal, Sony, EMI and Zomba, is reading focus group research briefs, swapping song titles via e-mail and trying to conjure another blockbuster Now That's What I Call Music compilation album. In truth, this is not such a difficult task, as the committee has an embarrassment of label-owned hits to choose from in preparation for the November release. ''It's not as sexy as secret ballots at the GOP convention,'' admits Ken Pedersen, executive vice president at Virgin Records, a division of EMI.

But in a Napster-fueled singles-swapping world, songs, and not albums, increasingly are the musical currency for most young consumers. This change in landscape has helped transform multi-artists hits compilations from a schlocky late-night TV business staffed by aging executives into a burgeoning part of the 21st century American music industry. Eight weeks ago, Now That's What I Call Music Volume 4 became the first non-soundtrack compilation in history to hit number one on the charts. So far, it's sold 1.46 million copies.

The success of the Now series has a spawned a group of imitators now invading record stores. On Sept. 5, Columbia debuted a new compilation series called Platinum Hits 2000. On Oct. 24, Universal will release Universal Smash Hits and three other compilations devoted to the latest and greatest metal, alternative and country tunes. And later this fall, Warner Music and BMG will complete the third volume of their Totally Hits series.

THREE YEARS AGO, THE COMPILATION BUSINESS was the sole province of midnight hucksters. But domestic music executives began to puzzle over why series that duplicated the pop charts sold so well overseas. In England, there have already been 46 Now double-CD releases with 40 songs each (compared with the four U.S. releases of just 18 tunes a piece). British-born executives Ken Berry of EMI and Roger Ames, then of PolyGram, now of Warner Music, were convinced that the format could work in the U.S. and, in 1998, they invited Universal as a third partner into the budding venture.

When Universal bought PolyGram, Bruce Resnikoff, head of Universal Music Enterprises' catalog business, assumed oversight of the project. The partners asked Sony and Zomba to come aboard and in October 1998, the first Now record was released. The four labels split profits equally. Resnikoff leaves the decision-making for the Now records in the hands of the Now committee, of which Pedersen is one of five key members. His counterparts are Tim Pearson, Sony's vice president of sales and marketing, Julia Lipari, Jive's vice president of special projects marketing, and Bob Mercer, a Universal senior vice president. Jeff Moskow, a Universal vice president of A&R, is the final member. But others, such as Virgin president Ray Cooper and Sony vice chairman Mel Ilberman, along with Resinkoff, also weigh in toward the end of the planning stage.

The key five spend roughly four months preparing each biannual release. Committee members confess that most of the time is spent on the prosaic stuff: deciding the proper sequence of songs, choosing album art and even spacing the intervals between the songs. ''Should it be two seconds or three seconds between the songs?'' says Moskow. ''This is the incredible detail in our efforts. It would be much easier to make a record if we didn't spend the time to make the sequence correct in order to take listeners on a journey.''

Picking the tracks themselves is less fraught. That's because the committee only chooses bona fide successes that have appeared on the top 50 of the singles charts, rather than picking among label executives' favorites or should-be hits. ''Generally speaking, 12 to 14 of the 18 tracks select themselves,'' says Mercer. The last 6 or so are chosen from the list that numbers perhaps no more than 12. Shooting the TV spots and planning the ad purchases is the final step and by then, the committee is meeting by teleconference twice a day.

Preparing a Now record used to take longer when the committee had to beg artists to participate. Managers and acts were once scared that compilations would cannibalize album sales by stealing potential buyers who only craved the single. Most artist contracts have clauses for marketing restrictions, which prevent a label from allowing singles to appear on compilations or movie soundtracks without express permission. The Now committee used the soft sell, not wanting to upset bands. ''We have to deal with these artists on a daily basis,'' says Michael Cohen, who was the A&R person for the first two Now records and now runs the Warners/BMG Totally Hits series. ''We don't want them to feel like their stuff is being cheapened.''

Some label presidents were a bit wary initially, too. ''Even when Now 4 went straight in at No. 1, a couple of well-known label presidents called and said, 'Where the fuck did that come from?' '' recalls Mercer. Says Pedersen, ''We had to convince people that this wouldn't destroy the U.S. record business as we know and love it.'' Today, most label presidents are behind the efforts and the Now participants have helped the committee land reluctant bands. ''All the label presidents try to show the artist the logic of being involved in something like this,'' says Cooper. ''It can be creative and financially rewarding.''

FOR LABELS, COMPS LIKE NOW ARE basically a low-cost way to repurpose prerecorded material. ''We don't spend $1 million to make a new album and record eight videos,'' says Resnikoff. ''Somebody else has already invested all the money in creating the product.'' Resnikoff estimates that the commercials for the Now series cost roughly $10,000 to $50,000 to produce, whereas most videos soar above that. And Now doesn't need to fly artists around the country doing radio and record promotions. The TV spots resemble MTV outtakes, and retailers believe the commercials drive store traffic.

For bands, compilations provide an immediate financial return. Sources say that bands reap about 7 to 10 cents a track per record sold, and no act gets a bigger slice than any other. That's about 20 percent more than the typical record royalty deal and since Now is a big seller, the money can add up. Of course, for most artists, the earnings must first go to pay off recoupable expenses. ''We don't know if we've made money yet,'' admits Bryan Coleman, manager of Oleander, whose ''Why I'm Here'' was included on Now 3.

But more important than the ancillary revenue, the committee tells would-be participants, are the benefits of exposure. Committee members also show managers that a Now compilation has never resulted in loss of album sales for an artist. ''Britney Spears was on the first and the third Now compilation and her sales increased incrementally during that period,'' observes Cooper. ''There is no deterioration for any artists connected to the project.'' Of course, that doesn't mean that a Now record can result in a huge sales boom either. ''If it's scanning at 3,000 units, we've never brought it up to 100,000 units,'' says Pedersen .

J.P. Plunier, Ben Harper's manager, wasn't lured by the chance to sell more records but rather the opportunity to showcase Harper to a broader audience. ''The Backstreet Boys and Britney Spears are not artists we're usually associated with,'' he says. ''But we love taking risks, even if it's adverse to our so-called constituency.'' Harper's ''Steal My Kisses'' was somewhat of a gamble for Now. ''Ben Harper debuted at 49 with a bullet and we felt it sounded right, even if it didn't ultimately go pop,'' says Moskow. ''If you sense momentum, you make judgments.''

Plunier's not so sure that Now helt Ben Harper's career or sales. Since Now 4 was released, sales of his recent record have held steady at about 8,000 copies per week. ''There are a lot of converging factors for sales at the same time,'' says Plunier. ''We were on tour with Dave Matthews and we had the song on the radio, so it's difficult to pinpoint what is doing what for sales.'' But managers generally aren't scarred by the experience. ''It's a great way to get exposure to several million people,'' says Coleman, Oleander's manager. ''If they're looking for acts for the next one, we'll try to get on it.''

With the success of the Now series, the committee says that it now has the support of most managers and bands. ''With the first Now record, we had to beg labels and artists,'' says Resnikoff. ''With Now 4, we had to tell people we couldn't include them. The tide turned completely.'' Adds Pedersen , ''The artist and management community has finally accepted that this is a good thing.''

OF COURSE, THE EXPERIENCE IS QUITE DIFFERENT for bands that don't have the contractual power to say no to a compilation invitation. One example is the Backstreet Boys, who have appeared on each of the four Now records. Manager Jeff Kwatinetz says that the band's songs appear on Now against his will, and he fears the ramifications. ''There is a downside to overexposure because that's the thing that kills a band's career,'' says Kwatinetz. ''Its completely exploitative of the Backstreet Boys, and Jive has short-term label thinking in trying to get the money while they can.''

While it might seem strange for the ubiquitous Backstreet Boys to worry about an overexposure tipping-point, the compilation business itself faces a similar predicament. There is the obvious danger that the Now series and the flood of copycat records will saturate the market. Now's success reflected the belief that hits from a single label's coffers may not make a decent seller. ''It's difficult for any one company to create a top quality hits compilation,'' says Resnikoff. ''The Now series accounts for probably 70 percent of the U.S. labels, giving us a much wider palate to paint from.'' And a quick glance at some of the other records flooding the market show that they're not up to par with Now's star-filled selections. The recent Columbia-only Platinum Hits 2000, for instance, has some rarely heard songs and ancient melodies, such as Shawn Mullins's ''Lullaby,'' first released in September 1998.

But now, even Resnikoff's company seems to be ignoring his advice by releasing Universal-only compilations. As other companies do the same, a lot of so-so songs will be masquerading as hits, which might bore record buyers. Says Cohen: ''We don't know what the American market can take. There may not be enough hits to go around and consumers may not want it.''

Compilation advocates point out that the business represents about 25 percent of total sales in Europe and only a scant portion in America, so there is room to grow. Mercer, for one, isn't worried about the brave new world where retailers' CD racks are indistinguishable from the play lists of Top 40 radio. ''I don't mind all this activity starting now if it does elevate the profile of compilations,'' he says. ''The more the merrier and the one with the best compilation will win out.''