Short interview with Lyor Cohen, chairman and chief executive of Warner Music’s US operations. Source

Q. What was the biggest challenge Warner Music’s managers confronted when they purchased the company?
A. Warner’s infrastructure was way too expensive. Throughout the 1980s and early ’90s, the success of the compact disc format allowed music companies to build enormous, expensive staffs. When the industry began to decline in the late 1990s, most companies decided that rather than cut staff, they would take shortcuts to sell more records. That’s why Britney Spears, the Backstreet Boys and ’NSync appeared, because labels had to find huge pop hits to pay for their staffs, no matter how short-lived those hits were. But to survive, the industry needs to develop artists who are profitable over the long term, even if they don’t start out big.

Q. What was the biggest management change that you and Bronfman made when you took over Warner Music?
A. Warner had a history of failed mergers, and executives had postponed a lot of hard decisions in anticipation of one of those mergers succeeding. So when we took over, we were clear and decisive about who would be fired. People had been paralyzed because they were worried about their futures. We made our decisions quickly, and removed uncertainty so people could focus on the future. The other change we’ve made is placing A&R (artist and repertoire, those who discover and nurture talent) executives above marketing and promotion employees. Record people want to work for an A&R-driven music company.

Q. You come from a musical background, having been a club promoter, a road manager and a marketer for such bands as Run-DMC, Social Distortion, the Circle Jerks and the Red Hot Chili Peppers. Today, some music companies are run by executives with more corporate than musical experience. How does your background influence the choices you’ve made at Warner?
A. My background lets me teach my executives not to fear mistakes. Here’s an example: When Warner’s label heads were cutting their artist rosters, I told them, ‘My man, you’re gonna cut an act that’s going to be successful across the street, and it’s OK.’ I have cut many platinum acts in my career. At (Island Def Jam), I cut the Baha Men, who went on to sell millions and millions of records. But for me, the Baha Men would have represented short-term positive results that would have led me down the wrong road. Our industry wastes money on hundreds of acts because executives are afraid to cut an artist who might be successful somewhere else. We’ve got to change that mind-set. My background lets me tell my executives: ‘You don’t have to snare all the successful bands. Just focus on making the ones you have snared successful.’