CCM Update
November 27, 2000

AFTER SEVERAL MONTHS of evaluation, Word Entertainment has merged its two contemporary labels, Word and Myrrh, into one under the Word Records trademark, an amalgamation which now sports one staff, a largely expanded artist roster and a new philosophy for reaching the label's customer.

All of Myrrh's artists, including those from the label's Black Music Division, have been moved over to Word, bringing the total to roughly 30 acts. The new, 30-member Word Records team, headed by Elisa Elder, who has led Word Records since 1997, was selected from both labels' staffs. In the process, seven employees, some in key positions, were laid off because of the duplication of roles, said Loren Balman, president of the Word Label Group.

Elder said she is "extremely excited" about the label and the new paradigms framing it. "This is a vibrant, vibrant roster when you combine the two, and I think there's going to be a whole new chemistry of artist interaction and of marketing and A&R interaction."

The announcement comes four weeks after Word Entertainment President Roland Lundy exited the company and two weeks after Myrrh Vice President/General Manager Jim Chaffee resigned his post.

Balman acknowledged the decision to consolidate was, in part, a response to Word's parent company, Gaylord Entertainment's report that spending was too high at Word. In his Oct. 26 conference call to stock analysts and shareholders, Gaylord President/CEO Dennis Sullivan said that Word's inventory levels and account receivables were too high.

"I think that all plays into it," Balman said, adding that he has looked at the marketshare for Word and Myrrh. According to SoundScan, year-to-date overall marketshare for the two labels has not declined from last year and is considerably better for Myrrh.

"I don't want to put some perfect face on this because that would be unreasonable," Balman said, "but I think the challenge is to always make changes when things are good. The most dangerous thing is to wait until it's too late."

Balman noted that'97 and '98 were Word's two best years. "When you're doing well, then you say, 'It worked here, so it will work there ... there is a kind of sense that if you spent that here and that worked, then you should spend it here ... If you always act like you're in those great times and if you're not asking the questions and you're not being as lean and efficient as possible, then you lay in jeopardy your vision."

In addition to building a leaner operation, the consolidation, Balman said, allows the label to move into areas of specialization, including the college market, Internet marketing, sales and digital delivery of music. Word is also planning to hire a specialist who will work with key accounts, complementing distribution's efforts. "Over the past several months, we have looked at this, looked at the marketplace and asked, 'How can we better serve ultimately our customer, retail and our artists?' " Balman said.

GET Management Co-Presidents Chaz Corzine and Jennifer Cooke, who manage Word artists Amy Grant, Rachael Lampa and Ben Glover, commented that in today's current market, labels have no choice but to find creative ways to target and reach the customer. "I think you can kind of get into a routine and become a machine and know exactly what to feed that machine," Cooke said, "but eventually, you feed it the same thing enough that it dilutes the effect. What Loren is describing is feeding the machine something new. There's a chance here to go do something a little bit different."

In addition to new areas of specialization, both Balman and Elder have set forth a new paradigm at the label that will essentially knock out any genre-specific walls. While other record companies are creating divisions focused on a specific market or genre, Word is bringing them all under one umbrella.

According to Elder, Myrrh's Black Music Division has been absorbed into Word. The label does include some genre specialists in A&R and marketing, such as Cheryl Moore, formerly director of marketing and product development for the Black Music Division, but these specialists are not limited to working on or signing artists from a specific genre.

"The former Word Records and Myrrh Records are no longer," Elder said. "We are really changing the way we do business here." Six staff members who remain are now charged with signing artists, including Judith Volz, Brent Bourgeois, Craig Masen, Alvin Williams, Brad O'Donnell and an undisclosed name. Gabe Vasquez, formerly marketing director for Myrrh, will head the marketing for the label.

The consolidation of both rosters brings together top-selling names like Amy Grant, Point of Grace, Jaci Velasquez and Shirley Caesar and begs the question of how one label can fully serve that many artists.

Declining to comment on the layout of the staff, Balman and Elder believe Word will be set up to handle the massive group when they finish populating the label. Both the publicity and radio staffs will eventually be comprised of four people each.

Both Corzine and Cooke said that with the new structure and larger roster, the timing of releases is vital.

Word's release schedule for next year includes new albums from Point of Grace and Amy Grant who are currently scheduled to bow in May, plus Shirley Caesar's duets album, two albums from Fernando Ortega (Spanish and studio), Greg Long, Erin O'Donnell, Mark Schultz, Sarah Masen, Anointed, Nicole C. Mullen, Rachael Lampa, Mark Schultz and Chonda Pierce, among others. The label also plans to debut five new acts in 2001 and will release specialty projects, including a "WoW" Christmas.

"It used to be that we'd go down and talk about our artists," Corzine said. "I think any time you go down now, you go with calendar in hand. The calendar becomes a real player in it now." According to Balman, the leaner and more efficient operation will not mean less quality or fewer resources. In the past year, Word and Myrrh have released several new artists, such as Nicole C. Mullen, Rachael Lampa and Mark Schultz, who have managed to carve out a noticeable place in the market amid the barrage of 2000's new artists.

"I think that over the years we've probably had our larger than fair share of breaking new artists," Balman said. "We're not going to retreat from that behavior or that kind of work in the future. In fact, I believe we've put together a better system that is now poised to continue to capitalize on our expertise. There's really not much beauty in serving an artist in a half-way manner."

The consolidation calls an end, for now, to the Myrrh Records trademark. Founded in 1972 by Sparrow Records founder Billy Ray Hearn, Myrrh was one of the first Christian music labels to sign and release contemporary artists like pioneers Randy Matthews, Petra, Honeytree and Barry McGuire.

While saying that he "hated to see something he created go away," Hearn said he understood the business reasons behind it, likening the situation to EMI Christian Music Group's decision to shift Star Song Records into a concept label.

"They're doing what they think is right like what we did with Star Song," Hearn said, "because in this day in the commercial side of business, it's harder and harder to justify the investment." Balman said he would use many factors to gauge if the new paradigms he and Elder have created are working.

"We will continue to have letters coming in from people saying 'This music touched my life.' I monitor success from that and the fulfillment of people I get to work with, knowing they're confident that what they do is in keeping with their personal missions and maybe last, but certainly not least, is evidence from a financial standpoint."

According to Balman, other divisions of the company are still intact. Though Everland Entertainment General Manager Rick Forsythe recently stepped down, Word's children's label is moving forward, working on the second episode of its new video series, "Threads." Balman, one of the co-founders of Everland, said he will eventually hire someone to head the division, but for now, he's taking over those responsibilities.

"I really want to get my arms wrapped around the business," he said. By market close on Wednesday, Nov. 22, Gaylord's stock was at $22.81 a share.

- Lindy Warren

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