(FORTUNE Magazine) – Antonio "L.A." Reid was all energy as he took the stage in Cannes last winter. This was his first appearance at BMG Entertainment's semiannual conference since replacing Clive Davis as CEO of BMG's Arista Records last June. Reid knew that he needed to prove himself a worthy successor to Davis, one of the most popular and successful music executives of all time, but his audience wasn't responding. Despite his boyish grin and the way he bounced excitedly inside his loose-fitting suit, he had trouble rousing the crowd of BMG executives. "Make some noise!" the dismayed Reid finally yelled. "This job is supposed to be fun!"

Reid's job isn't very fun right now. His predecessor left Arista in a shambles. Davis was so busy fighting his ouster that he signed no new talent all year, leaving the label without any big albums for the 2000 holiday season. He made sure his new label, J Records, would get a cut of the revenues generated by Arista's three biggest artists, Carlos Santana, Whitney Houston, and Monica. (Santana alone brought in $270 million in 1999.) Add in brain drain (nine of Arista's top executives followed Davis to J Records) and new business challenges (read: the legacy of Napster), and Reid faces one of the most difficult transfers of power this industry has seen.

If his track record is any indication, Reid should be up to the challenge. As co-founder of Atlanta's LaFace Records--a joint venture with Arista--Reid cultivated major pop stars like Toni Braxton, TLC, and Usher, produced more than 100 hit albums, and poured a half-billion dollars into Arista's coffers in the past five years. Says Rolf Schmidt-Holtz, BMG Entertainment's new president and CEO: "With Antonio, we have a very experienced and talented guy. He was a natural choice to replace Clive Davis."

Admirers say that Reid's greatest strength is his soft touch with his artists. Even when two of his top acts, Toni Braxton and TLC, sued him in the mid-'90s for signing them to bad deals, Reid kept things friendly. "Even when we were walking out from court, we still went to lunch," says TLC's Lisa "Left Eye" Lopes. (Both suits were settled out of court.)

Reid is already making his mark on Arista. When some employees grumbled at Davis' departure, Reid replaced them--in all, 15% of the 220-person staff. To fill the void, Reid signed a new stable of talent, including his LaFace co-founder Babyface and Janet Jackson producers Jimmy Jam and Terry Lewis. In three months he signed five new alternative rock bands to shore up one of Arista's longtime weaknesses. The message: This isn't Davis' label any more. "Clive built a structure in his image. Reid has to undo that," says Harold Vogel, entertainment and media analyst at Vogel Capital Management.

So far the results have been promising. Albums from Dido and Outkast have landed on Billboard's top ten, and hopes are high for the upcoming album from R&B artist Usher. Reid's strategy is to market his artists as cross-media sensations. "The future of Arista is a company that works more like a marketing company than a music company," he says.

That sounds good to his supporters. "He knows how to make stars, and he's also a producer," says labelmate Sean "Puffy" Combs. "That makes him a double threat." Of course, anyone can make threats. If Reid is to escape Davis' long shadow, he'll have to deliver.