(FORTUNE Magazine) – Antonio "L.A." Reid had his ups and downs as head of BMG's Arista Records. He orchestrated the successful careers of Pink, Avril Lavigne, and OutKast. He also spent so heavily on marketing that Arista lost $200 million in the past two years--even with hits like OutKast's inescapable "Hey Ya!" In January, BMG eased Reid out.

So is Reid washed up at age 46? Hardly. He's a candidate for the top job at Universal Music's Island Def Jam group and he's also chatted with Edgar Bronfman Jr., head of the team of investors who just bought Warner Music Group. It may seem a little odd that a free spender like Reid is in such demand. After all, the music industry is grappling with huge problems like how to win back consumers who are used to downloading songs free on the Internet. But the recent run of music executive shuffling shows that this is still a business where a solid "record man"--even one who departs under a cloud--can land a cushy gig.

Another case in point is Clive Davis, the 70-year-old icon who has played Svengali to everybody from Janis Joplin to Whitney Houston. In early February, BMG named Davis head of BMG North America. That, of course, came after BMG forced Davis out of his job as CEO of Arista in 2000. According to former BMG executives, Davis was spending so heavily on marketing that the label was barely profitable. A BMG spokesman says that wasn't the case. Whatever the situation, BMG has warmed to Davis again after his success with American Idol stars Ruben Studdard and Kelly Clarkson.

Even more telling is the career trajectory of Lyor Cohen, recently named chief of U.S. recorded music at Warner. Until recently, Cohen was CEO of Universal's Island Def Jam, where he nurtured Jay-Z and Public Enemy. Last year a federal jury found against Cohen and Island Def Jam in a fraud and breach of contract case that could wind up costing Universal $62 million. Universal is appealing the verdict. A Warner spokeswoman said the company wasn't concerned about the judgment. Universal is equally blase. According to a source, the company offered Cohen a $30 million contract to stay at Island Def Jam, even though the label lost $20 million in 2003.

Why don't BMG, Warner, and Universal bring in new faces? This industry still depends on its "best ears." The classic cautionary tale is that of Time Warner (parent of FORTUNE's publisher). Back in the '90s it put its music division into the hands of industry outsiders. Warner chairman Doug Morris was fired and landed at Universal with his key people. Largely on the strength of its hip-hop business, Universal soon became the world's largest and most powerful record company. And Warner Music? It missed the rap trend entirely. --Devin Leonard