Thomas D. Mottola, the powerful Sony Music chief who assembled a powerhouse lineup of artists and whom Michael Jackson once referred to as "very, very devilish," has resigned to start his own label, Sony Corporation of America said yesterday.

Mottola, 51, has become the industry's highest-profile record executive over the past few years, thanks to his links to singers and their sometimes bizarre actions. In July, Jackson, a former Sony artist, toured Manhattan in a double-decker bus calling Mottola a racist. Jackson brandished a poster showing Mottola's face painted with devil's horns.

Sony Music Entertainment Inc. is the third-largest of the five major music companies. It is parent to labels such as Columbia Records, Epic Records and Sony Classical and is home to artists including Bob Dylan, Billy Joel, Aerosmith, Bruce Springsteen, the Dixie Chicks and Jennifer Lopez. Mottola was the fulcrum for launching top liners such as Ricky Martin, Pearl Jam and Mariah Carey, whom Mottola signed as an unknown 19-year-old in 1989 and married four years later. They divorced in 1997. He also is one of the key men to credit, or blame, for making a superstar out of Canadian diva Celine Dion.

The announcement came as a surprise to the music business, in which Mottola was a fixture -- he had led Sony Music since 1989. He was called an "icon of the industry" yesterday by Howard Stringer, chief executive of Sony Corporation of America. Sony released Mottola from the final two years of his contract.

A news release from Sony said Mottola was quitting to start a yet-unnamed entertainment venture, possibly in partnership with Sony. But other Sony sources intimated that Mottola was pushed, probably because of the music industry's economic hardships.

Mottola's successor is likely to come from outside the company and have a strong financial background, a Sony source said.

Like all record companies, Sony has faced shrinking revenue because consumers are turning away from $20 compact discs in favor of pirating or copying their own, downloading songs from the Internet onto CDs or copying CDs from friends.

At Sony Music, operating income will fall about 20 percent in 2002 from the previous year, according to Sony Corp. The music unit sustained the largest operating loss among the company's major divisions, which include motion pictures, games, electronics and financial services. In the first two quarters of 2002, revenue from the music division was the second-lowest among Sony units, barely beating out financial services.

"I have been thinking about taking up this new challenge for about a year, and really made the decision to go forward only recently," Mottola said in a statement. "I am thrilled that I will continue my long-standing relationship with Sony to create a company that I believe will become a blueprint for the music business in the coming years."

In the past few months, Mottola became noted for using his stars to promote products and using the products to push the artists. For instance, he recently inked a deal for Dion to hawk DaimlerChrysler minivans. He pushed marketing deals with PepsiCo and other corporations as a way to defray the high costs of developing and promoting artists.

In the release, Mottola was vague about his new company, saying only, "I believe consolidating the range of entertainment disciplines in one organization today holds the greatest potential for efficiently realizing artistic vision and commercial success." It will incorporate the functions of a record label and a branding agency, the release said.

Nobuyuki Idei, Sony Corp.'s chief executive, gave some hint of Mottola's direction in the statement when he said, "Tommy felt it was important to him that he return to his great passion for label and artist development."

Mottola started as a manager for pop groups such as Hall & Oates and later joined CBS Records, which was bought by Sony in 1988. Mottola began his ascent through the executive level, finally being named chairman of Sony Music Entertainment in 1998, though he had run the division since 1989.