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Op-Ed: EMI slashing staff, cutting costs, and looking for sponsors for releases?

By Paul Wallis     Jan 15, 2008 in Business
Looks like the asteroid has met the dinosaurs. EMI, the ancient icon of the recording “industry”, is to cut a third of its staff. Recently taken over by a private equity firm, EMI is doing a total restructure. Perhaps "anachronism bypass" is closer.
It’s also looking for new acts. Wow. What, the museum catalog isn’t good enough?
TIME Magazine’s piece is very dry, tracing the arrival of EMI’s new CEO, Guy Hands, and the problems facing the company and the industry. Hands has a record of achieving great things in troubled companies like Nomura Securities, and across a range of other industries.
Raising the dead, however, might be a bit more difficult:
But taking on EMI is a different proposition altogether. Private equity firms, unlike the stars on EMI's books, prefer to toil in, well, private, dissecting a business well away from the glare of the media. Way before Hands took an axe to EMI's payroll, Terra Firma's management of the business was caught in the spotlights. Worried that Hands wouldn't know his A&R from his R&B, alt-rockers Radiohead severed ties with the label shortly after it was sold to the private equity firm, and took the radical step of allowing fans to download and name their own price for the band's album In Rainbows. Others let their music do the talking. Robbie Williams, who bagged a $130 million record deal with EMI in 2002, has threatened to withhold his next CD, fearing the firm won't be able to market and promote it. "All we know," Williams' manager Tim Clark told The Times of London this week, "is they are going to decimate their staff."
Uh-huh… So even people with a lot of money tied up in the business are bailing out. Not too encouraging.
There’s a bit of debate about whether private equity can handle creative media, and whether they understand the relationship with artists. The Artists and Repertoire guys are the ones with direct contact, and the decimation of staff, however understandable in terms of costs, isn’t exactly cheering up the punters. They don’t know if the people they’re working with will have jobs. That’s messy, and it can mean starting from scratch with someone else, or the end of the relationship.
Private equity is good at handling costs and money, and a lot more alert than the traditional corporate management. They’re much tougher managers. For an industry on its knees, this is a make or break. If the private equity guys can’t do it, nobody else is likely to, either.
However- the recording industry is now a third wheel. Both artists and fans know perfectly well they don’t need somebody tacking on $10-20 to a download. Most artists can produce their own material at a fraction of the costs record company-style production demands. They have far more creative control, and can market direct.
Recording contracts aren’t gifts to artists. That $130 million, for example, is a ludicrous amount, in terms of actual recording and production costs. It reflects how much people are prepared to charge.
It also reflects the kind of mentality which will commit $130 million to one artist, and then wonder why it’s looking for new acts. The Beatles’ entire career as a band didn’t cost $130 million to record, even in different currency values. Meanwhile, people sick of being ripped off are ripping tracks instead, and the industry isn’t getting a whiff of a result from all its tantrums and persecution of people swapping things on the net.
Most musicians, (with the possible exception of those with corporate-conceptual suppositories stuck between their ears to keep them apart), will tell you that the process of annoying music fans is now well established, and is one of the reasons the industry is now heading down the drain so fast.
So the new idea is sponsors for releases. Now you can buy a commercial to go with your deep personal musical tastes. Nothing like a torch song to some global parasite to make the world go round.
Ooh how stimulating. Makes you want to go out and wear a suit and look intelligent and tap your little footsies while looking like a Total Prat Festival, doesn’t it? …While someone belts out a new insurance deal in carefully non-copyright techno riffs….
Yo’ Crazy Wild Things. Vive La Revolution Des Intellects!
Oh, swoonsies, in effect.
One thing the industry has never had is a sense of proportion.
Looks like it’s about to get one.
More about Music industry, Emi, Restructuring