Tuesday, October 09, 2007

EMI thinks this digital thing could be quite important

We wonder if, when Guy Hands and Terra Firma bought EMI, he expected to discover an open embrace of the digital market; an awareness that the industry in which EMI exists has shifted irrevocably; an understanding that they'd been bought for a pittance by the German motorway cafe company because they hadn't been fast enough to adapt.

Or if he knew he was buying into a bit of a headless chicken in a basket case.

Judging by the email he sent round the place following Radiohead's pay-what-you-will album, he's still dealing with a company that doesn't know it's trying to sell ice in a nation of fridge owners:

In the e-mail, sent to staff on Friday, Hands described Radiohead's action as "a wake-up call which we should all welcome and respond to with creativity and energy".

"The recorded music industry... has for too long been dependent on how many CDs can be sold," he wrote. "Rather than embracing digitalisation and the opportunities it brings for promotion of product and distribution through multiple channels, the industry has stuck its head in the sand."

Hands is understood to have been surprised at the size of salaries paid to second-tier executives. On Friday he warned that unless there was a major cultural change, more established bands could follow Radiohead's lead, choosing to cut the label out of the loop and distribute their music directly to consumers.

EMI's biggest names include Robbie Williams, Joss Stone and David Bowie, all of whom are established enough to adopt the Radiohead model. With bands' revenues from playing concerts and festivals overtaking their income from CD sales, the decision to break free has become less risky.

"Why should they subsidise their label's new talent roster – or for that matter their record company's excessive expenditures and advances?" asks Hands.

It's almost heartbreaking that it takes a bloke from a private equity company to understand the situation, while the supposed music-aware EMI excutives have been missing the point for so long.

The big question, though: what is Hands going to do about it?


Simon said...

If this sort of thing has taught us anything, it's that they'll cut the new talent roster, expenditure and advances.

By the way, the world's smallest digital controversy is currently blowing up as it's been revealed the Radiohead tracks will be just 160kbps. A lot of people have just worked out as a result that maybe the band stand to profit from the advance goodwill of their audience, what with managing all the cashflow themselves.

ian said...

I take it Mr Hands wasn't at all surprised at the size of salaries paid to the first tier executives who got EMI into this state and privaty equity bosses, as obviously they've all earned it.

angel lipa said...

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