Tuesday, January 15, 2008

EMI: can shrinking save a broken beast?

Perhaps the most telling detail in the coverage of EMI's restructuring announcement is that it's not even made it to the front of the FT's website. EMI, once one of the biggest, proudest of British companies is pulling itself to pieces, and the FT doesn't even think it's that important.

So, what's going to give, then? virtually everything, by the sounds of it:

“We have spent a long time looking intensely at EMI and the problems faced by its recorded music division which, like the rest of the music industry, has been struggling to respond to the challenges posed by a digital environment.”

That's possibly a little overkind to the music industry, which has less been "struggling to respond", more "hiding under the duvet squealing".
“We believe we have devised a new revolutionary structure for the group that will improve every area of the business,” he said. “In short it (the restructuring) will make EMI’s music more valuable for the company and its artists alike.”

Of course, it's arguable that the two thousand people being bounced onto the dole won't find their areas of the business have improved - and its unlikely those who remain will enjoy the increased workload, to be frank.

Hypebot is waiting to see details, but isn't expecting to be impressed, judging on the reports so far:
I'm skeptical that this all will prove to be like so many other takeovers, buyouts and mergers we see on the corporate world. They wring savings and profits from existing assets buy cutting jobs and overhead as Hands did today. But all to often in the long run they do little to build new ones.

It does all seem fabulously vague, as the FT summarises it:
He focused on four key areas where he said the changes would make a difference, including repositioning EMI’s numerous labels, developing a new partnership with artists, and opening new income streams such as enhanced digital services and corporate sponsorship arrangements.

The first of these is meaningless - nobody much cares which sublabel a major artist is on; it's not going to suddenly make EMI profitable by changing the Virgin imprint to a classic label. Presumably the idea is to shrink the number of brands to reduce costs.

"Developing a new partnership with artists" is an interesting way of phrasing what is probably 'trying to stop the talent thinking we're screwing them'. But given that Macca and Radiohead and Williams and Coldplay have all got the hump since Hands arrived, it sounds like this might not exactly be EMI's forte.

"Enhanced digital services" - is that really a new income stream? Isn't selling music what, you know, the point of the company was supposed to be in the first place? God alone knows what is actually going to be "enhanced", but if Hands believes that people are going to suddenly start paying more for downloads, he might want to think about finding someone else to run the show for him.

By the time you get to 'corporate sponsorship', it's clear there aren't actually any ideas here at all, beyond sacking people and hoping the bills might drop below income sometime soon.

To echo Hypebot's take: the major labels are unquestionably in need of major surgery. But Hands is the wrong sort of surgeon: EMI needs a transplant of young, fresh, ideas; instead, they've got a cosmetic surgeon syphoning fat off a dying body.