January 18th, 2008Rebellion at rock'n'roll headquarters
EMI, the iconic record company that soundtracked generationswith a rock roster that boasted the Beatles and the Rolling Stones,the Sex Pistols, Pink Floyd, Robbie Williams and Kylie Minogue, isdropping down the charts.
It sales are so bad the former bond trader who owns the companyis doing his business thing: axing 2000 jobs and putting singersand musicians on day rates or salaries instead of advances. Moneyman Guy Hands says he intends turning EMI into a lean, mean musicmachine.
With CD sales plummeting, pirate or otherwise digital downloadsplaying havoc with profits and artists forsaking records to maketheir money touring, the suits have routed the jeans at EMI.
Some lead acts aren’t even bothering to await the culturalchange that has accompanied Hands’s arrival: Paul McCartney hasgone on the run, Radiohead fled to a new space and Coldplay isgetting cold feet.
McCartney quit even before Hands walked in the door, sayingtraditional companies such as EMI had become “very boring”.Radiohead launched their latest CD on the net with an anarchicpay-what-you want price tag before signing with an independent.They said the Hands regime was like a “confused bull in a chinashop”.
Hands, the founder of the Terra Firmer venture capital groupthat bought EMI last year for $5.73 billion, plans cutting up to athird of the company’s 5500 worldwide workforce and culling itsroster of 14,000 artists.
“We believe we have devised a new revolutionary structure forthe group that will improve every area of the business,” Hands tolda London press conference this week. He said EMI “like the rest ofthe music industry, has been struggling to respond to thechallenges posed by a digital environment.”
Hands ain’t exactly rock’n'roll. The 48-year-old has no musicbackground and made his fortune investing in a wide portfolio thattook in pubs, cinemas and waste management. He told London’sFinancial Times that he was a “contrarian investor” with ahistory of proving his critics wrong.
EMI is not alone in losing big names. With the big acts ofyesterday wandering around making millions from the nostalgiamarket, some have left the record companies that nurtured them,hoping not only to cut them out of profits but also to harness morecontrol over their own brands.
Bizarrely perhaps, McCartney signed with a record company, HearMusic, backed by the Starbucks coffeehouse. Three months agoMadonna left her lifelong label at Warner for a $120 millioncontract with the concert promoter Live Nation Inc. Williams’smanagement has told London newspapers he won’t release anotherrecord on EMI until the management makes its plans clear. “We haveno idea how EMI will market and promote the album,” Williams’smanager, Tim Clark, said. “They do not have anyone in the digitalsphere capable of doing the job required.”
