bye bye EMI

[BruceH]

"...that was the only reason

We all had to say goodbye! EMI!"

---Sex Pistols

[The Magnificent Goldberg]

that said, as i think you noted, EMI once upon a time-- & even recently, in classical-- allowed it's global divisions an interesting degree of autonomy... almost all of THAT is sure to be locked up under the new regime as well, of course.

Yes, I was going to say that it wasn't just in classical music that there was some autonomy. Then I just looked at the date of the only hEMIsphere CD I bought. Some arsehole in EMI - Gerald Seligman - sold corporate EMI that they could release some of their African and elsewhere stuff in Europe and get hits. So they did. And they didn't. And that, I think, was the death knell of the regional autonomy business. But it was 1995 when that started, so probably 1997 when it went for a Burton.

How time flies.

MG

[Guy Berger]

EMI Is Set to Slash Jobs, Drop Artists

By ETHAN SMITH and AARON O. PATRICK

January 14, 2008; Page A3

In the latest effort to right EMI Group Ltd., the record company is set to announce tomorrow that it is laying off as much as one-third of its 6,000 employees, slashing marketing expenditures and dropping artists as part of a radical restructuring, according to people familiar with the company's plans.

The moves are part of an effort by Terra Firma Capital Partners Ltd., the private-equity group that bought EMI last year for £3.2 billion ($6.26 billion), to make its investment pay off. Most of the job cuts are expected to come from EMI's recorded-music operations, as opposed to its successful music-publishing operations.

[EMI's restructuring plans have drawn protest from managers of artists including Coldplay.]

EMI's restructuring plans have drawn protest from managers of artists including Coldplay.

The plans come as the music industry as a whole has struggled to return to profitability -- and indeed to prove itself viable in the long term. Album sales in the U.S., including online album sales, plunged 15% in 2007, according to Nielsen SoundScan, and paid digital downloading hasn't grown nearly quickly enough to make up the loss from the decline in CD sales. Increasingly record companies have cast about for new sources of revenue, including getting involved in artists' deals to license their names and likenesses, licensing music to Web sites in exchange for a cut of ad revenue, selling T-shirts and the like. So far the results have been modest compared with the magnitude of the decline in sales that the companies face.

The planned restructuring has already drawn protests from managers of more than 20 prominent EMI artists, including pop star Robbie Williams and rock band Coldplay. A group of managers who have informally dubbed themselves the Black Hands Group -- after Terra Firma chief Guy Hands -- plan to discuss their grievances with EMI's new owners tomorrow, the same day the company plans to announce the restructuring at a London movie theater owned by Terra Firma.

EMI's new owners are unhappy with the relative size of the company's investments in talent scouting and marketing -- they believe EMI spends too much on marketing the acts already on its roster and not enough on finding new ones, according to a person familiar with the plans. And Terra Firma has said that as much as 30% of EMI's 13,000 artists never release an album -- which Terra Firma feels is too many unproductive artists, many of whom need to be cut.

If the cuts to marketing budgets, in particular, are as deep as some fear, Mr. Williams and Coldplay -- two of EMI's biggest acts -- are considering not delivering their next albums, which had been expected soon, according to people familiar with their thinking. Such a move could be financially ruinous to EMI's fiscal year, which ends in June.

Among the managers' complaints: Mr. Hands's desire to centralize marketing in a way that artists and their managers fear would mean less effective promotion in various international markets. Mr. Williams has an unusual relationship with EMI in which the two parties' fortunes are uniquely tied together in a joint venture funded by EMI; the venture's profit is split between artist and record company. Nonetheless, his manager, Tim Clark, last week blasted EMI's new owners as "bean counters" and threatened to withhold his client's next album.

An EMI spokesman dismissed Mr. Clark's grievances, made in an email and in interviews with British newspapers, as a play for extra cash. "It is an enormous shame that someone who has made so much money out of his relationship with EMI in the past has chosen to criticize the company before even listening to what its plans are," the spokesman said.

Several facets of EMI's plans are unclear, including the role of Roger Ames, the music industry veteran who has been running its North American operations since last year. Mr. Ames also recently assumed duties running artists and repertoire, or A&R, in the United Kingdom, following the ouster of Tony Wadsworth, who had run the U.K. operation. It isn't clear whether Mr. Ames is to be given a hand in running the company.

The music industry has suffered in recent years, but EMI has fared even worse than its three major competitors. Last year it slid to No. 4 of four music companies -- after Vivendi SA's Universal Music Group; Sony BMG Music Entertainment, a joint venture of Sony Corp. and Bertelsmann AG; and Warner Music Group Corp. -- from No. 3 in terms of market share and revenue, and saw its market share in its home country slide to 9% from 16%.

Write to Ethan Smith at ethan.smith@wsj.com1 and Aaron O. Patrick at aaron.patrick@wsj.com2

EMI Cuts Are Expected to Generate

Up to $391 Million in Savings a Year

By AARON O. PATRICK

January 14, 2008 1:56 p.m.

Terra Firma Capital Partners Ltd. plans to cut costs at EMI Group Ltd. by up to £200 million ($391 million) a year through job reductions and by centralizing sales, marketing and administrative functions at the troubled music company, according to a person familiar with the situation.

The private equity firm, which bought EMI last year for £3.2 billion, plans to strip EMI's individual record labels such as Capitol, Virgin and Parlophone of many of their responsibilities. Most or all of the labels' sales and marketing staff will become part of a new global structure reporting to EMI's headquarters in London, according to the person. That should leave the labels to focus on signing up musicians and helping them create music, known in the industry as artists and repertoire or A&R.

Another problem Terra Firma plans to address is an oversupply of CDs, according to the person familiar with the company. In the past, EMI pushed its sales staff to get as many CDs into shops as possible, even if many were returned. That resulted in 35 million unwanted CDs being discarded each year, according to the person familiar with the company. Among them: 1 million copies of Robbie Williams's "Rudebox" CD.

As part of the changes, Terra Firma plans to cut 1,500 to 2,000 jobs from EMI's music division, which has 4,500 staff. The job losses are expected to generate up to £200 million in savings a year. That should help Terra Firma make a profit from its investment in EMI, its largest after its 2005 purchase of Viterra AG, a German home owner and landlord.

Terra Firma Chief Executive Guy Hands is scheduled to brief EMI's artists, managers and employees in London on Tuesday on his plans.

The music industry has suffered in recent years, but EMI has fared even worse than its three major competitors. In 2007, it slid to No. 4 of four music companies -- after Vivendi SA's Universal Music Group; Sony BMG Music Entertainment, a joint venture of Sony Corp. and Bertelsmann AG; and Warner Music Group Corp. -- from No. 3 in terms of market share and revenue from the year earlier, and saw its market share in its home country slide to 9% from 16% over that period.

EMI's previous chief executive, Eric Nicoli, also cut thousands of jobs and replaced senior management in an effort to reduce costs by £110 million a year. He stepped down last year when EMI was sold.

Write to Aaron O. Patrick at aaron.patrick@wsj.com

[Stefan Wood]

So, will that be it for Blue Note?

[Dan Gould]

Of course it is easy to just excise a tiny portion of a huge company that doesn't add anything to the bottom line, but the fact is that when you are looking for huge savings, you have to look at where you spend huge dollars - and that is the pop side of things.

My guess is that at worse, the pace of reissues slows and what was scheduled for early this year might be the whole kit and caboodle, spread out over 2008.

[Shawn]

So, will that be it for Blue Note?

My guess is that it would impact new recordings more than reissues (not nearly the upfront cost involved). I'd be willing to venture that reissues are likely to become digital only over the next couple years, that sure would get rid of alot of the cost.

[JSngry]

Possible biright side - the attention being paid to "oversupply of CDs". BN's allegedly always been ran tightly with usually realistic budgeting supporting usally realistic sales projections. Not a big "winner" of a line (except when there's a breakout like Norah or that Cantaloop band, sorry can't remember their name right now...Us3?). So, if ownership is looking at overestimation and overproduction as the problem du jour, BN decidedly does not come into that picture.

Then again, this is the music business. all bets are off except that somebody's eventually gonna do something stupid.

Edited January 15, 2008 by JSngry

[Rob C]

So, will that be it for Blue Note?

My guess is that it would impact new recordings more than reissues (not nearly the upfront cost involved). I'd be willing to venture that reissues are likely to become digital only over the next couple years, that sure would get rid of alot of the cost.

Yes, I agree, at least on the first proposition. I'd be surprised if BN's reissue programs aren't reasonably profitable; just as I'd be surprised if their new releases, apart from a breakout like Norah Jones, are very profitable.

[Christiern]

Heard a former "insider" at EMI on BBC Radio during the night. He thinks it will all pretty much boil down to a single reissue label. Having just one cuts down on the cost and lessens the confusion, he added.

I don't think labels are going to matter, in the long run, it's all going to be delivered via download. I bet we'll soon see CD collecting done with the zeal and possessiveness of 78rpm and LP collectors. The days of DVDs, too, are numbered, once the Blu-ray bump peaks and subsides. Well, dust just won't know where to go, will it?

[The Magnificent Goldberg]

They also had a couple of big sellers with Anita Baker. I've been trying to find out if there are other pop/R&B acts on BN but the site is as slow as arseholes.

MG

[GA Russell]

I bet we'll soon see CD collecting done with the zeal and possessiveness of 78rpm and LP collectors.

What you say has the ring of truth, Chris.

My first thought upon reading your prognostication was that people would want to collect "hard copies". But upon reflection, I think the audio fidelity will have something to do with it too, just as 50s LPs are sought after, while 80s LPs are not.

I remember that 1987 was the year in the US that CDs started to catch on. The following year, the record labels said that they would not accept vinyl returns, so the retailers quit ordering vinyl, giving the consumer no choice but to buy a CD player and CDs. But by then you could buy a decent CD player for between $100. and $150., so people were willing to go along.

But most important, most people perceived that the CD provided better sound. That was because a cheap hundred dollar CD player did indeed provide better sound than a cheap hundred dollar turntable did.

But now it is different. I think that most people feel that an mp3 is good enough, but no one thinks that it is superior to a CD.

So I expect that sales of downloads will depend upon the price. The price for an album download at AAJ is typically $12., I think. I don't think many people will be willing to spend that for a download. Jim has suggested that a download should cost five bucks, and I can imagine that there are people who will spend that amount who won't spend twelve.

The other issue about downloads is the question in my mind about how long the burned CD will last. As I understand it, burned CDs of downloads go bad after five years. Is that right? Does anyone have any personal experience in that regard?

I think there are a lot of adult music collectors who will be unwilling to spend more than a few bucks for a record that's going to go bad in a few years.

Let me mention one more point. We here use the internet, and I suspect that none of us is intimidated by the concept of downloading, although few of us will prefer it.

But I read a number of times last year that Walmart is the #1 music retailer in the US. A lot of people who shop at Walmart don't have computers. They spend their money on big screen TVs to watch Nascar (at least in the Southeast which I am familiar with). I can't recall what I read sometime in 2006 about the percentage of total album sales claimed by country music, but it was a lot. I can't believe that the country music labels will stop making CDs to sell at Walmart, because I believe that a sizeable percentage of country music fans will never become used to dealing with the internet.

One final thought. No matter what the majors do, I suspect there will always be a supply side demand for CDBaby. There are going to be artists who will want to sell CDs at concerts, and will have CDBaby keep a few copies on hand for internet sales. So while the days of Blue Note (and other old recordings) CDs may be numbered, the days of current artists selling their own hard copies may be just beginning.

[clifford_thornton]

I bet we'll soon see CD collecting done with the zeal and possessiveness of 78rpm and LP collectors.

What you say has the ring of truth, Chris.

My first thought upon reading your prognostication was that people would want to collect "hard copies". But upon reflection, I think the audio fidelity will have something to do with it too, just as 50s LPs are sought after, while 80s LPs are not.

Just to clarify, a lot of '80s LPs - especially in the punk and post-punk genres (not to mention 45s) - are quite collectible and rare. CDs have been collectible for a while now, especially some of the Japanese discs which are limited and almost instantly OOP.

[jazzbo]

The other issue about downloads is the question in my mind about how long the burned CD will last. As I understand it, burned CDs of downloads go bad after five years. Is that right? Does anyone have any personal experience in that regard?

I have cdrs much older than five years old with no sign of any deterioration at all.

[GA Russell]

The other issue about downloads is the question in my mind about how long the burned CD will last. As I understand it, burned CDs of downloads go bad after five years. Is that right? Does anyone have any personal experience in that regard?

I have cdrs much older than five years old with no sign of any deterioration at all.

Great news, Lon! But I'm not making it up. Don't CDRs go bad sooner than professionally made CDs?

[clifford_thornton]

I don't know if that's been proven, or if anybody has any idea how long they will actually last. 100 years? We're not even there yet.

[Christiern]

The other issue about downloads is the question in my mind about how long the burned CD will last. As I understand it, burned CDs of downloads go bad after five years. Is that right? Does anyone have any personal experience in that regard?

I have cdrs much older than five years old with no sign of any deterioration at all.

Great news, Lon! But I'm not making it up. Don't CDRs go bad sooner than professionally made CDs?

CDR blanks come in a wide variety of qualities--the really cheap ones should definitely be copied onto better material. Because there is no standard, it is virtually impossible to make a general prediction of durability, but I think it is safe to say that they ain't here to stay.

Virtually all my video LaserDiscs rotted years ago--I had a few hundred. My CD collection of commercial releases goes back to the very beginning, and none have gone bad.

[J Larsen]

I bet we'll soon see CD collecting done with the zeal and possessiveness of 78rpm and LP collectors.

What you say has the ring of truth, Chris.

My first thought upon reading your prognostication was that people would want to collect "hard copies". But upon reflection, I think the audio fidelity will have something to do with it too, just as 50s LPs are sought after, while 80s LPs are not.

Just to clarify, a lot of '80s LPs - especially in the punk and post-punk genres (not to mention 45s) - are quite collectible and rare. CDs have been collectible for a while now, especially some of the Japanese discs which are limited and almost instantly OOP.

Haven't you found that the value of those records has really plummeted over the last several years, though? I have a bunch of those records, and used to have a LOT more, and have found that a lot of former $100 - $200 records are going for $20 - $40 now.

[Shawn]

I remember reading that CDRs could go bad if you played them 24 hours a day for about 3 years...since I doubt any of us listen to a single CD 24 hours a day then there's not much to worry about.

I bought my first CD burner in 1998, I just listened to one of the first discs I ever burned...sounds just like it did 9 years ago.