So pretty sad news for EMI staff today when the company announced it was gonna cut 2,000 jobs.
It's sad as it means less and less people will have a chance of working in the industry. I know I would have loved to work in the music industry full time but the money just wasn't there and I was not from a fortunate enough background to spend my life on a perpetual cycle of work experience placements.
It was inevitable - when a venture capitalist firm buys you out they are are gonna trim the fat.
The Telegraph probably added more reasons for Guy Hands (EMI Chief Exec) to get worried when it leaked that the Verve may be the next act to throw their toys out of the pram:
"The Verve are to join Robbie Williams and Coldplay in threatening to withhold their next album from EMI until they receive assurances about marketing and the company's financial health."
The paper goes on to quote the reformed Wiganites' manager, one Jazz Summers, as saying: "Why would we deliver a record when EMI is cutting back on the marketing and is in financial difficulty? I am going to tell Guy Hands I want assurances."
Change is inevitable and as I have written in previous posts the music industry has been far too slow in its reaction to the uprising of digital media and is now paying the price. Ultimately it probably means cheaper products for us and anyways I'd love to be in the next EMI management team meeting;)
3 comments:
He looks like the T.V. presenter from match of the day 2.
Hi Victoria,
I think you are being a bit harsh on Hands. For one thing he is hardly a venture capitalist of the traditional "masters of the universe" asset stripping kind from the 80s (think Michael Douglas in Wall Street). And he has a track record of leaving businesses in good health, even if his ultimate personal interest is only medium term (he has said he doesn't imagine holding onto EMI for more than a decade).
And whilst what is happening is certainly a personal tragedy for all those losing their jobs (and that should never be far from our consideration), it is also a fairly inevitable by-product of the changes the music industry has undergone and is undergoing. Thirty years ago, the record industry was made up of a whole host of small production companies, each with their brand niche (Island, Stiff, Rough Trade, etc). However, ultimately these companies proved unviable, as they tended to rely on too small a pool of artists, and therefore could not achieve long term success. So the the whole industry consolidated, as the majors bought them up.
But, and this is the crucial bit, these new super-companies did not exploit the potential economies of scale that developed. Instead, all the new divisions of, for example, EMI retained all their separate departments, even if they duplicated other departments elsewhere in the company. So you might have several marketing departments, for example.
However, the companies have been forced to adjust for two reasons. Firstly, the rise of the MP3 and file sharing (and piracy, obviously) has made music companies look at their business models, which are just plain unsustainable now - just look at the losses made by EMI's recording division in the past few years. This might in part be down to making bad records, but it is hard to escape it anywhere in the music industry.
These losses have to some extent been masked by the other aspect of the company - the recording rights side of the business. However, this is becoming an increasingly less useful source of revenue. To take one example, its just turned 2008. At the moment, any time someone wants to use Cliff Richard's first hit, Move It from 1958, for commercial or entertainment purposes they have to pay EMI. But come the fiftieth annivery of its release (in literally a few months) the copyright will lapse. Then its a free-for-all. Only five years times, and Beatles recordings will start to be unprotected. EMI may have the crown jewels of British pop at the moment, but they are slowly but surely floating out the window.
So making the recording side of the business effective again is a matter of business necessity for EMI, as it is the only way they can replace assets they are inevitably going to lose. More generally, they have to fundamentally rethink how they run their business to cope with the digital revolution.
If Guy Hands wasn't doing it someone would. Or, if not, it wouldn't be very long before no one had a job at EMI.
P.S. And don't even get me started on the hypocrisy of Chris Martin on this matter - a man with a record contract worth millions who doesn't approve of large record companies. A bit like hating fur, but only wearing mink.
Fair point Nick.
The illustration and headline were a bit tongue in cheek. I don't actually criticise him in my post. I guess I was making a dig at the hysterics the job cuts had encouraged in the media.
I agree completely that the music industry had to change and don't doubt for a second Guy's credentials.
It's just a shame that change took so long and that it is going to cause so much upset because of that.
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