EMI's Ex-Google Merrill Clueless Out of Gate, Offers Platitudes, Panders to Pirates

Cayocosta

Piracy bad, file-sharing okay. The industry's fight against piracy just got harder now that EMI is on record stating that it all depends on how you look at it:

"I'm passionate about data," Merrill said during a phone interview Wednesday with CNET News.com. "For example, there's a set of data that shows that file sharing is actually good for artists. Not bad for artists. So maybe we shouldn't be stopping it all the time. I don't know...I am generally speaking (against suing fans). Obviously, there is piracy that is quite destructive but again I think the data shows that in some cases file sharing might be okay. What we need to do is understand when is it good, when it is not good...Suing fans doesn't feel like a winning strategy."

Try anything and see what sticks - never mind how long this is going to take to deploy (and quantify) and that we might run out of cash first:

More specifically, Merrill said he would see whether a Google ad model will work for music. But he's willing to try music subscriptions and even an ISP fee. Certainly, what came across about what strategies Merrill intends to use is that he's not married to any one idea.

We've already witnessed ten years of failed experimentation, with the looting worse now then ever - systemic and virtually unfettered - yet EMI is keen to embark on a costly super-complication of the distribution of otherwise free content:

"I think there is going to be a lot of different models," Merrill said. "Those are two (subscriptions and ISP fees) you can imagine. I'm not sure that either one of those will be the most dominant model. But they are both interesting. We should try them and see what the data says. Other options will be things like you can imagine supporting music through relevant targeted ads, the Google model. There is a dozen of other things...we should try them all. We should see what the data says and whatever it says, we should follow the data, and follow our users and let them help guide us. We should engage in a broad conversation about art."

Spoken like a true geek department; or, now might be a good time to study the history of Motown, Atlantic, etc.:

"I think it's important to figure out where can record labels add value," Merrill said. "I don't know the answer."

Link

Cost of Piracy

Cayocosta

Guy Dixon, in his article Music: A New Era of Selling Out for Globe and Mail takes a shot at EMI for seeking corporate sponsorship to help underwrite the development of its artists:

Guy Hands, who is now chairman of EMI after his London-based investment Terra Firma bought the company and its many sublabels ranging from Virgin to Parlophone last year, said yesterday that artists may be in for a new era of selling out, with his suggestion that bands could be sponsored like British sports teams: "Football teams have very distinct corporate sponsorship. Why shouldn't some of the leading bands have the same sort of relationships?" the Financial Times quoted Hands as saying.

Unfortunately - and as usual - nowhere is it mentioned that piracy has contributed greatly to this development, as well as the loss of thousands of jobs and the cratering of record company valuations.

Mr. Dixon writes as though these things are occurring in a vacuum.

With regard to fans being jaded; perhaps artists are becoming a little fed up with the notion of playing minstrels to an audience consisting in large part of spoiled brats that hold them in contempt and consider their work worthless.

EMI to Cut 2000 Jobs, Focus on Catalog

From Joseph Schuman, Wall Street Journal:

EMI tomorrow plans to announce a restructuring that could cutup to 2,000 jobs and emphasize the profitability of its catalogue -- with the likes of the Beatles, the Rolling Stones and Norah Jones -- rather than its recorded-music division, the Times of London reports. Guy Hands, head of Terra Firma Capital Partners, which acquired embattled EMI last year, is expected to stress how half of the company's profits come from the catalogue division, which employs 1,100 people, compared with the 4,500 who deal with newly recorded music, the Times says. Mr. Hands wants to centralize sales, marketing and other support functions and also scrap EMI's current bonus regime for managers -- which is based on album shipments -- and replace it with one based on group profits, the paper adds.

Link

EMI Strikes Deal For BoxOffice365 On-Demand Video Site

From Lars Brandle, Billboard

EMI Music U.K. will make DRM-free audio and video content available through British Internet Broadcasting Co.'s (BiBC) downloadable virtual store, the music major said today.

Works from EMI artists including Coldplay, The Spice Girls, Queen, Kylie, Pink Floyd and KT Tunstall will be made available to customers of BoxOffice365, BiBC's on-demand audio and video download service.

"EMI is always looking for innovative and exciting ways of monetising its content," said Graeme Rogan, head of digital sales, EMI Music U.K., in a statement.

Link

Terra Firma Sells 15% Stake in EMI for £250M, Out in 2012

From Dan Sabbagh, Times Online:

Terra Firma, the new owner of EMI, is close to completing a £250 million equity fundraising, after telling would-be investors that it can lift profits in recorded music from £61 million in 2007 to £528 million in 2012.

The venture capital group, run by Guy Hands, is selling a stake of about 15 per cent of EMI, at what is thought to be broadly the same £1.5 billion equity valuation it applied when it took over the music major behind Kylie Minogue and the Spice Girls this year.

Terra Firma is predicting an exit in 2012 which, if its plans come off, would mean the company being sold for an enterprise value of £9.4 billion – it was bought for £3.2 billion, including debt. Borrowings taken on in the wake of the deal are approaching £2.5 billion. At this sale price, Terra Firma’s annual rate of return would be 33 per cent.

Link

(WMG) Downgraded to $5 by Pali Research

From Idolator:

Last month, stock analyst Rich Greenfield said that shares in Warner Music Group were worth a mere $7.50, thanks to consumers viewing music as "just above dust bunnies" in the "worth" department. The stock plummeted, and yesterday Greenfield downgraded the stock's price again, saying specifically that reduced floorspace in big-box stores will hurt the recorded-music business even more.

Rumor du jour has EMI and new owners Terra Firma waiting for WMG to fall even further, then trying to finally combine the two companies once and for all.

Ned Raggett picks it up from there:

It’s been a little over year since the implosion of Tower Records, its long-delayed but inevitable execution (rumors had been going on for years), and my multiple visits to the Costa Mesa location were primarily defined by the appearance of those dust bunnies, both the actual balls of detritus and the numerous musical equivalents. As the prices dropped and more and more of the truly great stuff disappeared into the collections of hoarders like myself — and I was still surprised at the good discs I was finding at 80% or more — the saddest thing about it all, beyond the fates of the employees who were stuck looking for work as Christmas approached, were the monstrous piles of multiple copies of one or two discs by some poor sap of a band or an MC whose stock had likely been bought on consignment and whose life’s work ended up practically being given away at a buck a disc, or even a cent.

Link

EMI Labels Sue Online Music Executive Robertson

From Paritosh Bansal, Reuters:

EMI Group companies sued online music industry executive Michael Robertson for copyright infringement on Friday, some seven years after his former company paid recording firms more than $100 million to settle a similar case.

Several EMI-owned labels and publishers sued Robertson and MP3tunes LLC, which runs www.sideload.com and www.mp3tunes.com, for willful infringement of copyright over the Internet, according to a complaint filed in U.S. District Court in Manhattan.

EMI's complaint says MP3tunes' two Web sites offer an integrated music service, allowing users to listen to music on their computers, obtain copies of songs online, transfer music to their computers and portable devices, and distribute it to others.

Link

EMI to Axe Unproductive Musicians

From Katie Allen, Guardian Unlimited:

Music group EMI, home to Robbie Williams and Lily Allen, has suggested it will axe artists that are not working hard enough as it takes a fresh approach to the music business under new private equity owners.

Guy Hands, head of buy-out group Terra Firma, said in a memo to EMI staff that his initial views on overhauling the recorded music division included more rigorous demands on artists.

"I do see a need for fundamental change in how we approach the music business and how we deliver the interconnected triangle of the consumer, EMI and the artist," he said in the memo, obtained by the Financial Times and posted on its website.

He did not mention any specific artists at EMI, whose roster also includes Kylie Minogue, the Rolling Stones and Gorillaz, but slammed the focus by some on upfront money rather than album sales.

"There has been a lot of talk about what labels offer to artists and to the consumer. However, there is not much talk about how artists should work with their label. While many spend huge amounts of time working with their label to promote, perfect and endorse their music, some unfortunately simply focus on negotiating for the maximum advance ... advances which are often never repaid," he said.

Like all the big music groups, EMI is battling falling sales against a backdrop of rampant piracy and fast-changing consumer habits. In its final months as a listed company, EMI issued two profit warnings in quick succession after disappointing Christmas sales for Robbie Williams' new album.

Link