Can someone explain to me why EMI are in constant financial trouble with an act like Coldplay? This calls for a private equity buyout! *rubs hands together, lights cigar with a Benjamin*

 

All labels have been in financial trouble as of late because of the internet. Labels make all their money off hard copy sales. Where the bands make money off of tours and t-shirts. Coldplay only make about $2 per album sold.

 

EMI is sunk because their other major act left...Radiohead. Coldplay is their last A-list act. Once they leave EMI is done and will be bought out by Universal or another Big 6 Company.

 

Another reason labels are so sunk is because anyone with a laptop can now record. Myspace bands are taking over the world.

[Article] For Coldplay, it's another album, but for EMI, is it a leap too far?

 

Tomorrow's release will be a make or break for Guy Hands' £3.2bn takeover

 

In an industry well used to hype, for once it was no exaggeration when EMI chief Guy Hands hailed it as "the most anticipated album of the year".

Not only does Viva La Vida or Death and All His Friends signify that Coldplay are at a stage in their career where they can get away with pretentious album titles, it could also set the tone for whether Hands' controversial £3.2bn takeover of EMI last year ultimately succeeds.

 

The album, released in the UK tomorrow after a marketing campaign that included giving away the first single, Violet Hill, free and promoting a series of free concerts beginning in London on Monday, is being seen as a litmus test for Hands and his vision for a new EMI.

 

The early signs are good, with 2 million downloads of the single appearing to drive online sales. After featuring the title track in its ads and delivering it immediately to anyone who ordered the album, Coldplay has racked up the biggest ever global pre-release sale on Apple's iTunes music store.

 

Play.com, the online store, has revealed the album is outselling the rest of the top 40 combined.

 

But retailers will be looking beyond the initial surge to whether the record has the "legs" to maintain a high chart position for months to come, appeal to casual record buyers and match X&Y's global 10 million sale.

 

"We're optimistic. We've placed one of our largest ever orders for any album," said HMV spokesman Gennaro Castaldo. "They are one of the few artists that can actually drive people instore and sales online, and connect with a wider audience."

 

Coldplay, who have a mixture of credibility and mass appeal matched only by U2 that makes them major label gold dust, embody the dilemmas facing Hands and his team as they try to reconfigure the company for the digital age.

 

Does the label or the band and its management claim the credit for taking them from pasty students to A-list stadium fillers? And having reached that point, what value is there for Coldplay in remaining with their label when they could now duplicate most of its functions at a lower cost elsewhere - keeping a greater cut for themselves?

 

'Pay what you like'

 

The fear for major labels is that more of their stars will follow Madonna and Jay-Z, who have signed with concert promoter Live Nation for $120m (£60m) and $150m respectively. At EMI, Paul McCartney left to experiment with a record label operated by Starbucks and Radiohead quit for their groundbreaking "pay what you like" experiment with In Rainbows and a new deal with an independent label.

 

Yet away from the hype a more complex picture is emerging. "Everyone is waiting to see what happens with Madonna and Live Nation. We won't know the answers for a few years, and that will give a lot of people food for thought," said Ben Cardew, at industry title Music Week.

 

In an age when there is more to be made from live performance and licensing than selling records, commentators are asking whether the aims of the band and their label are still aligned.

 

"Ultimately, Coldplay don't really need a record label. It would be a huge blow for EMI if they lose a band like Coldplay, given how much they contribute to the bottom line. But aside from physical distribution, everything else you need you can pretty much build yourself. The big question is around what they do next," said Paul Brindley, managing director of digital music consultancy MusicAlly.

 

While the industry buzzes with rumours that Coldplay have only one more studio album and a greatest hits to deliver on their current deal, it is understood the two sides are tied together for longer. So it must have been with some relief that Hands recently opened Q magazine to read a ringing testimonial for the "new EMI" from the band's guitarist Jonny Buckland. The last album, he said, was "finished under pressure" from the label but this time "they've been fucking brilliant and we've been feeling like a new band again, rather than a corporate machine".

 

Bank frontman Chris Martin said: "Being on a major label at the moment is like living in your grandparents' house. Everyone knows they need to move out, and they will eventually, but we kind of like our grandmother."

 

All the rhetoric from Hands about behaving less like a "plantation owner", as he was dubbed by the managers of EMI act Robbie Williams, will be tested by the Coldplay campaign.

 

While not quite copying Radiohead's gambit, the free download was a move that gave the group a direct relationship with 2 million fans. By making streaming tracks from the album available free on MySpace, EMI has helped head off the usual fears of pre-release leaks and piracy.

 

Gamble

 

Radiohead's gamble and other moves, such as the Raconteurs rush-releasing their album to critics and fans alike on the same day, have forced record labels to reconsider the monolithic marketing they attach to big releases.

 

U2 manager Paul McGuinness yesterday became the latest to confirm that the internet had changed the game, although he ruled out following in Radiohead's footsteps for the Irish band's next album, saying the experiment had "to some extent backfired" because too many people still downloaded the album from filesharing sites.

 

As in the film industry, music executives have long pledged to wean themselves off the need to rely on two or three "tentpole" releases a year and spread the risk by investing more intelligently in a range of artists in the same way as independent labels have done.

 

"They are all still geared to the big releases. One vision of the future is that they will be able to invest in artists at a lower level and make a profit on, say, 200,000 sales. At the moment, they might need 1 million just to break even," said Cardew.

 

Another dilemma for the majors is that they are trying to face two directions at once: making as much money as they can from older audiences still buying CDs from artists such as Coldplay, while also trying to sign new acts and develop new models for a generation for whom paying for music is anathema.

 

They are faced with trying to claw back revenues lost to digital piracy and falling CD sales, while attempting to wrest back the credibility with consumers and artists lost in the 1990s thanks to cynical marketing and opaque contracts.

 

Behind the scenes, Hands has overhauled the top team since he paid £2.4bn for EMI last year in a deal worth £3.2bn including debt. One outburst about "lazy" A&R men aside, he has also been less high-profile recently following the outcry that greeted his arrival.

 

As he cut 2,000 jobs, respected figures such as Tony Wadsworth left. And digital gurus such as Douglas Merrill, a former senior Google executive, and Cory Ondrejka, one of the creators of virtual world Second Life, have joined in an effort to accelerate the transition.

 

As they set to work, perhaps they'll be humming the chorus of one of Coldplay's earlier hits, The Scientist: "Nobody said it was easy, no one ever said that it would be this hard."

 

Difficult albums: a history of hype

 

Be Here Now, Oasis The third album by the modestly self-titled biggest band in the world was released amid a flurry of hype in August 1997. It followed success of their first two albums but the release marked the high water mark of their fame; the music failed to match the hype and the band imploded amid fraternal tensions.

 

HIStory, Michael Jackson In an event that encapsulated the hubris of a record industry still riding the CD boom, in 1995 Sony spent a fortune sending a 60ft statue of the singer down the Thames as part of a marketing campaign for his new album. It didn't sink, but Jackson's career soon did.

 

Loveless, My Bloody Valentine According to music business lore, this slice of Scottish indie rock nearly bankrupted Creation records after a torturous two-year recording process presided over by the band's leader Kevin Shields. In the end it didn't sell well but was rapturously received by critics.

 

Chinese Democracy, Guns N Roses This as-yet unreleased album promises to be one of the most hyped moments in music. Since recording began in 1994, it has cost a reputed £13m. Drinks giant Dr Pepper has pledged to give everyone in America a free can of pop if the band releases the record this year.

 

Second Coming, The Stone Roses After huge success with their 1989 self-titled debut, the Manchester indie band wanted to quit small label Silvertone for Geffen. But contractual problems followed and it wasn't until 1994 that the new record finally appeared. It wasn't well received and the band split soon afterwards.

 

http://music.guardian.co.uk/news/story/0,,2284769,00.html

Coldplay Bipassed EMI's Marketing Department

 

Big article in the New York Times today about how Guy Hands' takeover of EMI is going. (Not well.) Interesting with lots of details for those who can stand a glimpse inside the proverbial hotdog factory. You can read it here: EMI’s New Boss Sees Cracks in Music World

 

Especially interesting is that it mentions how the potential Coldplay strike was resolved. (And probably why this campaign seems so much less impersonal and corporate than the X&Y campaign was.)

 

So far this year EMI’s market share in the United States has declined to 8.8 percent from 10.7 percent, according to Nielsen SoundScan, the largest drop among the four major music companies. An album from its top-selling band Coldplay will be out Tuesday, and robust sales could polish EMI’s image.

But even this would belie tension within the company, as Coldplay agreed to release the album only on the condition that EMI pay for the band’s management to hire its own marketing and publicity team, rather than rely on EMI employees.

 

which probably rankles quite a bit because:

 

Mr. Hands’s vision appears to be this: split the marketing function from the development of talent — called “A&R” for “artist and repertoire” in the parlance of the music business; and sharply cut costs by reducing artist advances and paying less on marketing music.

interesting! then what's EMI doing for the band? Now I don't undestand that "being with EMI is like living with your grandparents" Chris said...

 

Coldplay even had to hired a marketing team...

What a shame on EMI - When does Coldplay contract ends? Somebody knows?

 

cheers

EMI is paying for the marketing team. I think Chris was referring to certain people (not necessarily in marketing) in the company that they still really liked working with as his "Grandmother". Not that they'll be around for much longer. :dozey: They still have to take the 'big label approach' even if it's with different people running it because they're still at a 'big label'.

interesting article! they're actually breaking away from EMI after all! :D

 

 

(damn even A&R jobs doesn't seem to have a good future outlook now. so much for going into that career... :\)

That is interesting, thanks for posting. :)

interesting article! they're actually breaking away from EMI after all! :D

 

 

(damn even A&R jobs doesn't seem to have a good future outlook now. so much for going into that career... :\)

 

 

I'd say the world needs A&R people now more than ever. It's the nature of the job that's shifting a bit. ;)

Well they did some major layoffs last week. Cut almost half their workforce...shortly after they finsihed all the promotional work for Coldplay. Figures: complete the Coldplay work, cut workforce, net your gains...

 

http://www.nypost.com/seven/06252008/business/emi_employees_feel_the_heavy_hands_of_jo_117061.htm

 

" it is making good on a January pledge to trim 1,500 to 2,000 staffers from the ranks of its 4,500 recorded music workforce around the world. "

EMI Lays Off Nearly Half its Employees

 

June 25, 2008

 

http://www.nypost.com/seven/06252008/business/emi_employees_feel_the_heavy_hands_of_jo_117061.htm

 

"The axe is finally falling at troubled music major EMI.

 

On the same day that the company announced Coldplay would top the Billboard charts with 720,000 albums sold in the US, it is making good on a January pledge to trim 1,500 to 2,000 staffers from the ranks of its 4,500 recorded music workforce around the world.

 

The cuts are currently underway and are expected to continue throughout the week, sources familiar with the situation said.

 

The number of staffers in North America expected to lose their jobs is unclear.

 

While the layoffs are believed to be substantial, one source said they would be well under one-third of the workforce in the region.

 

EMI declined comment.

 

The layoffs are part of Terra Firma boss Guy Hands' bid to dramatically transform the company - a move that includes a major overhaul of the label's leadership.

 

Roger Ames, the former head of recorded music in the US and UK, was shifted to a more general advisory role within the company in April, while Capitol Music Group CEO Jason Flom is believed to be on his way out.

 

Nick Gatfield, the former president of Universal Music Group's Island Records UK, will take the helm as EMI's new head of North American and UK recorded music business starting July 15."

 

 

So despite sales of Coldplay's album and after their first week protions for the album were complete the layoffs begin. These people did get decent layoff packages but their co-workers who remain are currently getting double the work on their accounts with no increase of pay (for a few years actually).

 

I'm friends with the local rep so i was dismayed to see them let go (but glad that they will have some time to find other work.) News likes this makes me sad that I paid for the album (first music purchase all year) as it seems hypocritical to respond to financial success by slashing jobs.

 

SIGH :(

The Evil Music Institution strikes again??:rolleyes:

:dizzy2:

The Evil Music Institution strikes again??:rolleyes:

 

good one:dozey:

Sad to see this happening at EMI. Only record company I spend $$ on (because they offer DRM free tracks on itunes). Other companies offer DRM free tracks on amazon and elsewhere, but I get those off of bittorrent.

I noticed I bought a Tobymac album that was on the EMI label. I was a little surprised.

They just layed off people at the university hospital that i'm working at currently (pediatric ward). surprising. sorry, semi-off topic.

i'm not surprised to see layoffs in today's economy but right after their finacial success of the year its highly disappointing....

 

maybe they'll blame it on coldplay giving Violet Hill away for free.

I hope that cunt that was so fucking rude to people in Houston got the sack. Bitch deserves it. She made some little girl cry. :angry:

Coldplay Label Unveils New Boss

 

An industry outsider has been named as the new chief executive of EMI music.

 

He is Elio Leoni-Sceti, formerly head of Europe at household goods giant Reckitt Benckiser. The 42-year-old has worked at Reckitt - whose products include Dettol and Nurofen - for the past 16 years.

 

He has no experience of the record industry but interim executive chairman Guy Hands says he has every confidence in him. "His career achievements and outstanding leadership qualities are ideally suited to ensuring EMI is a successful business," Mr Hands declared.

 

Mr Hands promised a "revolutionary" overhaul of the business after it was taken over by private equity firm Terra Firma last year. He said it was needed to meet the challenges of the digital age and restore EMI's profitability. One of his first acts was to shed around 2,000 jobs. EMI's artists include Coldplay, who are currently top of the album charts with Viva La Vida. Kylie Minogue, Robbie Williams and Lily Allen are among the label's other stars.

 

Cold-cycle to Coldplay

 

By Andrew Hill

Published: July 8 2008 03:00 | Last updated: July 8 2008 03:00

 

Elio Leoni-Sceti's move from Reckitt Benckiser, the household products group, to be chief executive of EMI Music will prompt amusement, and perhaps dismay. Each time Mr Leoni-Sceti is referred to as a "detergent expert", EMI's artists will feel a little more uneasy. That may be one reason why, in the official statement welcoming him to the music group, much was made of the Italian's excitement about the prospect of working with Kylie, Lily and Norah and nothing of his regret at no longer working with Airwick, Veet and Vanish.

 

EMI has been through this before, when Eric Nicoli joined as executive chairman from United Biscuits in 1999 ("EMI takes the biscuit" etc.). Mr Nicoli's years at EMI were not glorious. But the idea of putting product people in charge of product - be it Calgon, cookies or compact discs - is sound, even if Mr Leoni-Sceti will concentrate on branding, marketing and innovation more than on shifting physical stock.

 

Unlike United Biscuits under Mr Nicoli, Reckitt has been a star performer. But Mr Nicoli had executive control of EMI as a listed company with disparate shareholders. As an employee of Terra Firma, the private equity group headed by Guy Hands, Mr Leoni-Sceti may have less room for manoeuvre, despite his new boss's pledge to step back as non-executive chairman of EMI. When it comes to his key investments, Guy Hands-off still sounds less plausible than Guy Hands-on, whatever his title.

 

A measure of Reckitt's strength, meanwhile, is that it should easily be able to pluck another manager from its ranks to fill the space Mr Leoni-Sceti leaves on the executive committee. As the second- youngest member of that team, the 42-year-old was theoretically one of those in line to replace Bart Becht, Reckitt's much-lauded chief executive. But Mr Becht himself, still only 51, shows no signs of flagging. Hardly a succession crisis.

 

http://www.ft.com/cms/s/0/86b718f4-4c89-11dd-96bb-000077b07658.html

EMI: No background music

 

EMI chairman Guy Hands has turned to a marketing expert with no experience of the music industry to help him turn round the record company's fortunes. But can Elio Leoni-Sceti win over the artists? Sarah Arnott reports

 

The appointment of a little-known Italian marketing executive to run EMI's recorded music division is the latest step in the reinvention of the beleaguered label by Guy Hands, its private equity backer.

 

 

Elio Leoni-Sceti was recruited from Reckitt Benckiser, the consumer products giant responsible for Cillit Bang and Airwick, and is one of a series of non-music industry appointments that are central to plans to separate EMI's creative and business roles.

 

Mr Leoni-Sceti's appointment will also see Mr Hands step back from president to non-executive chairman of the company. "Elio's career achievements and outstanding leadership qualities are ideally suited to ensuring that EMI is a successful business," Mr Hands said. "He has the passion, drive and belief in the future of the music industry to realise the ambitions we all have."

 

Mr Hands' group Terra Firma paid £3.2bn for the company last August, after a string of profits warnings sent the stock price plummeting. In May 2007 the company announced a £264m loss, as its share of the UK album market slipped from 16 per cent to 9 per cent and digital downloads ate into sales and margins.

 

The problem is affecting the whole industry. Sales of physical products are declining, as digital players such as iPods take over the consumer market. In 2007, recorded music sales dropped 8 per cent globally, including 9 per cent in the US and 13 per cent in the UK, according to the International Federation of the Phonographic Industry. The labels are also fighting a rearguard action against digital piracy, particularly file sharing over the internet, and although legal digital music is growing at a phenomenal rate – up 40 per cent between 2006 and 2007 and worth $2.9bn (£1.5bn) last year – it is not enough to fill the gap.

 

Mr Hands' plan is to streamline the business, cutting back on marketing and administration costs, and looking carefully at artists' advances. In January, EMI announced redundancies of 2,000 out of a worldwide staff of 5,500 to help meet a target of £200m of annual savings. But the most significant change is the separation of the artists and repertoire (A&R) role – which includes finding and developing the label's artists – from other responsibilities such as marketing, promotional agreements or digital strategy.

 

Traditionally, music company senior executives are drawn either from those who have risen up through the creative ranks, or lawyers or accountants who have specialised in the music business. But the proposal at EMI is for creative specialists to concentrate on finding the next big thing, and leave the label's newly created Music Services division to handle negotiations with retailers or merchandisers.

 

In such a context, and at a time when the launch of an album includes up to 200 different products, only one of which is the music itself, Mr Leoni-Sceti's background in marketing and branding could be a considerable asset. "It used to be that the big labels were only about having the most popular bands, because that is what people were buying, but now the attitude is that the company is selling an 'entertainment experience', and it will give away music for free if can make money another way, from live gigs or merchandising," Adam Daum, a media analyst at Gartner, said. "Bringing in someone unconnected with the music industry, but who understands branding and marketing, could be better, because they are more likely to have lots of examples of ways to make money."

 

The problem is how far the "creatives" – be they artists or A&R people – baulk at the changes. Paul McCartney had already left EMI by the time the Terra Firma deal went through, claiming that the company had become "boring" and "symbolic of the treadmill". But he was not the only high-profile defection. Radiohead quit the label in artistic disgust in December. Thom Yorke, the lead singer, told Radio 4's Front Row: "Companies buying and selling themselves and seeing the artists' work as simply part of their stock are devaluing music." Robbie Williams has also threatened to leave. The Rolling Stones, an EMI stalwart, released their recent Shine a Light album with Universal.

 

The stream of top executives moving on has been even more striking, if less headline-friendly. The only big name from the old guard who has survived is Roger Faxon, head of the label's music publishing division. Eric Nicoli, the chief executive, stepped down in September, before the company was formally delisted from the Stock Exchange. Martin Stewart, finance director, was also a swift departure. Tony Wadsworth, head of the UK business, quit in January after 26 years, and last week, Jean-Francois Cecillon, head of EMI's international business, announced plans to leave.

 

After the takeover, top roles were taken by Chris Roling, a former ICI executive, Ashley Unwin, from Deloitte Consulting, and Julie Williamson, who has a long history with Terra Firma. Most notable was Mike Clasper, a former BAA chief executive, brought on to Terra Firma's investor board in November to oversee a global review, who was leading the Music Services division until he was poached last month to be chairman of HM Revenue & Customs.

 

Mr Hands' transformation may be causing ructions, but the separation of technical expertise and general management duties is a trend across the board, according to Mick Holbrook, head of organisational change at PricewaterhouseCoopers. "The age-old problem, particularly in the creative and scientific industries, is that a great technical expert promoted to general manager means losing twice: the creative impact is lost, and the business rarely gets a great general manager," Mr Holbrook said.

 

The difficulty is to manage the cultural change, as the recent problems at EMI illustrate. "There are a number of cultural questions, not least how adaptable the person coming in is, because they will have to reach out to a group of people that don't trust them," Mr Holbrook said. "The danger is that the changes happen too much, too fast, and the creative people all leave, so the process has to be carefully handled."

 

How well EMI's new management, including Mr Leoni-Sceti, can manage such challenges remains to be seen. But they do not have long to prove the validity of Mr Hands' vision of a 21st century music business. "This is a company that has been acquired by someone who wants to radically alter the way it operates, and there have been lots of grievances raised," a City analyst said. "The proof will come in a couple of years."

 

Meanwhile, EMI must be doing something right. It clocked up number ones on both sides of the Atlantic last month with Coldplay's Viva la Vida album and Katy Perry's "I Kissed a Girl" single.

 

http://www.independent.co.uk/news/business/analysis-and-features/emi-no-background-music-862072.html

Can they move to another label? It wouldn't be the WORST case if they just jumped ship, and Parlo released a GH, for the holidays.

Coldplay helps EMI back into black

 

Turnover at EMI’s record music division leapt 61pc in the first quarter of its financial year as sales of Coldplay’s hit album Viva La Vida helped the record company return to underlying profitability, according to Guy Hands.

 

Mr Hands, who is under pressure to prove that his £3.2bn purchase of EMI last year was not an error, told staff in a memo that the company had achieved a “massive reduction in waste”, even before accounting for the 2,000 jobs that are being cut from the company.

 

“In the three months to the end of June, the recorded music business achieved positive ebitda [earnings before interest, tax, depreciation and amortisation] of £59.2m, compared with a loss of £45.1m in 2007, according to our latest management accounts,” he wrote.

 

He added: “Every region contributed to this result with strong release schedules. Significantly, these additional sales were achieved with a far more efficient marketing and promotional spend. In addition, these figures only include a relatively modest contribution from Coldplay’s Viva La Vida, because it was released towards the end of the quarter.”

 

Sales of the album will give a huge boost to EMI sales in the current quarter as it strives to hit a £180m ebitda target for the year to September to meet banking covenants. The record has just racked up a fifth week as the UK’s number one album.

 

Mr Hands hailed the “dramatic improvement” in underlying profitability but warned staff that it was “early days” and admitted that it could be misleading to look at just one quarter in isolation due to the timings of releases. “As we all know, the recorded music business is extremely volatile and we cannot count on future quarters always being this good.”

 

He said the company had cut the number of CDs it overshipped from 42pc of gross sales to 16pc.

 

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/15/cnemi115.xml

How Do You Lose $1.2 BILLION????

 

According to a new report, EMI, the label Katy Perry and Coldplay call home, lost $1.2 billion in the fiscal year ending March 31st of this year.

 

Ouchy!

 

Analysts say the loss can be blamed on “poor" operational performance. In particular, 'a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.'

 

The year before, the company 'only' lost $455 million.

Yikes!

 

Katy Perry and Coldplay's latest hit the scene post March 31st and have done pretty well.

 

So, EMI's numbers should look a little better next year, right? …that is if they don't go under!

 

http://www.fashion.ie/aggregator/gossip/118589-how-do-you-lose-1-2-billion

 

Hey Everybody Who Is Getting The Story Wrong: EMI Lost $1.2 Billion Last Year BEFORE Coldplay and Katy Perry Success

 

Private equity firm Terra Firma released a report on Friday stating that record label EMI lost $1.2 billion last year, during which time the label's market share dropped from 12 to 9 percent. But here's the good news: it was all the previous management's fault. At least that's what Maltby Capital, Terra Firma's investment vehicle, which prepared the report, is saying.

 

Articles and blog posts heralding the bad news have been popping up all over the Internets today. But calm down! Things probably aren't as bad as those results make them seem. Mostly because that figure is old!

 

It refers to the year ending March 31, 2008, seven months ago, and before EMI released smash albums from Coldplay and Katy Perry, which should definitely have helped this year's results. In fact, the head of Maltby Capital said the same in the introduction:

 

EMI’s operational performance has improved significantly during the first seven and a half months of Maltby ownership, and we expect the six months results ended 30 September 2008 to show year on year improvement.

 

Since the formerly publicly-traded label is now private, we don't know exactly how it's doing. But, we wouldn't be surprised if earnings to date this year were up from what they were the year before.

 

If anyone knows has more info about financial results at the label for the past seven months, drop us a line in the comments or send a tip to [email protected]. As for the rest of you, stop panicking already!

 

http://www.businesssheet.com/2008/10/hey-everybody-who-is-getting-the-story-wrong-emi-lost-1-2-billion-last-year-before-coldplay-and-katy-perry-success