More tough times for another UK music company, this time EMI.
EMI today announced a major series of restructuring and cost cutting initiatives in the face of market pressures and a stark claim that:
ďEMI Musicís full year revenues could decline, year on year, by approximately 6% to 10% on a constant currency basis.Ē
So is it EMIís fault? Only partially. EMI is impacted by a combination of legacy issues which is has been unable to reddress (weak US footprint, no media or technology parent company to leverage assets of) and of overall market issues.
Since 2001 the European music industry has lost close to a third of its value and CD sales will continue to decline steadily. Digital revenues are on the up, but wonít offset declining music revenues for a couple of years yet, and even then it wonít bring back the 1990ís heydays. The music industry has had its high water mark, now it is in the process of finding its new true level. In this context EMIís strategic realignment and cost savings are as much a reflection of overall market dynamics as anything else.
Of course it is important to remember that music is a hits driven business, so a record labelís performance should be judged not just in quarterly contexts, but also annual contexts. Digital ironically accentuates the impact of hits: ring tones are more hit focused than any other music format (largely due to providers promoting only half a dozen ring tones on a TV ad spot, and also to small phone screen sizes limiting inventory promotion by operator portals etc.). Similarly a digital music store front page has a lot less space than a physical retail storeís front shelves. So despite digital supposedly being a long-tailerís paradise, its current combined impact – i.e. including mobile – on the music industry and EMI is primarily the opposite.
No so much long tail as amputated tail-stump.