Over the last week I’ve had half a dozen different press calls about various different EMI stories, so I thought it was a good time as ever to reflect a little on the embattled label.
Since Terra Firma’s take over EMI has been the source of many stories ranging from the “fruit and flowers” excesses of the pre-acquisition days to the “Next to sponsor Radiohead” type speculation about new business practices. The bottom line is that EMI is one of the corner stones of a shrinking industry that is having to relearn its business in order to be equipped for the realities of the music industry in the 21st century. For most of this century recorded music revenues have declined and they’ll continue to do so for a little while yet. When digital finally offsets the impact of the decline it will be a case of leveling off and modest growth rather than a return to the apogee. Thus it makes sense that, unless EMI are to significantly gain market share, they cut their cloth accordingly.
Though there is clearly a process of two very different business cultures clashing / learning to co-exist, the ‘fresh eye’ Terra Firma brings has resulted in some innovative ideas, such as the concept voiced by Guy Hands of artists getting smaller advances in return for a larger share of Net receipts. This makes good sense and gives artists a vested interest in promoting their albums. Currently so many see so little after recoupment that it is little wonder that some actively encourage their fans to download their music illegally. The lower risk for the label is obviously also a key strength in a softening market where risk aversion could otherwise result in signing fewer artists. However, EMI needs this to become industry wide practice, otherwise why would an up-and-coming artist sign to a label for small or no advance versus a fat one from another label?
There was a lot of talk about whether losing Radiohead’s ‘In Rainbows’ was a reflection of EMI’s new supposedly hard-nosed owners’ lack of understanding of how a label works and of artists’ concerns and needs. Though Radiohead eventually made a success of their ‘go it alone’ venture, one has to wonder whether the album would have been nearly as successful without all the free publicity from the high profile press coverage. Radiohead were a relatively high-risk investment for EMI: they are in the latter stages of their life span, they create critically acclaimed but un-commercial and often inaccessible music and they will have income expectations corresponding to their peak years.
Coldplay is arguably a much more important act for EMI. Coldplay occupy an intriguing intersection of appeal. They have genuine, safe-bet mainstream appeal, sell out stadium world tours but retain just enough credibility to appeal to many music aficionados. They also have genuine US potential (Viva la Vida hit #3 in the US charts a couple of weeks ago) – no small asset for a major label that looks more like an indie in the US. Notably Chris Martin has publicly voiced his appreciation for the support he had from EMI with their latest album (a shift from his flippant comments about shareholders). Following the slew of negative press stories and high profile losses such as Tony Wadsworth, this is a big deal for EMI. A successful Coldplay album will not only be a revenue success it will show the artist community that EMI is an artist-friendly label again.
And if Terra Firma succeed in turning EMI round and creating a sustainable business that is capable in the long-run of competing on level terms with other labels for new and established talent, that would indeed be success, particularly given the current market dynamics. The process EMI is going through is more pronounced than the other labels, but its not entirely unique. All the other labels, big and small, will need to adjust themselves to the brave new world of the 21st century music industry.