More details have emerged about the planned restructuring at EMI Group, with chairman Guy Hands urging employees, artists and managers to embrace consumers’ needs in the era of digital music.
The restructuring follows a three month consultation review of the business by Terra Firma in the wake of its acquisition of EMI for £3.2 billion ($6.3 billion) last year. In a presentation to staff in London today (Jan. 15), Hands said consultation had found agreement in the company on the need for the whole recorded music industry to change, although he acknowledged that this “will not be without pain.”
Hands declared that it was “not sustainable” to maintain EMI’s global roster, which he claimed totals 14,000 artists. He added that, overall, new releases have been losing money for several years. He said there would have to be an end to the industry model of “signing up as many artists as possible, while taking huge bets on a few”. New business models will aim to reduce the complexity within the organisation and focus on the needs of emerging artists.
Key support activities will come under global leadership and work to develop new ways of serving the customer in the digital age, Hands said. He added that it was “expensive and inefficient” that only one in 20 people working on EMI’s labels were in A&R; the U.K. and U.S. A&R structures will be unified under common leadership in order to manage artist rosters in an “integrated and holistic way.”
As reported earlier today, EMI’s new private equity owners Terra Firma have confirmed the company will cut between 1,500 and 2,000 jobs worldwide in its Recorded Music division as part of a major restructuring that will save up to £200 million ($392.2 million) a year.
“Unfortunately in the past, the restructurings that have been done within EMI have not been seen as fair,” said Hands. “This time we are determined to conduct the selection of who stays with fairness, honesty and respect for everyone as an individual. We will not be asking people to reapply for their jobs in a formal way.”
Hands said that he has been predicting music consumption would move from CDs and high street retailers to multiple routes including digital since 1995. “Overall revenues across the industry from the sale of recorded music have been declining,” he noted. “But the recorded music industry has neither responded strategically to these challenges nor adjusted its way of operating accordingly.”
EMI staff, he added, “have told us the old ways of doing business, designed for a different era, have been protected for too long. They are no longer appropriate if we are to have a sustainable industry which can find, nurture and break the creative musical talent of tomorrow.”
Hands told staffers that the overall challenge was to move to a structure which can best monetize artists’ music in a market where the CD is no longer so dominant, and where many consumers have become used to not paying for music.
EMI will support its artists for the long term and continue to work with great music talent, Hands said, but he added that they must “jointly share both the risks and benefits”. He also said the company will help artists generate additional revenue from sources beyond the sale of recorded music, such as corporate sponsorship. The company will also investigate driving more value from its back catalog.