EMI: the sad demise of a very British company
For three decades, EMI took on the world in record sales. Now its sale to Sony and Universal marks the end for the music major
EMI has been put through the wringer more than any other music company in the past few years so news of its sale today – in two parts to two different music companies – finally ends all the speculation and uncertainty about its future. Inevitably, as with every sale or merger, jobs will be lost; but the EMI brand, after having been owned by private equity company Terra Firma since November 2007 and then finding itself under the begrudging custodianship of Citigroup bank since February, will live on in its new homes, among music executives again.
Even as the final details of the sale were being hammered out, it was business as usual for the company. On Thursday night it took over its
iconic Abbey Road studios in London to showcase its brightest prospects for next year: new talent like Emeli Sandé, as well as Kylie Minogue, the
singer whose career rehabilitation in 2000 coincided with her signing to
EMI imprint Parlophone and from whom a new album is now anticipated.
Assuming it all clears the European Commission, US antitrust bodies and the aggressive lobbying of the independent sector, EMI's record music arm could now be folded into Universal Music (giving that company a global market share of over 40%) while EMI Music Publishing is absorbed by Sony/ATV to create a new publishing powerhouse.
The journey to this point has been a rocky one that saw EMI cut its staff, previously occupying three huge offices across London, so they could squeeze into one building as the company's global significance waned. For better or for worse, Terra Firma was there for the long haul and wanted to revive EMI as a company and as a brand – with no less an ambition than to reinvent it as the first truly 21st-century music company. Citigroup just wanted shot of it to the quickest and highest bidder, with no real care for the legacy EMI – with one of the truly great music catalogues in the world – represents.
This all marks the sad, almost apologetic, demise of a standalone EMI – a very British music company that took on the world and, for a time at least from the 60s to the 90s, was winning. The traditional music business has had a difficult time post-Napster in 1999, unable to move quickly enough and adapt to a new rhythm punched out by the internet and digital technologies. Universal bulked up (notably by swallowing indie giant Sanctuary), Sony and BMG merged in 2004 and Warner Music most aggressively pursued the contentious "360-degree" route (where all acts now signed must give over a share of their non-recorded income).
For EMI, its publishing business was in rude health – it was the biggest music publisher in the world until the merger of BMG Music Publishing with Universal Music Publishing in 2007. The recorded side was the real concern, having only broken a few acts globally this millennium (notably Coldplay and Katy Perry). Even the brightest stars of its catalogue business were jumping ship (the Stones, McCartney and Queen have all - presciently - defected to Universal in recent years and even David Bowie was rumoured to be shopping around for a new home).
It was with some chutzpah that Guy Hands, on buying EMI, described it as the "worst company in the worst performing industry" – but he said he was going to save it, mostly from itself. The EMI old guard walked the plank and Terra Firma tried to rebuild from within. A schizophrenia at the executive level meant management from non-music companies (such as Reckitt Benckiser, Google, Northern Foods – never mind former BBC DG John Birt) was constantly changing, and new ideas were tested and then quickly scrapped; all the while, no one was quite sure where the company was trying to get to or how it was going to get there and so EMI's woes grew.
It was only, ironically mere months before Guy Hands lost his grip, that a solid recovery plan was finally put in place with the June 2010 appointment of Roger Faxon, then running its publishing arm, to take charge of the entire company. His plan would, he said, take three years to come to fruition. But the fact it is now being carved up into two portions actually unpicks a lot of what initially Terra Firma and latterly Faxon were trying to do in terms of reinventing EMI as a "full rights" company, ensuring its recorded and publishing arms worked in unison. Faxon himself had said post-Terra Firma that a splitting of the company was the worst possible outcome. His nightmare is about to come true. As no single music company could have bought EMI Records and EMI Publishing outright, so the chainsaw was applied. The cut will not be a clean one.
There is an argument that EMI would have gone out of business if Terra Firma had not bought it. The irony here was that most of its debts were absorbed by Guy Hands's misreading of the market, making it more appealing to other buyers such as Universal and Sony/ATV. Until recently, Warner Music (itself no stranger to new owners) seemed the likely home and might well have been the best fit for the market overall. They'd tried to merge in the past but had been blocked due to regulatory issues. Now the climate has moved on so much that the biggest major can look to buy the smallest – a situation that was unthinkable even a few years ago.
Presented with the hypothetical situation of EMI merging with Warner, one leading independent label executive told me recently that having three record company super-powers - each with a relatively equal market share was - preferable to a duopoly of Sony and Universal. Now, for the indies at least, something much worse has happened: one company controls just under half the market. The lobbying against this happening will be ferocious so this is all far from a certainty.
If, however, the deals go through, it will mark a bittersweet ending to a chapter in the history of the music industry. The EMI legacy – of enviable diversity and leftfield signings that went multi-platinum – looks like it will live on as a brand, but doing so within much bigger multinational concerns and as just another part of their steady march towards consolidation.
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