Hands tells EMI staff to ‘wake up’

Music giant must innovate, says new owner

LONDON — EMI Music Group’s new owner has warned staff that they must think outside the box if the company is to prosper in the years ahead.

Guy Hands, the chairman of private equity financiers Terra Firma, which bought EMI two months ago, last week sent an email to all employees in the wake of news that one of the company’s top acts, Radiohead, will sell its new album without the involvement of the record label.

Radiohead’s innovative plan is to deliver their latest album over the Internet by allowing fans to set their own price for the music.

Hands responded with an internal memo stating that the music industry has been too slow to embrace the digital revolution and that Radiohead’s move was “a wake-up call” that everyone at EMI should welcome, but “respond to with creativity and energy.”

Hands wrote: “Rather than embracing digitalization and the opportunities it brings for promotion of product and distribution through multiple channels, the industry has stuck its head in the sand.”

The Terra Firma boss believes that other EMI acts and their managers will be following the Radiohead initiative closely to see whether such a business model can earn musicians more money than following the traditional record company route.

“Why should (established acts) subsidize their label’s new talent roster — or for that matter their record company’s excessive expenditures and advances?” Hands said in his memo.

Indeed, Hands appears to be willing to rip up the established record company business model in favor of focusing EMI on all aspects of the music industry. It is understood he is entertaining such ideas as having the company explore deals whereby EMI might subsidize the making of an album or fund a tour in exchange for a share in an act’s revenues.

Insiders at the company say that there has been mixed reaction to some of the statements coming out of Terra Firma about EMI, but that the willingness of Hands and his executives to listen to ideas by staff is being broadly welcomed throughout the company.