One of the biggest shakeups in the music industry’s history is expected to be announced today by EMI.
It is likely that 1,500-2,000 people will be pinkslipped, a slew of artists dropped and departments at individual labels centralized. EMI’s key pop labels, Capitol, Virgin and Parlophone, are likely to retain only their individual A&R responsibilities as sales, marketing and administration staffs are merged into a single entity.
A number of EMI offices are expected to close, and it’s possible several of the company’s smaller imprints will shutter. Speculation is that the profitable music publishing unit and A&R departments will be left largely untouched.
The company is looking to shed annual costs of nearly $400 million, a figure in line with the amount targeted by Edgar Bronfman Jr. when he took over Warner Music Group in 2003. Warner Music staff is now down to about 4,000.
Terra Firma is looking to quickly make the music conglom a profitable venture — in the year ended March 31, EMI lost $565 million — and has been cutting personnel from the top down. Last week, longtime EMI Music U.K. chairman Tony Wadsworth got the ax, and before him, Eric Nicoli was removed from his job running the recorded music operations.
Based on various reports, EMI has a global staff of between 5,000 and 6,000. The previous regime, headed by Nicoli, had eliminated thousands of jobs over the past eight years to make the company more attractive for buyers as well as reorganized management and the reporting structures at the labels.
Terra Firma purchased the company last year for $6.2 billion, and Hands has been closely studying where to make cuts to make the company profitable. EMI consistently runs fourth in U.S. market share with about 9% or 10% of recorded music sales, but it took a pounding in the U.K. last year, sliding to 9% from 16% in 2006.
Since Hands took over, a number of his email memos highly critical of staff and EMI methodology have been leaked to the press, which has not won him fans in the music community. One idea that has been bandied about, and may well come to fruition, is a payment structure that does away with advances and instead rewards artists whose music sells well.
Several of EMI’s top acts have been speaking up over the past months criticizing Terra Firma’s plans. Robbie Williams’ manager Tim Clark has expressed concerns that artists have no idea how EMI will market, distribute or promote any artist’s work; the management for Coldplay, one of EMI’s few global superstars, has expressed “confusion” over the makeup of EMI and its direction. The company lost Paul McCartney and Radiohead in 2007.
EMI has been banking on the release of Coldplay’s next album, “Prospekt,” before the company’s fiscal year ends in June. There have been rumblings that the Brit band may delay handing over the finished album to the record company or even attempt to leave the major.
Beyond Hands’ presentation, a group of managers, known as the Black Hands Group, plans to have a separate meeting with EMI chiefs to express concerns about the direction the label is taking, especially in its call for centralized marketing ops.
Hands has been critical of the previous regimes, saying they focused too much time on a potential merger with Warner Music Group and too much money on marketing releases. Over the past seven years, sales of albums, both physical and digital in the U.S., have slid to 500.5 million from 785 million in 2000.
EMI was largely unrepresented during the just-finished, six-week holiday-buying season, when 20% of all recorded music sales are made. Company’s labels had only three albums in the U.S. top 100 during the period — greatest hits discs from country acts Keith Urban and Trace Adkins and R&B singer J. Holliday’s “Back of My ‘Lac.”
With relatively sparse release schedules for the next two months, the only major albums are coming from Ringo Starr, Lenny Kravitz, We Are Scientists and Dem Franchize Boyz.
EMI is also looking to cut costs by exiting trade groups such as the IFPI and RIAA (Daily Variety, Jan. 10).