EM-I Could Do With A Hand(s) 21/01/2008
It’s quite rare that the business side of the music industry grabs as much press attention as the showbiz side does but since Terra Firma’s acquisition of EMI, it’s been pretty much impossible to ignore the goings on at smallest of the ‘big four’.Pretty much every day a new headline is released regarding Guy Hands and his ‘crazy new strategies’ or news of yet another EMI artist complaining about what’s happening, but is it all bad news? I’d personally argue not (although granted it’s easy for me to say that as I’m not one of the 2,000 people who could be potentially losing their jobs pretty soon – If you do work for EMI and you read this blog then I assure you I’m not trying to piss anyone off, I’m just looking at the situation as someone who has a direct interest in the music industry).
So first of all, who is this Guy Hands bloke?
Quite simply he is an incredibly successful business man who has a rather impressive track record of turning failing businesses (which EMI currently is) into profitable ones and then flogging them on for a massive profit. Thanks to this nifty gift he owns, he has now amassed a personal fortune of over £200 million.
His serious dyslexia has appeared to be as much of a help as a hindrance to his career as close friends of his describe his condition to be one of the main driving forces within him. With reports of 18 hour days and no personal weekends flying around the press; he really does seem quite the man for the task.Previous highlights have included buying Angel Trains which he sold for a £390m profit, becoming the UK’s largest landlord and earning an estimated £1.5b profit for his bosses at Terra Frima. So good at what he does, he even spurned cheeky northern Tory William Hague to say that if he’d become a politician rather than a business man, then he’d be prime minister by now.
Oh, and he also owns Winston Churchill’s house. Means nothing but still interesting.
Although coming across as some sort of superhero-esq businessman, he has brought in a few other folks to help him out with this gargantuan task including; former British Airways chief Mike Clasper, former BBC Director General John Birt and former Northern Foods boss Pat O’Driscoll.
Do we see a recurring theme here? No one from the music industry.
So what have they changed so far?Well Mr Hands has announced he wants to cut costs by £200m which means around 2,000 jobs are at stake worldwide. He’s also announced his main strategy will be to develop new partnerships with all the artists based on ‘transparency and trust’. He pointed out that EMI currently have around 14,000 artists which he believes is far too many and wants to cull a number of them. He wants to cut out costly advances, start paying artists per days work and also to stop rushing out albums by artists who only have 1 or 2 good tracks to their name and make them focus on the digital side of the industry until they become more established.So why is he doing all of this?Well 2 of the most staggering facts are as follows:
85% of what EMI release fails to make a profit
Lets think about this figure for a moment; for every one hundred artists that are released, only fifteen of them actually make any money for the company. In any other industry, that figure would be completely unacceptable and because of the decline of the tangible music market, it is now also finally becoming the case within the music industry.
30% of artists who receive an advance never actually produce an album
Three out of every ten artists who are given an advance to record their music; don’t. Eh? I believe the technical term here is ‘to piss it up the wall’.
What do the artists think?Quite simply, they’re not chuffed. Robbie Williams has rather majestically gone on strike for some inexplicable reason. The Rolling Stones have signed with Universal, Coldplay are thinking about jumping ship and Thom Yorke described Hands as ‘a confused bull in a China shop’ (I do love the fact that Yorke felt a regular bull in a China shop wasn’t good enough of a simile for him and therefore he had to add the prefix of ‘confused’. How often would you find a bull in a China shop that wasn’t confused? Is it a regular occurrence for them?). Hands did retort quite correctly to Yorkes statement however:“We definitely are not a bull in a china shop, we do know what we are doing and we know that what we are doing is trying to build a business that gets back to its former glory, that is world class and to do that we are clearly going to upset a few people but we are not in a popularity contest”.
What about my humble musings?
So to summarise; we’ve got a bloke in charge of the fourth biggest record company in the world who openly likes Meatloaf and who has brought with him three other blokes (all of whom have no experience within the music industry whatsoever). The first thing he’s done is told a 3rd of his staff that they’re getting fired and has told his artists that he wants to pay them per day. Also, 4 of his biggest artists potentially buggering off as they believe they’ll be neglected with regards to marketing budgets.
Sounds like a bit of a mess yes?
Well I think it’s a rather beautiful mess from my point of view. We hear time and time again that the music industry is dying on its arse and it would appear that someone is finally doing something about it. He’s being radical and evidently he is not averse to taking risks. He’s already lost some of his biggest artists, but this hasn’t resulted in him being usurped or losing his bosses confidence (they’ve actually just given him an extra £500m to invest in EMI) and he’s looking at the music business for what it actually is: a business.
It might take time to see if his business seed bares money fruit (what the hell does that mean?), but if it succeeds it’ll cement his place in entrepreneurial history. If it fails? Robbie Williams comes off strike and we all lose…
What I’m reading this week: A rather interesting read from the Yardbirds manager Simon Napier-Bell