From pressuring music trade organizations like the IFPI to refocus its priorities, to impending massive job layoffs, one of the music industry’s “Big 4″ may be the first to realize that reform is long overdue.
Last week it was reported that EMI would leave the International Federation of the Phonographic Industry(IFPI) on March 31st if the structure and aims of the IFPI were not aligned with the interests of EMI.
EMI apparently feels the group is no longer useful to the industry in its current state, and thus resent having to pay fees for the privilege of belonging to it. EMI owner Guy Hands estimates that his label may pay as much as $250 million annually to all the organizations it belongs to, although the groups themselves say the amount is one-tenth that.
With piracy essentially increasing each year it’s tough to fathom any sort of benefit for EMI to the tune of $250 million annually. Was the shutting down of the BitTorrent tracker site OiNK last Fall really worth such an expenditure when you stop to consider that no less than 2 sites have replaced it, both now even hosted with the relative safety of Swedish servers?
EMI seems to realize this to a degree and wants the IFPI to focus on its interests rather than its own. Angering music fans is not one of EMI’s interests. In fact, if you recall it was the first major record label to remove DRM from its digital download offerings with Apple’s iTunes Plus Store.
Sources close to the matter have reported say that EMI is also unhappy with the industry’s disastrous strategy of dragging its customers to court, a process that has resulted in only one case going to trial — the Jammie Thomas case a few months ago — and settlements averaging between $3,000 and $4,000. Jennifer Pariser, Sony BMG’s head of litigation, admitted during the Thomas trial that the whole strategy of suing customers is, from the labels’ point of view, a money pit.
It was back in 2006 that EMI finally realized that the whole music game had changed. For the world’s fourth-biggest recorded-music company apparently invited some teens to its London HQ to talk to its top managers about their music listening habits. Afterwards the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realized the game was completely up,” said one of the meeting participants.
There was also recent word that prior to the current owner EMI was spending some $400,000 dollars a year “entertaining” its music artists with presumably booze, drugs, women, you name it. It was referred to as expenditures for “fruit and flowers” and was immediately targeted for elimination. It had certainly been going on for sometime and is just but a single example of how record labels have been living in excess while consumers and many music artists alike where systematically ripped off, swindled, cheated, and outright lied to while execs partied behind closed doors with “fruits and flowers.”
Now today brings news that Terra Firma, the private equity firm that recently acquired EMI Group, plans to announce a major restructuring of the record label that includes eliminating 1,5000 employees, or a about a third of a total staff of 5,500. With CD sales continuing to decline it seems only logical that you would need less people on board to manage less business.
It now seems that EMI has realized that it must streamline itself if it wishes to compete in a changing music landscape, but will it be too little too late with a majority of music fans having grown accustomed to free downloads using P2P and file-sharing services? Only time will tell, but at least EMI realizes that game has “completely changed.”
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