What EMI's Repositioning Means

On Friday EMI announced some major reshuffling to its org structure and additionally a repositioning of the company as a “comprehensive rights management company serving artists and songwriters worldwide.” Underpinning this is a closer alignment of EMI Recorded Music and EMI Publishing (which may have possible implications on EMI Publishing being sold as a standalone business).

The repositioning is the result of an internal strategic review, so it pays not to pass it off as consultant-speak window dressing for the re-org. Indeed Terra Firma has something of a track record of repivoting the structural focus of EMI.

So what does being a “comprehensive rights management company” mean? In principle it shouldn’t be that much different from what EMI and other labels and publishers already do (i.e., they create revenue for artists and songwriters by exploiting their works across multiple products and formats). Of course this core task is a much more complex one now than it was 10 years ago. As recorded music revenues continue to free fall, the importance of alternative revenue streams with brands, telcos, and device companies has risen exponentially. Add to that the numerous digital music formats, and you’ve got a complex mesh of revenue streams. And that’s without even considering other key revenue streams such as traditional synch and of 360 deals. The days of record labels just being record labels are long gone. 

So no big deal then, just a statement of the realities of the 21st century music business? Well one thing that this positioning does not focus on is the crucial role of record labels and publishers as nurturers of talent. Discovering and signing an artist is just part of the journey. Unless that artist is given the developmental support, mentoring, and of course investment, they will not realize their potential. And to deliver on these aims a label needs to have the right creative and supporting environment. EMI still has many of those great people who can create that environment. But the question is whether this was just an oversight in the press announcement or whether this repositioning means that they will find their contributions increasingly marginalized in favour of more cautious and short-term asset exploitation strategies?

Comments

Rights manager not Rights holder.

If this repositioning is what it looks like, this is indeed a major shift of policy , and a very promising one.

Most people do not realize that the biggest change on the mechanics of the music business, has nothing to do with the Internet, and everything to do with Pro-Tools.

Once artists needed a record company to make professional recordings of their music. At first because the companies owned the studios , later because they financed the production of recordings on still very expensive third-party studios. Because of the impossibility of doing professional recordings by their own means , artists agreed that record companies got the ownership of their recordings.

Digital recording technology changed all this. Nowadays even the most humble of artists, have the means to make their own recordings. So music performers today usually come to deal with the recording company with a finished product not a demo tape, that would require thousands of dollar of investment to become a real consumer product.

In this case , most self-respecting artists think twice on giving up ownership of their recordings for a promise of an uncertain marketing investment.

Faxon , as a publisher, is used to the concept of managing artists musical properties , since publishers don't own songs.

Let´s see if he can change the culture of ownership of works, that has been the rule of the industry since it´s beginning.

Hi Beni Your point about

Hi Beni

Your point about Pro-Tools is valid (for the record I have my own digital recording studio so I'm pretty familiar with the concept of the democratization of music production). Costs of production and distribution have both dramatically reduced over the last decade. These trends will be crucial to record labels building sustainable businesses as of course they have been accompanied by plummeting revenues.

In short, labels will continue to become lower revenue but higher margin businesses.

??

Hi Mark,

Glad to hear that you´re a fellow musician.

I didn´t quite followed the jump to your conclusion.

If EMI manages to accomplish this transition from being a company that sells products they own, to one that provides the service of rights management to artists, their margins on individual artists will certainly shrink.

The idea , which makes perfect sense to me , seems to be to make recording companies more like publishers, that build large catalogs by investing very little on each artist, instead of the current trend in the record business that is to concentrate a large investment on a few blockbusters.

The open question in this strategy, is what is exactly the deal that EMI will offer artists. Will it be good enough to lure artists out of the independents ? Because indies have been gaining market share steadily over the last ten years.

If the margins you are referring to are the general profit margin of the company, you´re probably right. Because in the case of having a hit out of the blue , like Faxon got with Norah Jones , an artist developed by EMI publishing, the margins are much higher than on products that are created by large investments on marketing. So if the strategy pays of , eventually EMI will have larger profit margins than the other companies, that insist on building blockbusters.

But that those mean necessarily that EMI will have lower revenues than the other companies, what they will have is less predictable revenue, since they will depend more on the taste of the public, and less on force-feeding music through marketing.

That seems to me like the most highly improbable part of the whole equation , can Terra Firma live with an "old school" model of entertainment management, dependent on bets on the collective unconsciousness?

That´s what you get by doing three things at the same time....

The last paragraph...

But that does not mean ...

Watching the World Cup and writing at the same time can be a tricky business....