Moreover, “There is a sense among analysts and investors that executives trained in the traditional business of selling vinyl or plastic discs – including Mr. Levy – are not prepared for the digital era, and that the companies must be overhauled,” says the story.
Never a truer word was spoken.
Translated, this means EMI is trying to unscrew some of its many screw-ups, the most important of them being that, like its partners in crime, Warner Music (US), Vivendi Universal (France) and Sony BMG (Japan and Germany), six years into digital 21st century, EMI is at last waking up to the fact it’s no longer 1970.
It’s, “reviewing its use of the controversial content protection technology used on CDs, known as digital rights management (DRM), but has not scrapped it altogether,” said Reuters recently.
DRM (digital restrictions management) is the means by which the entertainment cartels have been trying to stop their customers, whom they call “criminals,” from using in any manner that suits them ‘product’ they legally acquired.
The idea is: the very considerable amounts spent on CDs and DVDs doesn’t buy them, it merely licenses them and those who in good faith thought they’d acquired them, hadn’t. Instead, the discs can only be used according to unpublished terms strictly dictated by the makers.
It doesn’t matter that no customer has ever seen, or signed, anything agreeing to corporate terms. The companies have said it’s so, so it’s so.
“Analysts say that protracted weakness in the United States, the world`s biggest music market, and a poor track record of developing new talent explain why EMI announced the dismissal yesterday of the top two executives at its music division,” says the NYT. “Alain Levy, chairman and chief executive of EMI Music, and David Munns, vice chairman of the unit, left the company.”
They’re being replaced by ceo Eric Nicoli but, “Analysts widely criticized the shift of Mr. Nicoli to a more operational role,” says the story. He’s led EMI since 1999, “but has no direct experience creating or marketing music”.
Hey! No problem. Nicoli used to sell cookies and candies and since EMI doesn’t make or sell music, it makes and sells ‘product,’ Nicoli is ideally suited to run the company.
“EMI`s woes – which were worsened by disappointing sales in the crucial holiday shopping period – reflect the inability of the industry to hold its ground as the market moves away from its primary product, a compact disc containing a package of songs,” says the story, continuing, Since 1999, the year the Napster file-sharing application emerged, free online file-sharing and CD burning have taken hold despite efforts to combat them. Sales of albums in the United States are down about 25 percent since 2000, according to Nielsen SoundScan.”
In the nonce, “yesterday`s shake-up was accompanied by a warning that EMI Music`s sales in the current financial year, which ends March 31, would slide by 6 to 10 percent from a year earlier,” says The New York Times. “Shares of EMI fell by 19.25 pence, or 7 percent, to 245.75 pence, or $4.80, in London.”
The revenue drop is, “pretty scary,” Bloomberg News has Anthony de Larrinaga, an analyst at SG Securities in London, saying. “The market was getting wise to the fact that some of the release roster in the second half wasn’t performing as well as it would need to.”
Meanwhile, does all the chopping and changing mean EMI is again looking for a life-saver?
“Slumping sales have led Nicoli to several attempts to combine with Warner Music Group Corp., the world’s fourth-largest music company, as a way to reduce costs,” says Bloomberg.
“In July, EMI and Warner abandoned $4.6 billion bids for each other after a European Union ruling damped prospects for regulatory approval.”
D.R.M. is D.U.M.B. – EMI to drop DRM?, January 11, 2007
The New York Times – With Ousters, EMI Group Is Said to Be Packaging Itself for Sale, January 13, 2007
Reuters – EMI reviewing CD content protection technology, January 8, 2006
Bloomberg News – EMI Ousts Top Music Executives, Forecasts Lower Sales, January 12, 2007
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