p2pnet news | Music:- Want to get rich quick?

EMI’s new owner, Terra Firma, reckons it can help, says the New York Post.

“Guy Hands’ (right) Terra Firma, on the hunt for additional equity investors in EMI, is telling prospective partners they can nearly quadruple their money in the struggling major label and cash out within five years,” says the story, going on:

“According to a confidential investor presentation obtained by The Post, Terra Firma plans to improve its EMI investment by 2 to 3.9 times, through a mix of cost cuts, dramatically improved digital revenues and strategic acquisitions.”

At the beginning of the month, “EMI will drop artists it feels are not working hard enough and ‘unpick’ its own executives’ pay packages,” Hands told staff in a confidential memo, according to the Financial Times, continuing:

Guy Hands, chief executive of Terra Firma, promised ‘fundamental change’ in how EMI approached the music business, but warned that artists would have to meet their side of the bargain.

“While many spend huge amounts of time working with their label to promote, perfect and endorse their music, some unfortunately simply focus on negotiating for the maximum advance … advances which are often never repaid,” he wrote in an internal memo this week.

Once EMI’s own standards had been raised, he said, it could be more selective: “It will be open to us to choose which artists we wish to work with and promote.”

Says the FT, “Mr Hands’ attempt to build a culture of ‘honesty, transparency and performance’ in an industry famous for its fragile egos, mentioned no names, but EMI has been plagued in the past by the late delivery of albums by some of its biggest acts.”

Meanwhile, some of the biggest savings are expected to come from the American end of the EMI business, says the New York Post.

With $31 million knocked off sales and distribution, and merged back-office functions, “Terra Firma, which has $1.5 billion in equity in EMI, also sees significant savings from cuts in operations in non-strategic countries,” sats the story, going on:

“The firm also wants to reduce costs in artist-and-repertoire and marketing by $58 million by using social networks and user-generated Web sites like MySpace to discover and promote talent.

“At the same time, Terra Firma is looking to improve the recorded music businesses’ cash flow by a whopping 766 percent over the next five years – from an estimated $43 million in 2007 to $1.1 billion in 2012 – by driving over $700 million in improved margins from online and mobile music.”

How Terra Firma gets there remains to be seen, says the story, but it said it isn’t ruling out “large-scale transformational acquisitions/business combinations,” including deals with other recorded music companies, touring companies, and artist management businesses, says the story.

Slashdot it!

Also See:
New York Post – Terra Firma to squeeze EMI millions, November 13, 2007
Financial Times – Hands warns of `fundamental change` at EMI, November 1, 2007

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This entry was posted on Wednesday, November 14th, 2007 at 8:18 am and is filed under Music. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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