EMI, still ’spending like a drunken sailor’
p2pnet news view Music:- Big 4 record label member EMI Music spent more than a million dollars on UK taxi fares in 2007, only slightly less than the money spent by three investment banks, with 8-10 times more staff than EMI Music.
Maltby Capital was the investment vehicle used by Terra Firma to buy EMI, explains the Hollywood Reporter, observing the company oversees EMI businesses and provides a, “corporate governance role”.
In its annual review for the year ended March 31, 2008, produced by Lord Birt — all 101 pages of it — EMI Group reports a loss of $1.2 billion (£757,000,000) , singling out the “continuing underperformance from EMI Music.”
The year before, the loss was a mere $454.5 million (£287,000,000).
“Revenue plunged to 1.45 billion pounds ($2.3 billion) from 1.8 billion pounds ($2.85 billion) a year earlier,” says the Hollywood Reporter, going on:
“The company says the slump in revenue was down to a weak release schedule, stating that only three EMI albums sold more than one million copies in the period, while two ‘Now’ albums each passed a million sales. In the previous year, EMI had 18 million-sellers.”
Terra Firma took EMI over, “with a vision of turning the company around through major restructuring,” says HearCanal, continuing »»»
A significant factor in this has been the group’s slow, poorly-coordinated digital strategy, and their (consequently) sub-par digital performance compared with the other majors. Another smaller yet telling factor is the £700k EMI spent with ONE London taxi firm. As The Register would have it, “the British music giant is still spending money like a drunken sailor”.
Sadly the report they cite doesn’t go on to detail how much money was spent on rum, whores or tattoos, but they do point out that the minicab sum was “only slightly less than the bills of three investment banks, with 8-10 times more staff than EMI Music”. The Reg article is definitely worth reading for a quick overview of the bleak outlook for music groups, and the relative performances of Publishing arms (not bad) versus Recording (abysmal).
Finally, when the major label pressure groups claim to be protecting the makers of music, remember they’ve always used their superior financial muscle to give themselves an advantage against the ever-struggling indie labels.
Yes, payola – the practise of bribing broadcasters for airplay – is alive and well, despite last year’s resolution to stamp out the practise.
EMI, a member of the Big 4 organised music cartel, was, “spending $400,000 a year on party favors (booze, drugs, women, whatever) for its talent,” p2pnet said in a story quoting Peter Kafka in Silicon Insider, who was in turn quoting The Economist which stated »»»
Now, having got rid of most of EMI’s senior managers and revealed embarrassing details of their spending habits (£200,000 a year went on sundries euphemistically referred to in the music business as “fruit and flowers”), Terra Firma is due to produce a new strategy later this month. But many observers reckon the private-equity men are out of their depth.
Prior to reading the article, we’ve heard two different versions of the EMI “flowers” story: One is that Guy Hands, the private equity boss who bought the company last summer, didn’t understand the term and couldn’t figure out why EMI was spending so much on floral arrangements.
Now, says Coolfer, by way of, “more items from the report worth highlighting” »»»
- As an example of how incentives were out of line with the goals of the company, unpaid advances were regularly written off as extraordinary items even though they were commonplace. “Because these provisions did not affect reported underlying earnings, there was little to discourage the practice of overpaying established artists.” (Page 26)
- “A typical marketing and promotion spend on a developing artist in the UK was £98,000 which represented, on average, 81% of sales.”
- “For audio assets, the top 250 artists today represent more than 75% of sales, leaving a long tail that is under-utilised.” Actually, that looks about right. The hits represent the majority of sales, especially for a company obstensably in the business of making hits.
- “Business practices that focused EMI Music on short term financial reporting goals are being actively discouraged. In particular, the company has now radically cut over-shipping of CDs, a practice which was distorting sales figures at quarter ends and resulting in substantial returns of CDs later down the line. CD return rates as a percentage of sales have been substantially reduced.”
Stay tuned. 
Hollywood Reporter – EMI Group posts huge loss, October 24, 2008
HearCanal – Taxicabs and Payola, November 11, 2008
p2pnet – EMI: goodby sex ‘n’ drugs for rock ‘n’ roll, January 14, 2008
Silicon Insider – EMI’s $400,000 Coke And Hookers Budget, January 12, 2008
The Economist – From major to minor, January 10, 2008
Coolfer – EMI Reports £757 Million Loss, Receives Frank Assessment, October 24, 2008
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November 12th, 2008 at 1:16 pm
And another factor is that the boycott continue to expend.
It will not be long now. All the bet are up to guest who of the 4 parasitic music recording corporation will hit the dust first.
Then it will be the turn of the MPAA menbers.
This is what you get for attacking the people! Deu!
November 13th, 2008 at 1:04 am
Blame it on the fans. If they wouldn’t have got sick and tired of all the gangsta’ rap being rammed down their throats and instead kept buying the garbage, maybe the considerable fortunes that the record companies spend on payola, prostitutes, and bribing politicians might have paid off.
Well, at least the political bribery has paid off handsomely; they got all their special-interest laws passed. Taxpayer bailout upcoming.