Let a hundred flowers bloom, let a hundred schools of thought contend…

Mao Tse-Tung’s famous words of encouragement about the arts and sciences in the people’s China harkens back to the halcyon days of when Terra Firma bought EMI Music. In fact, it pretty much is what every EMI Records CEO has said when they first stepped into the executive suite, painting pictures of how they intend to bring back creativity and focus on the music with earnest commitments to finding new music and making the place more artist-friendly.

But within the ellipses of the above quotation, millions of people were killed. Enter Madame Mao.

With each changing of the EMI Records guard, a Cultural Revolution has taken place- executives coming and going, making the whole place spin like a dreidel. It’s kind of like Guy Hands, Elio Leoni-Sceti, Charles Allen and Roger Faxon are an ersatz Gang of Four. So I guess you could say that Roger Faxon is the EMI’s latest incarnation of Jiang Qing.

When Faxon took the job back in the spring, he was talking the talk. He actually made a little bit of sense, just like Mao. I was actually hoping that he would succeed. Since then his inner Mao has surfaced and he has eliminated all of the top key management and replaced them with his lesser cronies from the publishing arm.

Artist managers with acts on the label are starting to really get fed up. They march up to Wright’s Lane on what has become a regular basis to meet the new guys. Each time they have very pleasant meetings with everyone pledging to get to know each other better and work together. As soon as they walk out the door they never hear from the new guy again, and nothing happens.

So is Faxson’s need to surround himself with his publishing cronies merely a sign of a very insecure executive or is he purposely gutting the place? Maybe both. He could be disemboweling the recorded music division with the goal of getting it to the point that a buyer would actually look at it seriously. You have to figure that a buyer would gut it anyway, and Roger is just shedding the salaries to make it more attractive. In spite of all of the “were getting back to the basics—new artists, the lifeblood of the industry” rhetoric, EMI Records is essentially becoming a catalog company. (With the exception of the despicable Lady Antebellum, nothing has really connected in a monster way, including the new Katy Perry album.) And what do music publishers do? License catalog. For the most part, publishers don’t have a creative bone in their bodies, unless it’s for accounting. Accounting is the music publisher’s Viagra.

To the outside observer, it seems as though Roger Faxon is trying to be a hero by emasculating the recorded music division in order to get rid of it while Terra Firma tries to hang on to the publishing wing, with Faxon going back to his old job.

The China of today is certainly not like Mao’s China. Beijing is now the driver of arguably the world’s most powerful economic engine. Any casual viewer of the Beijing Olympics could see that China is not some 19^th century agrarian culture. But the EMI Records of today is not the new 21^st century China. It’s more like Pol Pot’s Cambodian killing fields, and soon with Citibank ATM’s in every EMI office-building lobby.

See any resemblance?

© 2010, Wayne Rosso. All rights reserved.

One of Terra Firma boss Guy Hands’ very first mistakes after he closed his purchase of EMI was appointing himself as CEO. In an industry known for its hubris, Hands set the bar to new heights. He immediately went out and started to piss off his biggest artists, which led to a migration out of Wright’s Lane.

But a couple of years later, Guy finally woke up and realised that he was not the right man for the job and decided to go out and hire the right man—an Italian deodorant marketer with no knowledge or experience in the music industry.

I met Elio Leoni-Sceti last summer at EMI in London. He seemed like a nice enough fellow, but he had absolutely no business being in the music business, let alone CEO of a major recording label. A couple of weeks later I commented to one of the other EMI execs in that meeting that Elio wouldn’t make it to the end of the year. I was off by 3 months.

Then Hands decided that he needed a more experienced man in the job, yet still one with no music industry experience. Charles Allen did have television and deal making experience, and I guess that qualified him to run a major record label in Hands’s mind. That was April 1st, and it lasted about 10 weeks.

So Hands must have had an epiphany and figured that he should maybe try to promote from within for once and elevated Roger Faxon, CEO of EMI Publishing, to CEO of the entire enchilada. The question remains, is it too little too late?

I’ve never met Roger and I really don’t know much about him, although I did see him address a conference at which we were both speakers many years ago. At the time he struck me as a bean counter in a nice suit.

Faxon gave a Q&A the other day that I read with great interest. He of course made excuses for the lameness of the company since the Terra Firma takeover, which is to be expected, and I understand that. I mean, he really has no choice. And to the question “How would you describe EMI’s overall digital strategy?” the answer was a little vague.

“The most important goal is to understand how to use the power of the digital environment to create connections with consumers around music. Then the strategy goes to the second step—how do you yield the value out of those connections? That’s actually the same strategy in every part of the business; it just expresses it tactically in a different way because of the technology.”

But I must give credit where credit is due. He gave a very intelligent answer to a question about the message the label is trying to send by repositioning itself as a “comprehensive rights management company”.

“The message is that we want to be a business that looks comprehensively at the way that you can touch consumers with music, and to drive the business—not through single channels, but across the entirety of the opportunity to reach consumers.

It starts in a different place than, “I’m in the record business. My job is to sell a record.” If I’m in the management of all of the rights associated with that recording, I’m looking at all of the ways that music will enter the market and reach the consumer”.

When asked what the most pressing challenge facing the label is, he responded with the obligatory piracy mantra, going on to say that it has resulted in a “complete loss of the economic value of music”.

Remember that, Roger, when you’re cutting new deals with digital services. Don’t be a dummy—remember that your product isn’t worth what you think it is in the market today. Don’t overvalue your content like some other schmucks in the business. It isn’t worth what it used to be worth, and that’s due to more than just piracy.

Given EMI’s past track record, I thought that this was fairly enlightened. He went on to make some pretty sensible statements regarding artist development, sales, marketing, mixed in with a little of the standard bullshit that is to be expected. But overall I was encouraged for the folks at EMI. I can’t believe that I’m saying this, but I actually hope that he does well and doesn’t turn into an idiot like some of his predecessors.

I must be either getting too old or taking too much medication. Or both.

© 2010, Wayne Rosso. All rights reserved.

Welcome EMI. Nice Meeting You.

I want to officially welcome Elio Leoni-Sceti, Ronn Werre and Sylvia Coleman of EMI to my little site. I was in London a couple of days ago with a friend and we just  happened to bump into the three of them and I was introduced. They told me that they were avid readers so I wanted to give them the royal treatment. In all fairness, they were very nice and had a good sense of humor about my stupidity and abuse of EMI. So I guess that I have to reciprocate and be nice. By the way Sylvia is extremely smart and Ronn and Elio showed that they could roll. Oh, and Ronn. We should talk about that friend of mine that I mentioned.  :-)

So guys, can I still beat up on Terra Firma?

© 2009 – 2010, Wayne Rosso. All rights reserved.

Life Is Good At EMI

Here’s a really good one for you. Last week EMI sales reps started making calls to many if not all of their small accounts, mostly independent mom & pop stores, to tell them that they would no longer sell them product!!! Were these accounts bad payers? Nope. Would they not stock catalog or new artists? Nope. Then why in God’s name, you may ask,  would they simply cut loose paying customers? The answer given by sales reps — cost cutting.

So let me get this straight. EMI intends to save money by not selling their CD’s to independent retailers. Instead they want these retailers to go to one stops for their product.  These retailers are the only ones who buy catalog anymore. You sure can’t find it at Walmart and Best Buy. These are small businesses who have been loyal customers of EMI for 20, 30, 40 or more years. Like in the movie High Fidelity, these guys know every catalog number ever released. Every disk ever cut out of the catalog. They live and die by making personal recommendations to their customers–turning them on to new music. These shops are where music lovers go to discover and buy music. Several I have spoken with are so upset that they vow never to buy any EMI catalog again–or any new artist releases either. Only the certifiable hit product that they know will sell. They will no longer take chances on new EMI artists.

So I guess it just isn’t worth it to EMI to take these orders over the phone anymore. Too labor intensive. And after all, they’re doing so well that they really don’t need the business. Small potatoes. Let ‘em eat cake.

INTERESTING UPDATE: In making this policy change, EMI took the unusual step of notifying these retailers by phone instead of the standard letter. Could it be that they didn’t want anything in black & white?

Also, don’t forget that by being forced to buy from a one stop, not only does a mom & pop retailer pay more for his product (cutting into the already slim margins and pricing pressure from the likes of WalMart, etc.), but the one stops don’t carry nearly the depth of catalog that these guys need in order to make a living. And is this really a good strategy for EMI to introduce their new artists?  Another gripe they have is that now they won’t even get new and/or important releases (does EMI have important releases? Maybe the upcoming umpteenth release of remastered Beatles catalog) on Tuesdays, the new release day. It just makes it all the more difficult for them to compete and stay in business, even if it we were experiencing better economic times.

© 2009 – 2010, Wayne Rosso. All rights reserved.

Eeeeuuuuu. What's That Smell?

I know that I have been writing a lot lately about EMI. I know that it seems as though I’m beating up on them. But to paraphrase the great Willie “The Actor” Sutton’s response when asked why he robbed banks, “Because that’s where the money is”.

Last week brought lots of news from the ongoing soap opera that is now EMI. Losses, write downs, artist discontent, and what seems like endless executive turmoil have marked the tenure of new owner Guy “Ham” Hands. Mr. Hands, when acting as CEO of EMI, alienated artists and managers to the point that it boiled over into name calling in the press and threatened liable suits. There exists in the UK music industry a group of very influential artist managers who are referred to as “The Black Hand Gang”, and they all have or had important clients signed to EMI. The group includes Jazz Summers, Tim Clark and David Enthoven, Brian Message, Dave Holmes and loosely works together as sort of an ad hoc artists’ rights group in regard to their EMI artists. The Black Hand Gang holds all of the EMI major artist assets and Hands did not make a very good impression on them. So he finally wised up, some would say too late, stepped aside and brought in the perfect man to save the business–an Italian executive experienced in marketing soap suds.

Now things seem to be lurching into high gear. The Rolling Stones, Supergrass and Radiohead left the label and Coldplay only delivered their last mega-selling album on the condition that EMI have absolutely nothing to do with the marketing. Coldplay would handle it themselves and EMI would foot the bill. Then Coldplay decides to give away their next album, a live throwaway compilation, denying EMI some much needed billing. But the UK’s Daily Mail broke the story last week that EMI’s young female superstar Joss Stone is so pissed that she’s actually willing to buy her way off the label! You know you have problems when an artist is actually giving money to a record company.

Prom King Guy With His Queen

To compound the situation, The New York Post also reported on a rift between the once good chums Guy Hands and soap selling EMI CEO Elio Leoni-Sceti. The Post reports that the two came into conflict over EMI North America COO Ronn Werre. It seems that Hands wanted to give Werre a “take it or leave it” offer once his contract had expired. Werre went out and got a better paying job at Sony. Hands got pissed and wanted Elio to hire back Werre at any cost. Elio was embarrassed and Sony sued. So the upshot is that Werre is swinging a big dick, Elio has been emasculated and Hands feels like Henry VIII with a new girlfriend. So don’t be surprised if Ronn Werre suddenly becomes Guy’s new Jane Seymour to Elio’s Ann Bolyn and is crowned queen of the EMI prom.

Jr. Moves To London

And just to prove that all of the action is in London these days, our genealogically advantaged little buddy Edgar Jr. is rumored to be moving there. So how does all of this play into Warner Music’s longstanding effort to gobble up EMI? Pretty well, I imagine. Jr. will now be siting on the sidelines with the ability to quietly stoke the overheated British press and further pick away at the ailing EMI. The Brits look upon EMI as a national trust in a sense. A part of the English fabric. So it will be interesting to see how Jr. will sow the seeds of public discontent with Terra Firma’s ownership of the company.

So who will be the next artist to jump ship at EMI? I have nothing but gut instinct to base this on, but my guess is Robbie Williams, arguably EMI’s biggest star. My guess is that Williams and his management are so disgusted with what’s been happening at EMI that they feel they just don’t need them anymore. Why? Because IE Music, Robbie’s management firm, has a longstanding business relationship with Ingenious Media, the top media investors in Europe and one of the few independent investment firms committed to the music space. And besides, the IE guys know what they’re doing. And they don’t need EMI. At all. And don’t kid yourself–EMI made plenty of dough on the first of what is now called a 360 deal. If you knew how much revenue Robbie Williams generates, mostly outside of the US, it would bring tears to your eyes.

When Terra Firma first took over I was in touch with Guy Hands and company. I was having one of several long conversations with one of Guy’s emissaries one day–they were still moving into the EMI building, it was that early– when I told him that everyone in the record business would do everything they could to make Terra Firma’s EMI fail. He was astonished and asked why on earth that would be. My answer was simple. Schadenfruede. In the music business its not good enough for you to succeed, you must also see your friends fail at the same time. That no matter how progressive EMI planned to be, they would meet resistance from every other label. It ain’t like running rest stops on the autobahn. As it turns out, I was wrong. They’ve fucked up so much that they didn’t need help from anybody.

© 2009, Wayne Rosso. All rights reserved.