Tuesday, January 15, 2008

EMI's Radical Restructuring -- Are Dire Predictions About the Demise of the Major Labels Happening?

Stark and shocking news filled the hallways of major record label EMI yesterday -- i.e., that it would lay off 25% of its staff (a staff that already had been decimated in the past couple years) and further that it would stop paying artists advances on their royalties. While layoffs -- especially the size of this one -- continue to evidence the increasing misfortune of the major label music biz, the second point (i.e., the termination of artist advances) is particularly noteworthy from a strategic perspective. Such advances have been a staple of the music business for years upon years. EMI -- now owned by private equity firm Terra Firm -- hopes to radically change the game here. But, EMI likely will have even less of an ability to attract top musical talent as a result -- such talent will go to other labels -- and this could accelerate the company's downward spiral.

In any event, the music business continues its radical transformation. And, while I continue to believe that ultimately the digital/Internet world will prove to be a long-run boon for artists and others involved, the current pain will continue for several years to come ...