Last April EMI made headlines worldwide with its decision to allow Apple’s iTunes music store to sell its songs without the anticopying measures called DRM (digital rights management) that had become more or less standard for major digital retailers. Industry pundits had long considered DRM a dead end in the evolution of online retail because it punishes legitimate consumers by restricting what they can do with music they’ve bought but doesn’t have any effect at all on pirates trading in unlocked files. It’s also a waste of money, since DRM schemes are expensive to develop and implement and every one so far has been hacked, sometimes within hours of its introduction. Going DRM free was a coup for EMI—it could recast itself as forward looking, tech savvy, and consumer friendly. At the time it seemed a good sign, but other big players quickly followed suit, stealing EMI’s thunder—and since then there’s been nothing but bad news for the label.
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This summer the private equity firm Terra Firma acquired EMI for $6.25 billion, capping a year in which the label lost more than $500 million. This development provoked mixed reactions in industry circles. On one hand, it was heartening that someone—anyone—was feeling confident enough about the ailing mainstream music biz to invest in it. On the other hand, Terra Firma’s experience was in renting jets, managing natural gas pipelines, running pub and hotel chains—seemingly everything but music. It was assumed that, because the company wasn’t part of the culture that tolerates the notion of “nurturing” talent (that is, taking a loss on new artists), its bean counters would have no compunction about cutting costs and slashing jobs.
EMI’s stock, which had fallen to about $8.50 a share before the buyout, briefly peaked at around $11.50 afterward—investors love to hear about layoffs. Now it’s sagging again. But investor confidence, or the lack of it, may not turn out to be EMI’s biggest problem. Artist confidence was dipping even before Terra Firma showed up—Radiohead went feral in 2004 after declining to renew their deal, and in March Paul McCartney signed with Starbucks’ Hear Music label—and it’s plummeting now. Robbie Williams, the Verve, and Coldplay have all threatened to withhold their next albums, citing the layoffs and concerns about the new management. The Rolling Stones announced earlier this month that they’re taking their next record to Universal. And Radiohead, who released In Rainbows online via a paradigm-shattering pay-what-you-want program, said last fall that Hands and company were the reason TBD Records and XL Recordings—rather than EMI—were granted the privilege of pressing the album as a physical CD.
In last week’s review of Rhymefest’s mix tape Man in the Mirror I incorrectly described the between-song skits as conversations between Rhymefest and a Michael Jackson impersonator. Fest was actually “talking” with excerpts from old MJ interviews. v
