Something that seems to have been obvious for some time, is that the music industry, since it is generating less revenue year on year, should employ slightly less people, and the private equity group that has bought EMI Group has wasted no time putting that idea into practice, cutting as many as 2,000 jobs there over the next 6 months.
Whether you believe that music sales are down due to piracy, due to an aging business model, too great a reliance on albums, the transition phase to digital and online, or because the music offered is no longer the right mix, Mr Micawber’s tenet is still true (you have to make a profit), and record companies need to operate under the conditions that are prevalent today.
The cuts were part of a list of moves designed to make the company innovative, artist friendly and consumer-focused. We’ll see, because for EMI that’s exceptionally ambitious.
Guy Hands, the new EMI chairman told staff about an increased focus on finding new artists and building new relationships with them, based on transparency and trust. Some of those employees must have laughed out loud, thinking it was a joke, others may have begun writing their own requests for early retirement.
He also said that EMI would become known for helping artists monetize their work and will open up new income streams, including enhanced digital services and corporate sponsorship arrangements, which we understand were usually kept back purely for EMI (hence the issues about transparency and trust).
All sales, marketing, manufacturing and distribution will be put into a single division with a single leadership team, a move which will get rid of many duplications.
The moves will reduce costs by up to £200 million (392 million) annually, but more to the point, if the company can begin signing new, fresh bands to its roster, it may gain the credibility points that it has lacked over the past decade. The restructuring came about after a three-month review outside consulting firm Terra Firm and the company says many of the changes came from staff suggestions. This could be the turnaround of the year.