Sinking Ship Ahoy!

I've never been a big fan of large corporations. That doesn't mean I don't see explosion-filled summer blockbusters (because, really, who didn't see Iron Man?) or eat at chain restaurants. It just means I don't necessarily like how large corporations operate from what I know, being an avid reader of the New York Times, and would prefer never to have to work for one. The mid-size company I work for now, with its crossed lines of communication and cubicles as far as the eye can see, is about as big as I go willingly. And that's just because I love the people here.

In the six months since I graduated from college, I've spoken with a number of people involved with the local music industry. A common theme of all these discussions has been "The days of large multi-national corporations running the music business is fast on the decline. Stay away!"

After reading this article in the New York Times yesterday, I whole-hearted agree. When the European private equity firm Terra Firma bought out EMI last year, I wasn't paying as much attention as I would have had it not occurred during my last hellish semester of school. Though I was aware of the dealings after yet another failed merger attempt with Warner Music, I did not realize what Terra Firma is.

Terra Firma's speciality is buying up failing businesses and turning them into profitable endeavors. Sounds just like what EMI needs. Too bad the company's - and Guy Hands', now the CEO of EMI - business dealings consist of buying service stations along the Autobahn to renovate, running betting shops and owning a company that leases jet airplanes. Guy Hands, the founder of Terra Firma and now the CEO of EMI, has outside experience in running "country house-style hotels" with his wife and made his fortune at Goldman Sachs.

Obviously Mr. Hands is very good at his job as he was able to buy EMI for $6.4 billion dollars. This doesn't change the fact that he has no experience in managing a company dealing in creative products or working with artistic people.

Since taking over, Mr. Hands' has lost some of EMI's most promising artists. Joss Stone is seeking a buyout to her contract, Coldplay doesn't trust the record company to promote their recently released album, and Radiohead ran out to infamously release their most recent album online.

Yes, EMI is hemorrhaging money, leading to the layoffs of 1,500 to 2,000 of its 5,000 employees. So are all the other labels. Welcome to the music industry! We bleed money!

Records labels are a business. They have to make money or they go under. This doesn't mean they should be run just like every other business. Music is a creative pursuit. The back end office workers should be equally creative in producing, marketing and selling music as the artists are in making it. Reducing the release of a new album to being the same as releasing a new brand of detergent sucks out all the mystique and excitement that should be infused in all aspects of the production of music.

Mr. Hands rightfully admits he isn't a "music person," which could be a very astute observation if he attempted to become a music person. Instead he turns down invitations to watch recording sessions, more or less declaring to his employees that he'd rather stay ignorant to the process of music creation. Preventing employees from attending industry events will equally paralyze the company, outcasting it to not just the lowest of the "big four," but also forcing it into a position of exclusivity. We do not play well with others. Go away.

“Getting rid of management teams and starting afresh is something we’ve always done,” the NY Times article quotes Hands as saying. He's bringing in former executives from Google and Second Life to work on digital services. While the music industry definitely needs innovative minds working to help discover new forms of profitability, it's worrisome that he might be replacing the former management team with a cadre of people who are equally ignorant of the industry just because that's what "we've always done."

It's a little ironic that I stumbled upon this post in a featured blog yesterday, by a guy named Cory, who was recently named SVP of Digital Strategy at... EMI. Once again, a bit disconcerting that he's only bought five albums in the last eight years (though his complaints are well justified), but at least he can remember the musical catalog that's soundtracked important moments of his life, which is promising. He also expresses a willing desire to learn about the music business. Perhaps if the old management is replaced by more people with the enthusiasm and outlook of Cory, then they could make up for the lack of enthusiasm and total no-nonsense strict financial business sense that appears to ooze out of the new guy in charge to change EMI for the better.

Good luck to Cory and everyone else that's jumping into what looks like a sinking ship. I hope you're able to turn it around and perhaps even polish the dust from the legendary EMI reputation. Until then I'm going to grumble about corporate interests taking over the world, sucking out its creativity.