Feeds

EMI's £700k taxi bill

And incredible shrinking business

High performance access to file storage

A report by Maltby Capital, the company created to acquire and run EMI, reveals that the British music giant is still spending money like a drunken sailor. A highlight of the out-of-control budget was £700,000 spent with just one London taxi firm.

"This was only slightly less than the bills of three investment banks, with 8-10 times more staff than EMI Music," the report notes.

The 100-page analysis is fascinating not merely because it provides a snapshot of a type of business in catastrophic decline, but because it shows an awareness of what EMI needs to do save itself. "The business model [is] fundamentally flawed," Maltby says of the classic major-label approach.

First the decline, and it's quite a dramatic reversal of fortune.The EMI Group is two companies - Music and Publishing, and while one is successful and growing modestly, the other is falling off a cliff. But look how far and how fast. Just five years ago the group reported profits of £401m on turnover of £2.1bn. Last year revenue had fallen to £1.458bn, and losses to an incredible £757m.

Despite cranking out another bestseller from Coldplay, EMI Music alone lost £164m. The publishing business, however, saw revenues grow by two per cent.

The report says that costs at EMI Music were out of control, and that reporting structures were so dysfunctional, management struggled to find out the true picture. In addition, there were too many loss-making acts (a model that needs examining, Maltby says), and that EMI Music was stuffing the channel with CDs that were then returned. (For two months last year, returns amounted to half of sales.)

How much is EMI to blame in a brutal market? Quite a bit, the owners say, for EMI has fallen faster than average. Between 2005 and 2007, the market for sound recordings fell by an average of 23 per cent as CD sales crashed and licensed digital revenue failed to make up the shortfall. However, EMI's revenue from New Music fell by 36 per cent. Maltby notes -

Medieval lawyer writes out another copyright infringement lawsuit

Maltby takes a hard look at EMI's business in its annual report

"EMI Music’s traditional way of working with artists – highly successful in the days of booming CD sales and a significantly simpler and less fragmented market – had become less fit for purpose. As a result, EMI Music’s creative performance, as well as its financial performance, had begun to slide."

And the solution?

Well, publishing offers some hope. EMI owns the second largest music publisher in the world, and Universal only owns the top spot through acquisition (it bought out Bertlesman last year). EMI looks to regain the title this year.

Publishing is about marketing your rights - basically, persuading people to use your music rather than someone else's. Maltby correctly notes that publishers often sign acts early - before they've inked a deal with a record company. And the report notes how much better the publishing division is at spotting talent (Amy Winehouse) than the music division.

Performance revenue from publishing has risen from 22 per cent to 29 per cent since 1999, while sync revenue (the licence fee paid to use a piece of music in a film, TV show or ad campaign) doubled.

Music isn't about shifting units anymore. EMI owner Maltby falls short of calling for the entire business to be turned into a digital licensing operation: but even if the throw-mud-against-a-wall approach to A&R is dead, that remains the way forward. ®

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.