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EMI Sold ... Gee, What A Surprise ... Not!
May 25, 2007
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"It's like rearranging deck chairs on the Titanic. There's a much larger problem in that the economic and distribution model for major labels today is fundamentally broken."
-- Aram Sinnreich, who commented on the executive changes at the EMI Group back in January of this year in the L.A. Times.."The music business shows exciting growth potential, but the environment remains extremely challenging. In order to thrive and meet the demands of a rapidly evolving and dynamic music market, we must rethink our operations..."
-- EMI Chief Executive Eric Nicoli, February 2007..Well, after a couple of years of speculation it finally happened. EMI accepted a bid from a private equity group, Terra Firma Capital Partners, this week. (See the story below, "Britain's EMI Accepts Private Equity Bid.")
The initial "sound bytes" in the press and elsewhere all talk about rejuvenating EMI and making it a great music company again, moving forward in the digital age, exploiting online music sales, and blah-blah. Well, sorry if I'm a bit cynical from reading all those nice quotes, but any private investment company that talks such talk is usually as genuine in their meaning as those wonderful politicians in our nation's capitol.
Maybe Terra Firma Capital Partners is really sincere. (Maybe pigs will fly someday also.) But do you really believe any capital investment company buying a music company today is going to wait long for any return on their investment? And how many investment firms that buy any company in any industry have plans to actually grow the companies they buy? How many truly buy companies with thorough understanding of that company's core competencies? If you read any money/financial pages in any media, you'll find that in almost all cases that capital investment firms buy companies for one reason primarily: to break them up, and in turn generate big returns on the initial investment.
There's nothing wrong with all that. It's just business. But the music business is one rooted in a foundation of creativity. And any business in the creative arts arena operates completely differently from company's that sell widgets. If you've had the privilege of working in the industry, you already know this. Step outside the industry and try applying the same marketing applications and budget planning elsewhere and you are in for a rude awakening.
So I guess we'll have to take a "wait and see" on this one. But I don't hold high hopes at this point for EMI's future. EMI themselves saw the handwriting (OK, the red ink) on the spreadsheets for too long and merged Capitol Records with Virgin back in February to cut losses and save $200 million annually. Of course that wasn't enough, and they knew it. But it made the company look a whole lot better on paper to any possible buyer.
Maybe Terra Firma's offer will now spur a new round of other offers. Maybe Bronfman will get the Warner Music Group to up the offer and EMI will have to reconsider. There are even rumors now that former ex-EMI chief executive Jim Fifield and Corvus Capital were preparing an offer.
No matter who ends up owning EMI, let's be realistic. Music sales are down globally. CD sales are still in free fall. Online sales of digital music are still increasing at respectable rates, but the revenues don't offset the losses of revenues generated by physical CD sales. So, what would you do if you owned the company?
If this was a case study done in any top 10 business school, you'd see the students answer with the same results. Although, let's not put too much faith in business schools. As Peter F. Drucker says, "In business school classrooms they construct wonderful models of a nonworld."
Nonetheless, this isn't a hard one to figure out. Nobody buys any business to lose money and nobody is going to buy EMI without the plans to make good money right quick. Billion-dollar deals to buy companies in troubled times aren't made to invest yet more millions in those troubled companies for the long term.
There's an old adage that goes, "Whoever said money can't buy happiness simply didn't know where to go shopping."
And right now, somebody is shopping for EMI to make their portfolio a whole lot fatter.
AND NOW THIS
As Paul McCartney gets ready to release his new album, "Memory Almost Full," via the Starbucks' label, Hear Music, he does so 40 years after The Beatles gave us "Sgt. Pepper's Lonely Hearts Club Band," the album that became the hallmark for the now famous "summer of love" in 1967 and the album that changed everything in rock and a whole lot more. If you Google "Sgt. Pepper" you'll find over a million items to sort through. (Google "The Beatles," and that number jumps to 32 million results.)
I wrote the following commentary in 2004 on The Beatles' 40th Anniversary of hitting our shores and to commemorate their first appearance on "The Ed Sullivan Show." It has become one of the most requested pieces I've ever written in the newsletter, and it's generated so much email each time I've run it, so I thought it timely to run it again on this 40th anniversary of "Sgt. Pepper."
"We were four guys...I met Paul, I said do you wanna' join the band, ya' know? Then George joined, then Ringo joined...we were just a band that made it very, very big, that's all." - John Lennon
Yes...very big indeed. Forty years ago the "Lads from Liverpool" hit our shores and nothing was ever the same.
Their first appearance on 'The Ed Sullivan Show' was watched by an estimated 74 million people that Sunday night in February 1964 making it one of the biggest events in broadcast history and the crime rate in U.S. cities dropped dramatically during the show's broadcast. It was indeed, as Ed Sullivan used to say, " A really big show!"
The assault on American radio and charts was equally overwhelming. In the past few decades you've all read about the chart accomplishments of such mega-artists as Michael Jackson, Mariah Carey, Whitney Houston, Madonna, and others, but they all pale in comparison to this statistic:
For the week ending April 4, 1964 The Beatles had 11 singles on the BILLBOARD Hot 100 chart, including the first top five slots:
#1* - Can't Buy Me Love
#2* - Twist and Shout
#3* - She Loves You
#4* - I Want To Hold Your Hand
#5* - Please, Please Me
#31* - I Saw Her Standing There
#41* - From Me To You
#46* - Do You Want To Know A Secret
#58* - All My Loving
#65* - You Can't Do That
#79* - Thank You GirlOf course if you're old enough to remember listening to your favorite Top 40 station back then you remember hearing all these songs and more as the "British Invasion" started. It's almost impossible to imagine any artist or band being able to monopolize the charts and radio in such fashion today, and I don't think we will ever see it happen like that again. It was a different time.
Just how much The Beatles changed everything in pop culture has been the subject of many articles, books, TV specials, and now they teach courses on them in many colleges. Prior to The Beatles, Top-40 radio didn't play album cuts from best-selling artists...not even Elvis at his height. But when The Beatles released 'Rubber Soul' and made the decision that there would be no single released from the album for radio or retail (much to Capitol's dismay originally), radio programmers simply put "Michelle" on their stations along with "I'm Looking Through You," and about four other tracks from the album. The Beatles ruled at retail and requests so radio had to respond. But the fact is, NOBODY had ever achieved that kind of airplay (album tracks) at Top-40 radio previously. The Beatles were the first.
Of course 'Rubber Soul' wasn't the only album they released without a single for radio/retail. 'Sgt. Pepper' (the first rock "concept" album) didn't have a single and neither did their double-album, 'The White Album.' But it made no difference...they were all over Top-40 radio. Of course the release of 'Sgt. Pepper' (and subsequent concept albums by the Stones, Who, etc.) gave birth to the notion that the radio audience might want to hear more than just singles. A great radio man named Tom Donahue put a great FM station on the dial in San Francisco thinking just that, KSAN, and "progressive radio" (the forerunner of all album radio that followed) was rolling out across the country.
Before The Beatles, there was no such thing as "stadium rock." Nobody had ever played arenas or stadiums before 1964. But The Beatles sold out Shea Stadium, Candlestick Park, and other stadiums around the country in mere hours after tickets went on sale, shocking those in the press and media who predicted the shows by the group ("a fad" as they were called back then ) wouldn't sell tickets in those quantities. I saw them at Carnegie Hall, Forest Hills, and at both Shea concerts. The word mania doesn't begin to describe what occurred the minute The Beatles took the stage.
Long before MTV hit the air, The Beatles made a TV film called "Magical Mystery Tour." Though the critics in the UK panned it for the most part, in hindsight one can watch it and realize it was merely a long-form video with five separate concept videos to support their new songs. They were years ahead of the curve in realizing how music and video could be merged for greater audience.
Another amazing fact: "Sgt. Pepper" was recorded in four-track. Yup, that's right. Four track. Listen to it today and you realize what an engineering masterpiece it is and how many tracks had to mixed down and on top of each other to make the final recording. Many albums made today use dozens more tracks and updated technology...but sonically, "Pepper" remains a masterpiece.
I could go on and on...I've been a Beatles fan for these past 40 years. I never imagined that night I watched them on the Ed Sullivan show that within five years I'd be lucky enough to get a job working for Capitol Records selling Beatles records, and then promoting them to the very radio stations I grew up listening to.
When I worked for Capitol Records in 1970 and 1971 in New York City I was fortunate enough to meet John Lennon. The first time I talked to him I got "mealy mouth," was nervous, and he asked me what was wrong. I mumbled and then said..."I...I watched you on Ed Sullivan..." And he said, "Ah...well, that was The Beatles thing and all that...I'm just John now...so tell me what kind of music do you like?" We talked until the wee hours of the morning and I walked back to my apartment on a cold December morning with my mind racing.
The Beatles created the soundtrack for our lives back in the '60s and each song they sang made us feel like the wait wasn't going to be too long, and that sooner rather than later, we'd all be on our way to better lives. Maybe that's been only partly true, but it's what we all wanted to believe because their music made us feel such things. So we sang their songs loud, proud to claim them as "our own." But we should've known they belonged to the whole world and that the world we lived in was moving away from innocence.
John was right...they were a "band that made it very, very big." They were all that...and a whole lot more. A helluva lot more.
Britain's EMI Accepts Private Equity Bid
By JANE WARDELLEMI Group PLC, home to the Beatles and Coldplay, agreed to a 2.4 billion pound ($4.7 billion) takeover by a private equity group on Monday, but the deal raised speculation of an all-out bidding war for the struggling music company. EMI, which has long flirted with Warner Music Group Corp., said that Terra Firma Capital Partners' offer was the best among a number of proposals it received.
However, analysts said that the 265 pence ($5.23) per share offer from Terra Firma could flush out a higher offer from Warner Music, already reportedly looking at EMI's books, as well as other potential bidders.
Read more about it by clicking here.
Music Industry Offers Deal To Small Webcasters
Facing an outcry over imminent royalty fee increases for Internet radio operators, the music industry body that lobbied for the changes has attempted a peace offering.
SoundExchange, the nonprofit group that collects the fees on behalf of hundreds of major and independent record companies, said on Tuesday that it would give "small" Webcasters the option of paying "below market" royalty rates on the songs they play--that is, by keeping the required royalty rates essentially the same as they are under a 2002 law called the Small Webcaster Settlement Act.
Read more about it by clicking here.
Doors Open Up to Classic Rock Central.com
This year marks the 40th anniversary of The Doors. The Venice Beach, California, based band released their first record in 1967. In February of 2007 the band was awarded a Lifetime Achievement Grammy Award and a star on The Hollywood Walk of Fame.
Ray Manzarek and Robbie Krieger have chosen Brett Scallions as their new front man. Scallions is the former lead singer for the platinum selling band Fuel.
According to Manzarek, superstar producer Dick Wolf, of the "Law and Order" television series will be producing a Doors documentary for theatrical release in 2008. It will contain original footage of the band during their heyday along with interviews of the band members.
Read more about it by clicking here.
Key Senator Urges Rejection of XM-Sirius Deal
The chairman of the U.S. Senate's antitrust subcommittee on Wednesday urged regulators to block Sirius Satellite Radio's proposed acquisition of XM Satellite Radio Holdings. Democratic Sen. Herb Kohl of Wisconsin said he had sent a letter to the Justice Department and the Federal Communications Commission calling on them to oppose the deal on grounds that it would cause "substantial harm to competition and consumers."
"Such a result should be unacceptable under antitrust law and as a matter of communication policy," Kohl wrote to FCC Chairman Kevin Martin and the Justice Department's antitrust chief, Thomas Barnett.
Read more about it by clicking here.
Top 10: The Weirdest USB Devices Part II
Not everything that comes across the desks of PC Mag editors is something that's of great use to a person or will make their life any easier or more efficient. No, many of the things they see are good mainly for our sheer amusement. But who doesn't need a good laugh every now and then? With that in mind, here's the second installment of the Weirdest USB devices they could find-they've got everything from the plain obscene to the almost practical and office-appropriate. See what they dug up.
Read more about it by clicking here.
CONGRATS
CONGRATS #1 TO: To Amy Winehouse and Blake Fielder-Civil, who wed last Friday in a small ceremony in Miami Beach. The couple had been engaged since Apr. 23.
CONGRATS #2 TO: To 17-year-old Jordin Sparks, who was crowned this year's "American Idol" this week. Jordin easily beat out 25-year-old beatboxer Blake Lewis, and nobody was really surprised. After the best singer, Melinda Doolittle, was eliminated, it was a slam-dunk karaoke win for Jordin.
CONGRATS #3 TO: To Bono, who will receive the Philadelphia Liberty Medal from the National Constitution Center on Sept. 27 in recognition of his dedication to raising awareness of medical and economic problems in Africa. The medal comes with a $100,000 prize, which the U2 frontman will donate to DATA (Debt, AIDS, Trade Africa), the organization he co-founded.
CONGRATS #4 TO: To Paul Simon, 65, who was the recipient of the first Library of Congress Gershwin Prize for Popular Song Wednesday night. Simon earned the award, event host Bob Costas said, "for the depth and enduring quality and sheer scope of his work." Simon introduced "my dear friend" Art Garfunkel, and the two sang "Bridge Over Troubled Water" and "Cecilia."
THAT WACKY PAULA
Paula Abdul fell and broke her nose last weekend while attempting to avoid stepping on one of her Chihuahuas. Of course this means Paula actually makes Paris Hilton look good. With all the drinking, clubbing and partying Paris has done, she never tripped while trying to avoid stepping on her Chihuahua, Tinkerbell.
GET-WELL WISHES TO
Killers frontman Brandon Flowers, who was sidelined by bronchitis after he lost his voice just two songs into a concert in Denver last Thursday and was forced to leave the stage. Once he recovers, the band is slated to continue the rest of its U.S. tour as planned, a spokesperson said. The aborted Denver show has been rescheduled for Sept. 4.
GETTING BETTER
Bo Diddley was due to be moved Monday from the ICU to a regular room at the Omaha hospital where he has been since suffering a stroke earlier this month. "Bo's health continues to improve," his manager said. "He has little or no physical limitations from the stroke except difficulty with speech and speech recognition, but that is improving as well."
IT'SA NOTTA' NICE AND NOW THEY MAD
Italian consumer groups are urging authorities to cancel Barbra Streisand's concert in Rome scheduled for June 15 because of her "absurd and shameful" ticket prices, which start at just under $200 and go up to over $1,200. The groups contend that the Stadio Flamino, where the concert is supposed to take place, "is public property and cannot be used for immoral deals that are shameful to a civilized country."
HER DADDY IS JUST A REAL LIFE COUNTRY SONG WAITING TO BE WRITTEN
Former American Idol finalist and now Country artist Kellie Pickler's father can't seem to stay out of trouble. According to a North Carolina TV station, Clyde Pickler was arrested and charged with three counts of larceny of a motor vehicle and one count of obtaining property under false pretense. Papa Pickler was previously released from prison in 2006 after serving three years for stabbing his neighbor. He was also arrested in February for allegedly threatening his wife.
YOUTUBE GETS THE MACCA VIDEO DEBUT
Things change. Big superstar recording artists used to have their videos debut on MTV, VH-1, or elsewhere on TV. Paul McCartney's new video, "Dance Tonight," from his upcoming album, "Memory Almost Full," premiered on YouTube.com Wednesday. The video stars Natalie Portman as a "futurist electronic ghost," and was directed by Michel Gondry (Eternal Sunshine of the Spotless Mind).
BETTER LATE THAN NEVER DEPT
This past Monday, Cole Porter received a star on the Hollywood Walk of Fame. Porter passed away in 1964 and wrote more than 1,500 songs for stage, movies and television, including such standards as "Night and Day," "Anything Goes" and "I've Got You Under My Skin." Why it took so long for Mr. Porter to receive the star is something we'll never know.
FATS IS BACK
Fats Domino, 79, took the stage Saturday before a sold-out crowd of hundreds in a New Orleans nightclub, marking the Rock and Roll Hall of Famer's first public performance since Hurricane Katrina. The crowd jumped and screamed when he belted out "Blueberry Hill." Domino was accompanied by his longtime friend and musical partner saxophonist Herbert Hardesty. The pair have been playing together since the mid-1940s.
LIFE AFTER CREED
Ex-Creed frontman Scott Stapp might be having trouble at home. His wife, Jaclyn Nesheiwat, told police Stapp was "wasted" and asked them to come to her aid last weekend, according to a 911 tape released Tuesday. The former Miss New York 2004 also revealed that Stapp had "a lot of pot in the house" and "five or 10" guns. When authorities arrived, the singer was arrested and initially charged with aggravated assault with intent to commit a felony, but the charge was later reduced to a misdemeanor.
LOVE HATES THE AD
Courtney Love is angry about a Dr. Martens shoes ad featuring her late husband Kurt Cobain seated on a cloud, dressed in Docs and an angelic robe. A line of copy in the corner reads: "Dr. Martens. Forever." Love's rep called the ad "outrageous," telling People: "Courtney had no idea this was taking place and would never have approved such a use." However, there's little Love can do about it, as the ads are running only in the United Kingdom where the company's use of Cobain's name and image is apparently legal.
2006 Industry Conferences
Name Date Location Digital Hollywood June 11-June 14 Santa Monica, CA P2P June 11 Media Summit, Santa Monica, CA
Quotes of the week
"It's rather like having a silly little dog who likes to jump up on your lap, and you just swat the dog off. And occasionally in a very stern voice you have to say 'No.' That's how I deal with Ryan."
-- Simon Cowell, commenting on "American Idol" host Ryan Seacrest and their sometimes on-air tension."Did you hear about Paula Abdul? She tripped over her Chihuahua and broke her nose. She's going to be fine, but the doctor told her to wait at least six weeks before having sex with a contestant. She broke her nose, but the good news is she did not spill her gin and tonic."
-- David Letterman"There's only one real answer to the massive press coverage -- don't look. There is a tunnel and there is a light and I will get there."
-- Paul McCartney in the U.K. Guardian's Weekend magazine saying he does not read media coverage of his high-profile split with Heather Mills."I came out of this naked, a featherless bird."
-- Marilyn Manson, on the toll his marriage to estranged wife Dita Von Teese took on him, to Spin magazine. Frankly, Marilyn, you've always looked like a featherless bird."I will not do full frontal. I need somewhere to go as an actress."
-- Lindsay Lohan, discussing her upcoming role as an "exotic dancer," at the Chanel party. Well, gee, Lins, if you really need somewhere to go, actually that might be the best route for you. Because nobody is taking what you call your "acting" seriously."After a long day and I'm tired, yeah, a cookie helps. It makes me feel good. It's soul food!"
-- Kelly Clarkson, on not worrying too much about her weight, to EW. And based on current photos and some recent TV appearances, it's obvious Kelly's been munching on lots of cookies."I knew I was back in South Australia when the host came up to me, smiled, gave me a bottle of red and said, 'Welcome to Adelaide, Mr. Urban.' So I drank it."
-- Recovering alcoholic Keith Urban telling concertgoers about being handed a complimentary bottle of red wine by a Qantas flight attendant during a recent flight. Later, Urban's manager assured fans he was only joking."The New York Post is reporting that Britney Spears demanded to get off a United Airlines flight from Los Angeles to Miami because she wanted leather seats and they didn't have any. So she got off the plane. Hey I can understand that. If you're on a five-hour flight with no underwear on, you don't want to be sitting on vinyl."
-- Jay Leno"I saw a shocking picture of Paris Hilton today. She was not only carrying books, one of the books is the Bible. I'm pretty sure she stole it from one of her parents' hotel room. She's been carrying these books around for a couple of days now. She keeps trying to stuff them into the VCR."
-- Jimmy Kimmel
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Nation Mobilizes For Beautiful Weekend
NEW YORK-The nation's domestic forces are responding to the imminent arrival of pleasant weekend weather conditions by launching the largest coordinated surge on America's outdoor recreation destinations in recent history, sources reported Thursday.
" For the sake of our loved ones and our way of life, we have a solemn duty to enjoy this beautiful weather to its maximum potential," said Boston resident Ross Schneiderman, 37, a veteran of more than two dozen beautiful weekends since 1988. "So we intend to be ready to lock and load at the crack of dawn tomorrow."
" It may mean sacrificing TV shows and even chores, but we cannot sit idly by as this gorgeous weather rolls in," said Kansas City resident Chuck Dakin, 32, who has been monitoring both the Weather Channel and accuweather.com for relevant intelligence. "Plus, I found a great spot in Swope Park last week. If somebody gets there before us, things could get ugly."
Read the rest and laugh hard: http://tinyurl.com/yv79nr.
The Blogs
Check out a great blog (that I contribute commentary to) by Jerry Del Colliano, the Director Executive Programs, Clinical Professor Music Industry & Recording Arts, at the Thornton School of Music,University of Southern California, by clicking here: http://www.insidemusicmedia.blogspot.com.
Box Office
Check The Daily & Weekly Box Office (and more film info) at: www.boxofficemojo.com.
TinyURL
Check out www.tinyurl.com where you can make a smaller URL that will work for any webpage you wish to link to or reference. (As you can see, I'm using it in my news stories above!)
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