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Just last Tuesday, the Cambridge-based company signed a three-year deal with pressplay, a legal version of Napster backed by the world’s three largest record companies––Universal Music Group, Sony Music Entertainment and EMI Recorded Music...
Levy is used to turning music companies around. He and his new vice chairman at EMI, David Munns, were pivotal in pushing PolyGram (now part of Universal) from third place to the world?s largest music company between 1989 and ?98. But the rhythms of the music business have changed since then. EMI?s troubles are a microcosm of what?s ailing a $40 billion industry that can no longer rely on fans buying CDs by the armful to replace outmoded record collections. Too many expensive-to-maintain artists are selling too few CDs to an increasingly fragmented public...
...expected to announce next month measures designed to trim costs by at least $92 million by either dumping manufacturing and distribution operations or rolling them into joint ventures with other labels. Poor performing artists aren?t secure, either, including such legends as Mick Jagger and Paul McCartney. Last month, EMI gave pop diva Mariah Carey a $28 million payoff to free itself from the $80 million contract it signed her to last year. Carey, whose 1993 album Music Box sold 24 million copies, could only generate sales of 2 million for her first and only EMI release, Glitter, which left...
...there is only so much cost cutting can get you," warns Michael Nathanson, European media analyst at Sanford C. Bernstein & Co. EMI needs to sell more CDs. And that means finding global superstars. To accomplish that, EMI will have to improve its talent-spotting operations in America, where its market share is a puny 10%. The U.S. is the world?s biggest music market and it?s impossible to create world megastars with poor sales there. Deutsche Bank analyst Mark Beilby doubts if any of the five major music companies are willing to invest the time and money needed...
Another potential source of profits is the Internet - once legal and technical hurdles are overcome. Though music sold online will likely be priced very cheaply, savings in manufacturing and distribution could once again fatten margins. While the major labels have been slow to embrace the Internet, EMI insiders say Levy understands its potential. The company has already licensed music to more than 50 online music companies. If in the meantime Levy is successful in trimming costs and breaking new acts, EMI could be well positioned to reap the benefits of converting clicks to cash. That should have investors singing...