EMI

And sooner or later
Everybody’s kingdom must end

"The King Must Die"
Elton John

I can’t say that I know Alain Levy.  I’ve met him a couple of times.  Once, smoking cigars at the closed Chasen’s on Grammy night.  Actually, we always seem to meet around Grammy time.  At the charity dinner, at the EMI party.  But I don’t think he’d remember me.

David Munns?  Ask Van Morrison about David Munns.  The notoriously difficult artist would ONLY speak to Munns.  At least that’s the way it used to be…  David Munns is a record man, positively old school, but the days of the record men are through.

Alain Levy is an empire builder.  A dreamer who plays by his own rules.  But people like this tend to get blindsided, they’re so busy going headlong in one direction, they can’t see their enemies plotting on the byways.  As a result, PolyGram was sold to MCA without him even knowing.  The fact that such a stealth operation could be pulled off in the notoriously gossipy music business is quite amazing, but in this one case it was done.  Actually, when MCA sold their operation to the Japanese, before Bronfman bought it, David Geffen was kept out of the loop, it was feared he couldn’t be counted on to keep his lips closed.  But none of those people have any power anymore.  Matsushita exited the software business, licking its wounds.  David Geffen has all but done the same thing, he’s available for a quote, but DreamWorks is done, the film and record operations sold off, animation spun off.  Bronfman has reemerged, but he seems to have something to prove.  Panasonic and Geffen know there comes a time to take your chips off the table and go home.  Alain Levy had something to prove.  He came out of retirement to head EMI for bupkes.  He failed.  Times had changed.

It’s tough being an also-ran.  And although EMI controls the Beatles, they’re an also-ran.  If you’re an also-ran, you’ve got to align yourself with one of the big players, or reinvent the wheel.

A merger could never be constructed.  As for EMI being the Apple of the music business…Levy and Munns were too inured in the old ways to truly revolt.  The old wave never revolts, it believes in EVOLUTION!  But sometimes revolution is inevitable.  The music business is in an era of revolution.

Copyrights are more valuable than ever.  It’s just a question of how you market and collect the receipts for said intellectual property.  Levy and Munns were waiting for the return of…  The eighties?  The nineties?  It was as if they expected AOR to be dominant once again, and for MTV to go back to wall to wall videos.  It’s like no change was contemplated.  Oh, they pussyfooted, with online initiatives, but that’s like Microsoft making the Zune, too little, too late.

We can forget Levy and Munns now.  They’re gone, there’s no place for them anymore.  And they’re both so rich, it doesn’t matter.  We need new blood, to reconcile the music business with a future that is already here.  Talent spotting will always be important.  But in an era of instant communication around the globe, with everybody linked in, finding talent isn’t that hard, it’s more a matter of MARKETING said talent.  But, with intense bottom line pressure, nobody is innovating, everybody’s playing by the old rules.  Run the new stuff up Top Forty and sell the hell out of the catalog to the big box retailers, allow them to pay for it EONS from now, giving you time to pull a rabbit out of the hat.  But based on these firings, those days are through, that paradigm won’t work anymore.

It has to be about less money initially.  About gaining the trust of the customer with more credible acts, that touch people’s souls as opposed to sliding right off of them.  That takes time.  A LOT of time.  Nobody at a major label today has that time.  So, running in pursuit of the old dream, they’re leaving the playing field wide open for new players, with new game plans.  But said plans have to reflect the new reality, one wherein every person owns a lot of music, most of it presently free.  The acquisition of said music has to be legitimized, MONETIZED, before the sun starts to shine again.  Oh, you can build something on the road, but to leave out compensation for recorded work, that’s a mistake.

There’s no easy way out of this for the major labels.  They’re running headlong towards disaster.  The mismanagement by Levy and Munns wasn’t day to day, rather conceptual.  One has to apply the brakes and start driving in reverse, to where the people are.

There are opportunities for EMI.  Whether Eric Nicoli will embrace these or be replaced when private equity investors swoop down and buy the whole operation is unclear.  I’m betting on the latter.  But if Nicoli wants to save his job, he must make major moves.  Now that Marty Bandier is gone, he can state that the Big Kahuna, EMI Publishing, will go to a percentage rate.  Eliminating the fiction of single sales online replacing the physical disk business.  That bird ain’t never gonna fly.  You’ve got to sell the files much more cheaply.  And to do this, publishers can’t enforce a penny rate.  Everybody’s got to take less.  Except the artist.  The CD was built on the artist’s back, with discounted royalties, and that’s just patently unfair.  And it’s this unfairness that has helped drive new talent to indie labels.

And EMI must authorize legal P2P.  They’ve got no option.  Unless they start charging for music acquisition the way people presently do it, they’re screwed.  Legalize P2P and you get the YouTube phenomenon, everyone will be music CRAZY!  License at the ISP level.  Or just legalize Limewire and THEN sue everybody who doesn’t pay a monthly fee.  But to ignore how the vast majority of music is acquired is not only ridiculous, but economic death.  Music is very valuable, it’s just a matter of charging for it via the new system.

This is an historic day.  In partnership with this past week’s seventeen plus percentage point SoundScan drop, it’s clear the old guard, playing by the old rules, cannot continue.

And it’s not only Levy and Munns.  It’s Doug Morris.  And Jimmy Iovine.  Universal is not immune.  They’ve just got a bit more leverage and a benevolent corporate parent.

The music business soon will not look the same.  I’d like to tell you exactly how it’s going to turn out, but I don’t know.  It depends on so much.  Whether the majors will wake up to the crisis and actually make moves, or whether they’ll cede the landscape to new companies.  It depends on exhibition issues, the marginalization of Top Forty, and the rise of alternative formats.  It’s a complex puzzle, but one thing is patently clear, the old players are not up to the task.

The king is dead, the king is dead
The king is dead, the king is dead
Long live the king

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