Guy Hands/EMI
Who knows more about the future of the record business, Rick Rubin or Guy Hands?
Based on the leaked EMI memo, it appears that Rubin’s been beaten, Hands down.
We’ve seen this movie before, with IBM. Suddenly, with the shift from mainframes to PCs, IBM was out in the cold. Oh, it cried for a while, and even tried to go into business with Microsoft, with the ill-fated OS/2, but eventually Louis V. Gerstner settled on a whole new business model. He sold the PC business to Lenovo. After the printer business was sold to Lexmark. He changed IBM into a SERVICES COMPANY!
Anybody can sell you a box, but what you need is a SOLUTION! Furthermore, you’ll buy the boxes you need from the person who delivers said solution. So, IBM ended up with a brand new business model, one that has the company healthy. The old rule book was thrown out. Hell, they support LINUX!
We haven’t had a new idea in the major label world since the sky started falling back in 2000. Smug Doug Morris just thinks if he tightens the noose on HIS customers, those who need to license music to survive, Universal will end up in good shape. But is Universal heading for a cliff? Where’s the innovative thinking?
Certainly not at Sony BMG. That’s the outfit that HIRED Mr. Rubin. As for the BMG half… Looking at how Clive runs his business, you’d believe it’s still 1985.
As for Warner… A lot of platitudes have been uttered, but all we can see is rich owners and executives, and fewer worker bees, and fewer acts. This isn’t a company reinventing itself, this is a company looking for some kind of liquidity event. They want to hang on just long enough to cash out. But it doesn’t appear said event is in the near future, and their stock price reflects this.
And now EMI has gone the private equity route too.
You can’t trust the private equity guys. Their main goal is to make the balance sheet look good so they can sell the company to the public, ending up FUCKING RICH! Even though they’re pretty rich to begin with. But unlike Edgar Bronfman, Jr., Guy Hands doesn’t have a long history in the recorded music business, he’s not tied to the old ways, he’s taking a fresh look at major label infrastructure, and what he’s concluded is IT SUCKS!
I mean we haven’t had anybody speak truth in the record business in seemingly FOREVER!
"Why should they (hit acts) subsidise their label’s new talent roster – or for that matter their record company’s excessive expenditures and advances?"
Yeah, why SHOULD THEY!
Because that’s the way it’s always been done. The winners pay for the losers. We make you a star, we’re a necessary part of the puzzle, and this is the price you’ve got to pay.
But suddenly, both new bands and hit bands have alternatives. Majors need a NEW BUSINESS MODEL! Is anybody gonna come up with a NEW BUSINESS MODEL?
Rick Rubin wants to impress potential signees with architecture. Yup, if the building’s REALLY COOL, you’ll feel good coughing up the majority of your dough. It’s worth it. To hang with the cool folks on staff. Who are making more money than you are.
That’s another thing that flummoxes Hands. Why is middle management PAID SO MUCH? Why, in a dying business, are the guarantees for the EMPLOYEES so high? Maybe they should share in the upside.
Jimmy Iovine share in the upside? He’s ENTITLED to his dough. As is Lyor Cohen. Why should they be guaranteed this income? Where’s the incentive to REINVENT THE BUSINESS!
Hands reaches back to Ian Copeland’s Police model. Low advances and high royalties. Sure, he’s looking for new revenue streams, but he’s trying to save the ORIGINAL revenue stream, the one from RECORDED MUSIC!
How come Hands will go on record that Radiohead’s independent release is "a wake up call" and all you’ll get from the other execs is the statement that the band wouldn’t be anything without the major label that built them?
I don’t know what a major label looks like in the future. But I’m damn sure it doesn’t look like Interscope Records, the most successful outfit working today. Interscope is like the best electric typewriter company. Using all the old tricks to stay on top in a dying game.
Yup, Interscope is in trouble. Because the CD IS DYING! Do you hear Jimmy ranting in the press? Or Doug? Their cash cow is going down the tubes, the foundation of their business. CD sales are not going to rebound, and digital sales, as presently constituted, are not making up the difference. Where’s the solution?
"The recorded music industry… has for too long been dependent on how many CDs can be sold," he wrote. "Rather than embracing digitalisation and the opportunities it brings for promotion of product and distribution through multiple channels, the industry has stuck its head in the sand."
Guy Hands is no Andy Lack He’s not an entertainment exec, he’s a FINANCIER! And if he was entering a healthy arena, I’d be quaking in my boots. But SOMEBODY’S got to acknowledge we’re living in a mixed up, muddled up, shook up world and try to make sense of it.
The key isn’t to make more heinous deals, to take more of the act’s money, but to BENEFIT the act, to deliver opportunities and revenue that they can’t get elsewhere, so they WANT to be on the label.
There’s nothing inherently wrong with a major label. It’s got cash, it’s got stability. It’s got infrastructure, a full staff. And relationships. Acts would sign with majors if only they weren’t so untrustworthy, if only they didn’t want ALL of the act’s money.
It’s a new era. Is EMI going to rule in the future? I’m betting a newbie will surface, a la Microsoft, and become the behemoth while the majors aren’t looking. The majors have survived this long because they have the copyrights. What if someone starts off with NEW copyrights, from NEW acts. Or star free agents? Then they can do what they want, without restrictions.
This is the landscape the majors are playing in. One wherein anybody can make a record and get it distributed. Instead of lamenting the loss of their monopoly over distribution and their stranglehold on less listened to radio and the irrelevant MTV, they need to digest the new world and come up with solutions. It’s their only hope at survival. If he can pull it off, Guy Hands will get rich. But, if he succeeds, he’s going to be ENTITLED TO THE MONEY!
