EMI, one of the so-called Big Four major record labels, no longer considers itself a “label" per se, but a “comprehensive rights management company" under new leadership of Roger Faxon, formerly the head of its robust publishing division.
EMI's new strategy was undertaken after months of soul searching by its relatively new owner, private equity firm Terra Firma. And it just might work, if the new version of the company -- with its emphasis on uniting publishing and sound recording rights to facilitate a wider range of deals in a faster, simpler way -- succeeds in reflecting the ways in which the music business itself has so fundamentally changed.
EMI's theory: Music surrounds people more than ever, in online videos, interactive streams, advertisements, feature-length films, television shows, mobile apps, and so on. They just don't buy it as much as they used to.
This might be the first major label to recognize that new reality by fundamentally reorganizing its business around comprehensive rights licensing, rather than counting on fans to keep paying for recordings. But it likely won't be the last.
Increases in digital revenues have failed to offset declining physical sales, and making matters worse, older catalog titles recorded during the music industry's heyday often bring in a disproportionate percentage of revenue, leading to speculation that the major labels would eventually become catalog-licensing businesses rather than continuing to invest in new bands. That appears not to be the case, entirely, as far as EMI goes.
“The commitment to discovering and promoting new music is absolutely essential to our future growth," said Faxon in an internal staff e-mail obtained by Wired.com. A source close to the situation confirmed that, claiming that the company will continue to sign new artists and songwriters after this transformation -- it will just focus on signing them to multi-right deals, or providing those that do not wish to have a label with other label-like services.
Faxon added, “we need to recognize the power and importance of the extraordinary catalog of recordings we represent, and as we do that we need to respect the creative contribution of all the talented artists who made those recordings."
The focus, for new and old artists alike, will be more on inking deals for sound recordings, publishing, and merchandise whenever possible, to allow the company to make money for itself and its artists on a variety of fronts even if nobody pays for a single disc or download. Licensing music for these new uses, rather than funding an entire department dedicated to selling music to a shrinking number of consumers alone, could be just what the doctor ordered for the beleaguered company, which has required cash infusions from investors to stay afloat despite reporting a few signs of life lately (numerous publishing awards, increased market share).
Today's rapidly-changing digital music landscape, which encompasses user-generated videos, videogames, interactive apps, and other distribution mechanisms that didn't exist when the traditional music business evolved, requires the signoff of both the publisher/songwriter and the record label/artist. For example, EMI itself owns certain Beatles rights, but reportedly can't come to terms with Apple Records in order to sell the band's music digitally. If the company managed all of those rights, it would be easier for it to license that music for new uses of the technology.
EMI already does this for Gorillaz, Norah Jones and the vast majority of its 200 or so new artist deals signed in the past year. As a result, it can negotiate more effectively with sites like YouTube, services that place music in films or advertisements, iPhone app developers, and other new players, because it speaks for a large number of artists -- as many as it manages multi-right deals for. The company had already begun evolving past a being a traditional record sales-based organization, but today's announcement makes it official.
For more information contact All About Jazz.
