Can EMI's New CEO Change the Game?

I recently read an article on Rolling Stone about EMI's new CEO, Guy Hands, and his bold new plans to breathe new life into the music company he bought last May for US$4.7 billion.

We all know that the recording industry is desperately fighting for life, especially for the past 7 or 8 years, and EMI- the smallest of the four major labels (the other three being Sony-BMG, Warner Music and Universal-MCA) was a complete mess.

But how bad was bad? EMI had already lost US$500 million in a year, it's market share dipped to under ten percent, and two of its biggest artists- Coldplay and Paul McCartney- have jumped ship.

Last January 15, Hands had announced a total overhaul of EMI, hoping not just to stop hemorrhaging vast amounts of money, but to make it profitable once again- and everyone's eyes are on them now, including the other record labels.

The Action Plan.

The first logical move is to lower overhead. Which means cutting costs. And Hands had a lot of shaking to do.

1. No more expensive gifts to artists and multimillion-dollar severance packages for EMI execs.
2. Centralize whatever functions you can- in this case- marketing, promotion and distribution.
3. Lop off redundant departments, trim down everything else to manageable proportions. Not too long ago, we've seen some 2,000 EMI employees lose their jobs. A necessary evil if you want to stay afloat.

With that messy bit of business done, the next move is to defray costs somehow. His move: use more corporate sponsors. And now you have Nordstrom, Victoria's Secret and the New York Daily News co-branding efforts with The Spice Girls and Joss Stone and others.

The Future of the Recording Industry?

All the recording companies have already laid employees off, cut back on budgets and signed fewer artists. So what's going to be new this time around?

Whatever it is, it has to happen fast. Since 2000, sales for the recording industry has been down thirty-six percent. The business model simply isn't working anymore, and everyone is watching EMI to see if Hands has the answer.

I say more power to Guy Hands. Anyone who's shaking up the system this much, all in the interest of adapting to these changing times is definitely deserving of support. And just like everyone in the industry- I'd like to see what else he has in store for EMI.

Cheers, everyone!