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Record Co. Accept the change is here.

Posted by admin on 4.11.07 - 12:55pm

The following is an e-mail sent by EMI's PR Exec. Could this be the record companies finally accepting that the big shift in the way artists release their work, is here?

Dear all

RADIOHEAD

As you know, Radiohead, a band with whom we have enjoyed a long and productive history, have decided to release their new album, In Rainbows, directly to consumers via their own web-site. They have also allowed fans to download the digital album at a price to be set by the consumer. While some recorded music executives and other firms have expressed shock and dismay at this development, it should have come as no surprise. In a digital world, it was inevitable that a band with the necessary financial resources and consumer recognition to be able to distribute their music directly to their fans would do so. Radiohead is one of the most iconic, original and successful bands in the world, and one of the few with a fan base large and devoted enough to support the costs of such an initiative.

However, whilst most bands, including many successful names, will not be able to - or want to - follow in their footsteps, there are some important lessons to be learnt which support our analysis of what needs to change in the recorded music business model and which many of you have touched on in your letters and emails to us since Terra Firma bought EMI.

In this note, I want to address what Radiohead’s decision means for EMI and what it means for artists generally.

For EMI, this is a welcome reminder of the new digital world in which we operate and the need to focus on the services we provide to our artists. Those artists break down into three categories:

• Those who are already established and in whom we have invested heavily;
• Those with whom we are working to make really successful; and
• New, start–up bands.

EMI needs business models which work for all three categories, the reality being that the vast majority of the third category will fail to achieve commercial success and have historically been cross-subsidised by the first category.

EMI Recorded Music still has value to the vast majority of artists - in funding their development and in distributing and marketing their music - but highly successful bands have other alternatives for making money (such as touring) and a few, especially the more established ones, may be able to abandon their label and try to go it alone. You can see why they might choose to do so. Why should they subsidise their label’s new talent roster - or for that matter their record company’s excessive expenditures and advances - particularly when they are providing income to their record company through their catalogue sales?

We will need to give artists at all levels a deal that is fair to both sides, perhaps one that moves away from the large advances model of old and provides a true alignment of interests and transparency.

However, for every artist being signed to us, regardless of level, we need to deliver them maximum value and a world-class service; we need to develop products that the consumer wants. We need to develop revenue streams both for our artists and for EMI that come from many channels and not just from CDs. We need to be best in class at identifying and developing these revenue streams where best in class is not being judged against the recorded music business, but against international businesses of all types. We are determined to do so and to ensure that EMI Recorded Music has the people with the skills to provide such a worldwide service. It is only by doing this that we will be the best home to musical talent and the most innovative and creative music company.

In effect, the recorded music business needs to become more like the music publishing business which provides its writers multiple opportunities for distribution of their product in order to maximise copyright fees and royalties. In this effort, EMI publishing continues to be at the forefront of innovation and provides a broad range of services.

The recorded music industry, while seeking to develop some of these services, has for too long been dependent on how many CDs can be sold. The industry, rather than embracing digitalisation and the opportunities it brings for promotion of product and distribution through multiple channels, has stuck its head in the sand. Radiohead’s actions are a wake up call which we should all welcome and respond to with creativity and energy.

If you have any comments, please do feel free to email me as usual.

With best wishes

Guy

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