Sunday, 13 November 2011
Sad but not unexpected news in the last few days that the last surviving major UK record company has been passed into foreign ownership and will now form part of the Universal Group. There has been much said about the purchase by Guy Hands' Terra Firma and the huge debt burden that resulted. Apparently the short lived period in the banker's control did bring about better performance in terms of cost control and sales. The huge interest payments just masked the rise in that performance. Potentially Universal has done a great deal. So has Sony which has purchased the publishing company - always seen as the prize possession in the group given the rights it controls.
EMI has a lineage stretching back to the start of the industry. The Gramophone Company Ltd can be traced back to gramophone inventor Emile Beliner and partnered with Eldrige Johnson's Victor Talking Machine Company in the US (later RCA Victor); the UK element merged with the Columbia Company to form EMI in 1931 with RCA owning an interest. In 1955 it acquired Capitol Records in the US at a time when music was about to change forever. The merger with Thorn (Electronics giant) in October 1979 was seen as the last major step forward for EMI as it became a conglomerate which owned everything from cinemas to defence systems. The music group finally became independent again in 1996 and sold the HMV retail chain in 1998. On this latter sale the trademark of Nipper the dog listening to His Masters Voice passed from the business to retail chain HMV. HMV itself has been subject to a great deal of speculation this year with a number of suitors waiting for it's fall. A deal was done with it's bankers to ensure it's survival for now. A move to two tier (consumer electronics and live venues) based business has followed.
The current world of downloads and digital rights rather than physical product, whilst handled badly and slowy in general by the industry, should be seen as just the next stage in development of this industry and EMI has seen most of them with mixed fortunes. It was slow to embrace CD but given the range of it's catalogue with the Beatles, Floyd, Blur, Sinatra, the Beach Boys to name just a few on the popular side and, with a huge legacy of classical music - going back to Fred Gaisberg's recording trips across the world in the early 1900s. The buyers waited for the releases and, perhaps, EMI did not lose out by playing a waiting game.
The industry-wide attitude to Napster and downloading in general in the 90s definitely resulted in lost revenues - with a new culture of "buyer" - not interested in holding the carrier but just getting hold of the music - if free then all the better. Very difficult to get that genie back in the bottle.
The current talk is saying thank God it's gone to Record Men rather than to another conglomerate investor and I second that. Mick Jagger, whose Stones exited EMI for Universal earlier this year, was wheeled out to confirm that the lagacy would be safe in Universal's hands. Let's hope so. One ominous footnote that i've seen is that Universal have agreed to sell half a billlion euros worth of assets after the purchase - whether this is a nod to the competition regulators or just where they can see unnecessary duplication is yet to be seen.
I've read some really uninformed comment on Twitter and various blogs about this (one Tweet said "They (EMI) even made classical records as well you know"). We easily underestimate ourselves in the UK. EMI was THE record company for a huge amount of the 20th Century. Yes the 60s heralded the arrival of the Beatles etc but for most of the fifty years prior to that the company delivered huge revenues back to these shores.
Interesting until settled - this one has some time to run yet.