New Head of EMI Says 'Embrace Digital Music or Die'

no0b writes "Guy Hands is the new head of EMI, Britain's largest music publisher. Hands has come out publicly with a statement warning the industry against something music listeners have probably understood for some time. In the words of the Telegraph article, 'the industry will not survive if it continues to rely on CD sales alone.' More from the piece: 'With both new and established acts now capable of making money without the backing of a big company, McGee says record labels are being left out of the loop. He scoffs at their efforts to make up lost ground by developing into "multimedia entertainment companies that can manage bands and share in live income". But try they must. Revenues from record sales in Britain have dropped by more than £130m since 2004. The true cost to the industry could be far greater. TNS, the market researcher, looked at the spending habits of file-sharers between 2003 and 2005 and estimated a £1bn loss to the country in retail spend.'"

Comments

Radiohead provided the inspiration

[CRCulver]

Radiohead were signed to EMI, and now they've decided to go it alone and release their new album online, at a price the fans agree on. Could this be what caused this exec to sound the alarm?

Re:Radiohead provided the inspiration

[Foobar of Borg]

Radiohead were signed to EMI, and now they've decided to go it alone and release their new album online, at a price the fans agree on. Could this be what caused this exec to sound the alarm?

Well, in the sense that Radiohead was able to finally roust them from their slumber and scream "The building is on fire, you lazy bastards!", then perhaps. But this has been going on for a long time now. Hell, it's not even new. I remember when VCR's came out and they said the same thing. Also, they started releasing Betamax copies of movies like Star Wars for $100 (and this is in the 80's, so about $200 today). Of course, everyone simply signed up at a video rental club and acquired their own backup copy from the one they rented. Eventually, prices dropped to where people would actually be willing to buy an original copy.

Too Little Too Late

[MightyMartian]

The record industry has spent decades reaping vast profits, often screwing over artists in the process. That business model is now dying, I think this is all too little too late. In the long-run why would artists want to sign contracts with record companies when they market the music themselves?

Have fun with those lawsuits, they're your swan song, record companies.

Re:Too Little Too Late

[thatskinnyguy]

In the long-run why would artists want to sign contracts with record companies when they market the music themselves? Sure when bands turn into household names. But the unknowns who lack the resources to promote themselves on a national/global level need a record company with resources to do so. Sure there are things that small bands can do to reach a global audience. But when was the last time you heard of a band selling-out a stadium that had a popular MySpace profile and no record deal?

Re:Too Little Too Late

[MightyMartian]

Sure when bands turn into household names. But the unknowns who lack the resources to promote themselves on a national/global level need a record company with resources to do so. Sure there are things that small bands can do to reach a global audience. But when was the last time you heard of a band selling-out a stadium that had a popular MySpace profile and no record deal?

They need a marketing firm, or hell, someone willing to put a link to their MP3s from a popular site. I could see a guy like David Bowie popping a link to a band he thinks is great on a site where he's putting out his own MP3s.

Re:Too Little Too Late

[Telvin_3d]

In theory, this is how the music industry is supposed to/used to/sometimes does work. Someone who is in charge of the money side of getting the music made (dedicated producer, one of the artists, it depends) hears some new band and thinks, hey, I like that. It's kind of cool. So, they go to the band and in exchange for a cut of the proceeds they give them a chance to get better known. This might be letting them open for shows, collaborating on a song or two, producing a CD, whatever.

Then the new band either takes off or not. If they do, a few years down the line, they hear someone know and the cycle repeats.
Right now, the section of the industry that has this working best is the rap industry. For all their other faults, they are really good at bringing in new talent(?). You can see it if you look at most rap artists on Wikipedia. Their history goes "was discovered by.." who in turn "was discovered by..." and so on.

I think you can judge the health of any section of the music business based on the percentage of the artists who got their starts playing small gigs until someone bigger gave them a shot.

130 million is nothing

[gilesjuk]

In the UK we're struggling from huge consumer debt and massive house prices, 130 million can be the loss due to people not bothering to buy CDs simply because they need to pay their mortgage and debt off.

If the music companies were feeling the pinch they wouldn't be making expensive music videos.

EMI gets it...

[jawtheshark]

At least in my opinion. I stopped buying iTunes songs that were protected after that EMI and Apple introduced the Plus songs. If it isn't plus, I won't buy it. That simple. I have a playlist called "To Buy" in iTunes. It contains links to songs I'd like to buy but that aren't Plus. I review them from time to time if anything has changed. Never happened, tough shit for them. If I find a Plus song that I like, I buy the whole album, just to support the idea.

All songs before I started boycotting non-Plus songs, have been cracked with Hymn.

I don't want to do illegal downloading, besides it's a pain in the neck. Give me an easy way to download and honest prices, and I'll be happy. I can't be alone.

Here's how they can survive.

[Entropius]

1. Offer unencumbered mp3/flac/ogg/whatever downloads as their primary product at a reasonable price. This is below $1/song.
2. Tell the customer exactly where their money goes: "Out of every download, $.30 goes to the band, $.10 goes to the people who operated the recording equipment..." People will buy music from bands they like if they know they're actually supporting the band.
3. Save money by cutting marketing bullshit. Market music by selling *good* music, not by convincing 16-year-olds that they'll be cool if they listen to XYZ.
4. Diversify. Rather than trying to "produce" some canned pop "product" that they can sell to everyone, recognize that people's music tastes are often pretty eclectic, and their catalog needs to match that.
5. Stop trying to make obscene profits by underhanded dealings, and be happy with a sustainable business. Recognize that you're a middleman, and that you succeed by being as transparent as possible.
6. Cut the compression bullshit. If I want my music to sound louder I'll turn up my speakers, thanks.
7. Operate anonymous tip jars with a known cut (65% to the artist/35% to us, or whatever), and encourage people to download music via bittorrent or whatever and then donate to the artist. People will use them.

Re:Here's how they can survive.

[The One and Only]

3 would reduce sales, 4 is a prescription for losing money, 6 is the exact opposite of what most people want, and 7 is a recipe for not making any money at all. Do you honestly think we would be stuck with crappy pop acts if they didn't make money for the record companies? The reason mass media is so awful isn't because of some conspiracy to dumb down the populace--it's because the populace is already dumb enough to want those things.

Music is free now

[cdrguru]

The cost of something is determined by the lowest retail price. For music that is zero today. Most people are unwilling to assign a much higher value to it either.

This means any commercial enterprise which revolves around selling music is doomed. People will redistribute it and remove any possible value from your product.

This means the end of recorded music as a commercial enterprise. Period. I don't see a choice. I understand this is now how it is in China today - they gave up against piracy. I is going to be that way elsewhere shortly.

Movies are probably next.

Re:That's a 1bn GAIN to the country.

[Dunbal]

Your belief that everything should be free is what is putting many artists out of business.

      Please name a few.

      I will counter that those "artists" are "out of business" because THEY SUCK.

At your job, do you work for free?

      No one is saying the artists shouldn't be paid. We're talking about the middleman here. There is no more room for the middleman, he has been made obsolete. Nice switch of the argument. EMI is not an "artist" as far as I know.

      Now how hard would it be for a band to set up their own "store" on the internet and sell their tracks directly? Not very. I think the technological advances of the past 10 years have gone right over your head. Wake up, the world has changed.

      The old model had the record industry going out to "scout" new bands to find a sound that they thought hopefully would sell. Now the bands just have to make themselves available electronically, and the people will decide what sells.

The LIE that few spot

[Anonymous Coward]

I am a person, I got an income of 1000 dollars which I spend completly every month, 600 of which goes to fixed expenses like housing, insurance, taxes and other mundane stuff that you have to pay. Two hundred I spent on essentials like food, clothing, phone, etc. That leaves 200 to spend on fun. Lets say that before filesharing I spend that 50 dolllars of that 200 on music, now with filesharing I don't.

How much money has been lost to the economy because of filesharing?

Not a single penny.

If you don't understand why, you are an idiot, stop reading, american idol is probably on, if it ain't watch the static.

To everyone else offcourse it is obvious, I spend ALL my money in the economy, it does not matter to the economy WHAT it is spend upon. If I don't spend it in shop A I spend it in shop B, shopowner A may not like it but the economy doesn't give a shit, as long as I spend.

Now if you were to present me with figures that show that people nowadays are saving more money then before, then you might have a point, if teenagers start putting their allowances into banks instead of CD's then the world might indeed come to an end (although I am sure an economists could explain how this too would just be another way of spending)

Simply put, although I haven't bought a CD or a DVD or even a game in ages, that doesn't mean I don't spend money, turbine has large faction of it with my lifelong LOTRO copy, Blizzard got maybe a half-dozen full games sales out of me with WoW. The record company doesn't sell me CD's but I pay several CD's worth each month to my ISP.

They talk about money flows sometimes and that is just what money does, it flows like a river and sometimes that river changes courses, leaving one area dry and flooding another. It is part of live. We spend less on coal and more on gas. Once we bought hay, today we buy petrol, tomorrow, who knows, but there always be a inn/service station beside the road selling fuel, not just for our mode of transport, but ourselves.

If you really want to talk about lost money to a countries economy, check where those CD's are made. I can bet you a lot of money it ain't the US of A or Great Britian or wherever. It is china. Now putting ALL that manufacturing in low wage countries, now THAT hurts the local economy, to the tune of far more then a handfull of billions. Why don't we hear the music industry about that eh?

Wanna see proof? Go into an archive and look at pictures of your local highstreet, see how one type of store just gets replaced with another over the years. I am willing to bet that your local music store is now housing a mobile phone store. That is what people spend money on nowadays.

Re:The industry will not survive?

[Gary W. Longsine]

Well, to be more precise about it, the major activities of the recording industry which enabled it to maintain itself as an oligopoly are being radically transformed by technology. It no longer takes a multi-million dollar recording studio to cut and mix a decent recording, you can do it with a Macintosh and Logic Pro. Distribution doesn't require production and distribution of expensive physical media. Copy a file to a web server and pay for bandwidth as it's needed. The recording industry won't survive in its current form. It has enormous volumes of valuable copyrighted material, so it will probably survive in some form. There is one leg holding them up right now, which is that new bands don't yet have a way to become super stars without expensive promotion, done by the record labels. If new bands ever figure out how to make money with the record labels, say through some thing like google ads or some mechanism as yet unthunk, this industry is so totally over, overnight.