EMI's pain not necessarily music rivals' gain

By Mike Collett-White

LONDON (Reuters) - EMI lost two of its biggest acts in 2007, is in danger of losing more, has seen record sales slump and on Tuesday announced major layoffs.

But the label's pain is not necessarily its rivals' gain.

While some of EMI's problems are home-grown - including a poor release schedule last year and doubts about its new management's style - all four big record labels face tumbling sales at a time when stars have more choice than ever over how to market music.

"No one is rubbing their hands with glee," said a seasoned executive at another major label. "EMI's difficulties are not good for the industry. Everyone suffers."

EMI said it would axe up to 2,000 jobs in a restructuring plan to save up to 200 million pounds ($392 million) a year. The announcement follows a drip feed of bad news in recent months.

Robbie Williams, who signed a deal in 2002 reported to be worth 80 million pounds ($157 million), said last week he would not record a new album in 2008 because he had no confidence in how EMI would market it.

Coldplay, another big British act, is considering its options after UK boss Tony Wadsworth left EMI this month, while Radiohead, who have left the label, said Terra Firma boss Guy Hands and colleagues were "like confused bulls in a china shop".

Before Terra Firma took over last year, former Beatle Paul McCartney left EMI in March, branding staff "boring". Personalities, it would seem, count in music.

"In the music business the product talks back," said the executive, who asked not to be named.

But there has also been sympathy for Hands and EMI, and an acknowledgement that the way the business worked must change.

"I think we are the only industry in the world where we take 100 percent of the risk but only get maybe 40 percent of the potential revenue," said Ged Doherty, UK head of label Sony BMG.

"So that is why that sort of adjustment in business models needs to go on," he told Reuters, referring to companies seeking a share in touring and merchandise revenue as well as recording.

Hands gave a hint of how he would approach the industry when he explained his handling of another acquisition in the cinema business, where he found executives regularly jetting off to film premieres.

"They thought they were in the movie business, but actually they were in the popcorn business," he said.

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