Monday, 14 January 2008

Hands-on at EMI: Can Pop be Sold Like Popcorn ?

Mostly business here today, though Guy Hands is certainly well-connected politically. Later this week he is expected to reveal his strategy for the newly-acquired EMI: staff fear large cuts and key ‘artists’ (OK, Robbie Williams) are said to be truculent.

Hands’ traditional MO is to buy unfashionable companies with reliable cash-flows (pub chains, cinemas, rental properties etc) and securitise the hell out of them. How does EMI fit that pattern ? Is it the vanity purchase of a very wealthy man; or a new business model - or does he see the same underlying business dynamics to be exploited one more time ?

I’d guess the latter: he is probably looking to extend the concept of securitising royalty streams, as pioneered by David Bowie. Accordingly, part of Hands’ due diligence was an attempt to assess what teenagers are willing to pay for downloads. Can there really be any stability in that ?

‘Trooble at mill’ from Mr Williams et al is perhaps something he has catered for in his planning, with his talk of 'incentivising' EMI acts (profit-sharing, I imagine, not percent of the gross). Likewise, with the vast increase in the number of bands spawned from the YouTube generation, perhaps he is anticipating a wholesale commoditisation of pop music, and consequent reduction in artist-power. But I also reckon he is expecting to run an efficient business with slender and predictable margins: he refers to his Odeon cinema chain as being in the popcorn business, not the movie business.

Good luck, matey: the pop industry may be fuelled on alcohol (and other substances) but music doesn’t flow quite as smoothly as beer.

ND

9 comments:

Steven_L said...

Could this be the makings of the next credit crunch? An international financial system full of complex derivatives hiding junk music bonds?

"...City sources let on today that no-one actually knew which institutions were holding the worthless 'Girls Aloud' catalogue..."

Nick Drew said...

Steven - excellent !

This is a rich vein - more !

Steven_L said...

"...the G8 heard evidence from banking chiefs suggesting that file-sharing was now threatening the entire global finance system as they lobbied world leaders to provide a rescue package that included pulling the plug on the internet and a month-long worldwide amnesty on MP3 players preceeding a ban on their manufacture and sale..."

Nick Drew said...

... as Northern Rock increasingly lost out to hip-hop and Country&Western, pressure came on the government to nationalise it to bail out the remaining Rock fans ...

Ed said...

My musician friend was telling me about a very interesting business model he had come across - suffice to say the revenue is not from the music itself.

Nick Drew said...

and ... ?

come on, Ed, we won't laugh

(particularly if it's not funny)

Ed said...

The plan has yet to be launched so I better not. It is quite a clever idea, though.

Nick Drew said...

well good luck to him, lots of new ideas are going to make it big in the coming years

and good luck to you if you find yourself working on this, or any other new venture

(I have a bit of experience with new ventures - see comment on your blog - so I'll drop you a line)

Richard Havers said...

Pop is like publishing. As soon as you treat it as product you're doomed. Put another way, Pop is the most appreciated art form in the world. As 10CC were known to say, art for art's sake, money for God's sake.