EMI Group plc, the smallest and most troubled of the Big Four record labels, is planning to launch a Web site through which it will operate its own online store, selling music directly to consumers, according to a report in the Financial Times. EMI has bled staff and lost key artists since its acquisition by Guy Hands' Terra Firma Capital Partners in a £3.2 billion ($6.3 billion) take-private deal in 2007, but has also hired a handful of digital innovators who figure to take risks.
EMI hasn't released details regarding the project, but the FT story says it will include both audio and video content, including paid downloads and a free section, positioned as a "learning lab" to help people discover music. That jibes with what I've expected from EMI since it hired former Google Inc. [GOOG] CIO Douglas Merrill to run its digital strategy eight months ago: The company is finding ways to monetize what it gives away for free. (Hmm, "Learning lab." Sounds a little like "Linden Lab," another company that squeezes premium fees out of a free platform -- and from which another key EMI digital executive arrived in June).
EMI has failed to retain top-selling artists such as Radiohead and the Rolling Stones over the past year, and has reportedly lost so many key business-side staffers that it can barely complete deals. It signed on to the MySpace Music initiative at the eleventh hour, late last month.
But it has also led by taking chances. EMI was the first major label to insist that Apple Inc.'s [AAPL] iTunes store had to sell its music without DRM copy protection, presaging other DRM-free alternatives.
The FT story suggests, rightly, that consumers want to get their music from sites and storefronts that offer a large universe of content -- preferably, all the music there is. Indeed, most people aren't loyal enough to labels (particularly majors) to know which artists belong to which companies. For EMI to succeed, it would have to offer something so compelling that consumers would spend a lot of time on the site. Few, if any, have found that formula thus far. -- Paul Bonanos
See story in Financial Times about EMI's planned site
See Apr. 2, June 10 and June 19 posts from Tech Confidential about EMI's digital strategy
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