Still in the clutches of Guy Hands' Terra Firma Capital Partners Ltd., EMI Music Ltd. is beginning to show signs of a long-awaited turnaround. Although it
recorded a large loss of £757 million ($1.1 billion) during the year ended March 30 the music company
achieved positive earnings over the past six months, with Ebitda of £59 million. EMI also
reorganized internally last week, creating new business units for new music, catalog and music services.
In a lengthy
interview with Billboard, CEO
Elio Leoni-Sceti, digital chief
Douglas Merrill and A&R leader Nick Gatfield discussed a variety of strategic changes they hope will energize the company. Though Leoni-Sceti declined to discuss speculation that EMI might sell off music divisions such as Christian and classical, the trio emphasized the importance of data that reveals paths to new forms of monetization. (Wonder if they'll bring in
Billy Beane next.)
In an industry that for many years relied on guesswork as much as market research, EMI appears to be preoccupied with connecting artists with fans via data analysis. Merrill, a former Google Inc. [
GOOG] chief information officer, even compares EMI's business model with search. "There's more and more great art being produced," he says. "It's still hard for
fans to find great art. Artists need to understand more about the world
they live in. We're going to be a platform to connect that, and we're
going to create incredible value."
The executives are either vague or coy about specifics, but they suggest that EMI is devoting resources to new ways of analyzing patterns of consumer behavior to predict future buying habits. The company revealed plans for a "
learning lab"
portal site last month, which presumably will allow music sampling and
discovery, while yielding more data for EMI's ongoing analysis. And its hiring of Second Life co-founder
Cory Ondrejka also implies that the company is serious about finding new revenue streams beyond selling music, either on flat plastic discs or digitally, or even so-called 360 deals. "Cory built a company getting people to pay for fake real estate," says Merrill. "I
mean, that's remarkable. And they paid real money for it. It's insane."
EMI still has a long way to go. The company's market share has fallen below 10%, smaller than the combined share of independent labels, and it has lost key top-selling artists such as Radiohead since Terra Firma acquired the company in mid-2007. While its new steps may be puzzling to industry insiders, EMI is gambling that its analytical methods will not only spark a continued turnaround but also revolutionize the flagging music industry.
-- Paul BonanosSee Billboard's interview with EMI's leadershipSee
April 2,
June 10,
June 19 and
Oct. 8 posts about EMI's digital strategy from Tech Confidential
Continue reading below
