Sunday, November 13, 2011

And Then There Were Three: Universal Will Buy EMI, from NPR Music

So you have this idea about starting a band and wanting to make it big. What in reality is "making it"? This became a never ending topic while skating for many many years. As we would each take turns rollin' up to do our intended tricks on whatever curb, gap, rail or street session was happening, we all talked on music and what bands we dug were doing. My buddy Nick and I were convinced that if you can make it to an indie label, that was "making it". In our mindset it was staying true to your music, but still building a much larger presence and ultimately being heard by larger amounts of folks so you could tour. 

Who doesn't want to go on tour? Living on your own terms, driving from gig to gig, selling merch, new crowds nightly and eating truck stop food, hell, we still think its awesome. But you have the other side of the coin in which the world of Pop music exists and there in lies the perceived notion of fame and fortune as its much more appealing to the masses and ahem, brings about more suits trying to control the chess board. Yes, more suits who think of each band as just a piece of collateral to make cash off of instead of investing or the long haul.

There are a multitude of factors involved here that we won't get to, but to point matter of factly to our ideas is thus, now that the major labels are down to three with the sale of EMI to Universal, are major labels even relevant? In reality if less suits are in the mix and with a new music mindset based around internet and viral marketing, who needs a bad bank loan or generally referred to as your advance? Good bye major labels, hello hard work and reaping the benefits as it should have always been.


The home of The Beatles is being remodeled — drastically.
EMI, until now one of the four remaining major labels, is being broken up and sold off by the megabank Citigroup. After an auction that took almost nine months, French media company Vivendi, which owns Universal Music Group, will buy EMI's recorded music division and Sony Corp. will pick up the publishing arm.

Until the sale, EMI was the oldest extant major, and the last to operate independent of a parent conglomerate. Founded in 1931, its recording catalog includes music by The Beatles, Pink Floyd and Frank Sinatra and its publishing portfolio is one of the most valuable in the world. Capitol, Virgin, Blue Note and Parlophone are a few of the labels under the EMI umbrella. EMI Classics has long been one of the cornerstones of the classical industry.
In a statement, Vivendi's CEO, Jean-Bernard Levy said: "We are very proud to welcome EMI into the Vivendi family. We all respect the labels within EMI as well as the artists and employees who contribute to its success. They will find within our Group a safe, long term home, headquartered in Europe."

That press release puts the price tag at 1.2 billion pounds (about $1.9 billion). The Wall Street Journal reported earlier today that Sony Corp., which owns Sony Music Entertainment, will pick up EMI's hugely valuable publishing arm for $2.2 billion.

EMI has been on the auction block since February, when the label's former owner, the private equity firm Terra Firma, nearly defaulted on its debt and Citigroup took control. Terra Firma paid over 4 billion pounds for the label in 2007, but EMI came saddled with almost half that amount in debt. When the credit crisis struck, Terra Firma was unable to find anyone to take on that debt. In order to make the company more attractive to potential buyers, Citigroup excused most of it.
If that all seems to have very little to do with music, back in February, I wrote that the situation boiled down to:
"a large company that puts out recorded music, which was previously owned by another company that existed solely to sell it off at a profit, is now owned by an even more massive company whose only interest is in seeing how quickly — and for how high a price — it can sell that first company."
The sale didn't come about quickly. You might attribute the nine months it took Citigroup to unload EMI to the fact that one of the other major labels — the only one not mentioned so far in this story — was itself sold in May. Warner Music Group, which had been owned by an investment group headed by Edgar Bronfman, Jr., was sold to Access Industries,which owns chemical, natural resource, real estate and media properties.

In a sort of response to the shuffling of EMI from banker to megabank, Vivendi CEO Levy's statement also said: "We are confident that we will be able to create additional value for our shareholders thanks to our knowledge of the industry and our proven track record of successful integration."

To a pessimist, however, the piecemeal sale of the label — to other companies that are already invested in the record business — might seem like a sign of the industry's poor health. If nobody else but another record label could be enticed to throw EMI a life raft, this sale could look like the majors banding together as they begin to circle the drain.