Despite the hasty assumption of my last post, apparently the discussion continues for EMI shareholders as to which of their current suitors to go with – it’s an interesting moment. Their choice will of course be driven by the best value to them, however the impact of their choice could have an important influence on the direction of the entire industry. If the Warner deal comes back on the table, it will be a further consolidation – there’s a sweetener in the wings for the Indies apparently linked to this in exchange for their not objecting to it at the EU – but that won’t in itself solve anything. All that will happen is that further cost will be stripped out of the company – more merging of back-end systems – that will take at least another year – but no real addressing of the long term troubles of the recorded music industry.
If “lucky” Jim Fifield returns to the fold, it is very hard to predict what might occur. He did a very good job in the 80s of stripping cost out of a bloated and inefficient EMI, and he did negotiate the beginnings of one or two prescient digital deals before he left. He has a key partner still inside the company in Roger Faxon who is currently the head of EMI Music Publishing. Fifield remains however something of an unknown in this – he was never seen as a particularly artist friendly executive.
If Guy Hands’ Terra Firma private equity bid succeeds there will be the opportunity to deliver a completely new solution and start the urgent work need to redefine the platform for a wholly digital industry.
The first wholly digital music industry will have enormous opportunities assuming that it can establish new rights agreements and make a decisive shift away from selling physical units to selling access to the music. That is an enormous assumption but the thought process is already underway and many people working around the broader industry are starting to recognise the validity of this kind of approach. The aim must be to monetise the enormous amount of downloading across networks as a baseline revenue stream upon which a whole new raft of businesses can start to compete and build real added value.
In a consolidating market, shareholder action will have significant impact on an entire industry.