Has Guy Hands Already Lost His Way?
Or did the head of new EMI owner Terra Firma ever even know his destination?
Help me out here…When you have a minute read yesterday’s leaked memo to his staff (full text here) as well as his post-Radiohead-loss memo of just weeks ago (here). Is it me or does this sound like the meaningless babble of someone who has just taken over a large business that he has no idea what to do with?
"(I see the) need for fundamental change in how we approach the music business and how we deliver the interconnected triangle of the consumer, EMI and the artist," wrote Hands yesterday.
FILL IN THE BLANKS – For the underlined words substitute auto business, consumer, Ford and dealar or try agri-business, farmer, Monsanto and potato. Isn’t this the same babble has been sinking corporate ships for decades.
If EMI were still a public company, I think the markets would punish him. Or am I being too harsh? To quick to judge?
Absolutely nothing can be inferred from the above quote. In addition, the fact that EMI is now a privately owned company means the company can worry less about the perception of leaked memos.
As for the entire message, I think it’s fine. Hands does not need to know the details of the music industry, he needs to be able to steer it in the right direction. Strategic thinking should be broad in scope. Hands will work later on the details by managing and delegating those duties to the specialists.
The memo shows Hands does not expect change overnight, and he understands he has to untangle a structure that has been built over decades. A private owner is probably in a better position than a public company to grapple with these kind of long-term challenges.
Glenn,
You almost had me until “Hands does not need to know the music industry…”
Of course he does. Or he better higher someone who he trusts that does pronto. EMI is not a just human resources or management problem…its part of an industry in turmoil.
“A sailor without a destination cannot hope for a favorable wind.”
– Leon Tec
Bruce –
You are absolutely right. This was not a business deal for Hands – it was an ego deal. See my post today.
Check out the Ad-Supported Music Central blog:
http://ad-supported-music.blogspot.com/
Terra Firma never had a strategy for the music industry. They are a hedge fund, not a long term investor.
The plan was to copy the trick Bain Capital did with Warners (if only they had sold to EMI last year, but in that deal was a least one big ego involved …). Terra Firma had the bad luck to buy just as the subprime crisis changed the financial landscape. They paid 260 pence per share. In 2003 EMI shares traded under 100 pence. Is the company / the recording industry / the economy today in a better shape than four years ago? I don’t think so.
EMI’s problems are hardly unique. But rather than point to F and MON, a more relevant comparison shd be with other industries facing digital competition like newspapers, TV, movies. Very few incumbents in those industries have figured out how to survive (let alone thrive) in the digital world. In fact, you might conclude that the ONLY way to win in the digital world is to start from scratch.
BTW did you know that MON is the largest “chemical” company in the world? Bigger than DuPont. They reinvented themselves, overcame Luddite opposition and are doing a lot better than their old parent PFE.
The problem with major labels is they are all populated by the “old boys” who are still trying to fix today’s problems with yesterday’s solutions, and STILL have enough power over the landscape to continue resisting for a few more years, any fundamental change that would result in them making less per song, whoring artists out less, or having to account transparently to artists.
They still need a few more years to bleed. And bleed they will… meanwhile entreprenuers and newer indies / full service entertainment companies will slowly eke their way into dominance… it is the way of things.