Guy Hands, the private equity boss who bought EMI last summer, began the painful process of shrinking his company today, announcing that he’ll cut 1,500 to 2,000 jobs — more than a third of the label’s workforce. We don’t have details on the cuts yet, and it will be years before we know if Hands’ plan will work.
But as much as it stinks for the about-to-be-fired EMI employees, cutting the company’s payroll is a no-brainer. We could make the argument ourselves, but why not hear it from an industry insider? Here’s an excerpt from a BBC Radio interview with Chris Morrison, who manages the Gorillaz, one of EMI’s bigger acts.
Q:”How do you think people will react, if as expected, 1500-2000 jobs are cut, suggestions that EMI’s music roster of 14,000 artists will face a clearout. How will the industry react to that?”
“I would expect that in the future A and R, the signing of new acts, has to be far more efficient than it has been in the past. There has long been a phrase that it is a 80-20 business; that for 80% of the artists you sign lose money and only 20% make it, which is the excuse for keeping the royalty level at the level that the record industry takes it.”
Q:”If the reports of Mr Hand’s plans are correct, he plans to expand the A and R talent scout team which accounts for 6% of staff while cutting 400 middle managers and hundreds of other staff.”
“I think he has got to run his business as he sees fit, but he has invested an incredible amount of money into the record industry at a time when the record industry is suffering great difficulties. Although the difficulties would appear not to be just in volume, the difficulties are far more in the fact that the value of recorded music has been eroded considerably”
Q:”The music industry has gone through many dramatic changes, especially since the introduction of the internet, so maybe this step, a much leaner music operation, is a sign of the future.”
“I think it would be very good, the industry needs to be leaner and meaner, and the thing is when he bought it.. what I find difficult is some of the managers that are making a fuss about it have long mentioned to me that that they think there are inefficiencies in the record industry. When somebody pays a lot of money and buys a company and comes in and makes changes, some of those are going to be very difficult for people who work within that business. But maybe they are necessary, also it is far to premature to tell if he is right or wrong. He has got the right to do that considering the amount of money he paid for it.
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