EMI and Blind Acceptance

Speaking of the slow, painfully public death of record labels, the new owners of EMI (Terra Firma Capital Partners) are not having an easy time. Surprisingly, musicians are much more difficult to manage than generic widgets.

As the chief executive of Terra Firma Capital Partners Ltd., Guy Hands controls companies that lease jets, operate natural-gas pipelines, and, most recently, sell music.

The big difference among those businesses is Mr. Hands doesn't have to worry about keeping the planes or the gas happy. But the musicians signed with EMI Group Ltd. are a different story -- and they've been less than pleased with the British private-equity mogul.

The Rolling Stones are considering leaving EMI, as Paul McCartney, has.
"He's either really stupid, or really smart," says Jazz Summers, who as chairman of an organization called the Music Managers Forum has found some of Mr. Hands's statements "not very artist-friendly," but credits him with taking a big gamble on EMI.

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People who do business with the company say that Mr. Hands has inadvertently contributed greatly to the alienation among artists and their representatives. A series of missives and remarks by Mr. Hands has given many in the artist community the impression that he is out of touch with many realities of the music business -- including the need to carefully soothe the artists who actually make the hits.

On top of that, key portions of the restructuring plan Mr. Hands unveiled last week, which includes as many as 2,000 job cuts, some complain, treats music as an ordinary consumer product that can be marketed and sold in various territories like soap.

[From Can New EMI Owner Strike a Chord? - WSJ.com]

"Suckers and Liars, Get me a shovel" Some CEOs are damn devils.

Music is not an object that can be bought and sold on the open market, it is an art, and thus needs to be treated with a bit of respect.

In an interview, Mr. Hands says the music industry spent too much time fighting piracy with lawsuits and other tactics, rather than dealing with the situation. "Instead of spending millions shutting down Napster, it should have been working harder," to find new ways to convince people to pay for music, he says.

Mr. Hands got off on the wrong foot last October with an internal memo that found its way outside the company. He wrote that EMI should be "more selective" about which artists the company signs, as many don't work hard enough to promote their music. These performers, he complained, "simply focus on negotiating for the maximum advance... advances which are often never repaid." Many artists and managers felt insulted by the comment, which was widely discussed in the music business.

When Mr. Hands tried to patch things up at a series of dinners with prominent artist managers, he got a chilly reception. At a London restaurant he described to several managers Terra Firma's track record, including its stewardship of United Kingdom movie theater chain Odeon Cinemas Ltd., telling them "the cinema business isn't the movie business -- it's the popcorn business," recalls Mr. Summers, of the managers' group. Mr. Summers, whose clients include EMI artists Badly Drawn Boy and the Verve, found the remark insulting to musicians: "I told him he's dealing with artists, not popcorn."

It hasn't helped that Mr. Hands, having ousted EMI's senior management, still hasn't named a new chief executive, choosing to run the company himself on an interim basis and bringing in music-industry outsiders for key roles. At the same time, some key industry veterans have been shown the door, including Tony Wadsworth, a respected executive who oversaw the company's British operations for 20 years -- including the long, steady erosion of the company's market share on its home turf. Among those brought in was Mike Clasper, the former chief executive of the British Airports Authority.

"They're bringing in a lot of executives from other industries," said Dave Holmes, manager of Coldplay, one of the biggest acts left on an EMI label. "I would say that's worrying. It's not very comforting to me."