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Struggling EMI merges Capitol and Virgin Record labels
• Heads roll as music giant refocuses on digital marketplace
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By
The Minx, Entertainment editor
Friday,
26 January, 2007
Troubled record giant EMI has announced plans to merge its two principal American record labels, Capitol and Virgin.
Hundreds of staff are expected to lose their jobs as the British company struggles to find £110m in cost savings after a bad year's trading in 2006.
Among the fall-out, Capitol head Andy Slater loses his job. The merged company will be run by Virgin Records boss Jason Flom who takes over as chief executive in North America charged with ending EMI's long running failure to find successful US Acts.
EMI is the world’s third-largest record company but a late fourth in the US. Last year its album market share was 10.2 per cent well behind its closest rival, Warner Music, which ended 2006 on 18.1 per cent. Universal Music had a share of 31.6 per cent. EMI employs just over 2,000 people in the US.
In a letter to staff, Eric Nicoli, chief executive of EMI, said that the “changes won’t be easy” but added they are “absolutely necessary for our business to succeed in a world where fans are ever more demanding and expect instant access to their favourite artists and music”.
Nicoli also indicated that EMI would “focus on building our digital capability” — a tacit admission that the company is behind its rivals. EMI is the only one of the four music majors to have failed to sign a licensing agreement with YouTube.
The new operation will take the Capitol name, and will, Mr Nicoli told staff, “retain a presence in Los Angeles and New York”, maintaining A&R operations on both sides of the United States because the company remains “strongly committed to developing artists in America across all genres”.
Flom’s background is in rock and pop, and there is speculation that EMI will try to appoint a head of urban music, where it is particularly weak. The boss of the combined label group will report directly to Mr Nicoli, although it remains possible that the British group will appoint a North American head at some stage.
(The company's mega-million deal with UK popstar Robbie Williams has attracted criticism after disappointing sales of the megastar's latest, self-indulgent, album Rudebox).
On the Lam 2007
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