The worsening woes of the (recorded) music industry

From the Guardian‘s inestimable Charles Arthur comes a must-read post on the gloomy future of the record industry. Because it’s so good, I’ve re-posted here in full:

Bad news for the music industry. And it comes in threes.

First, Warner Music (which might be thinking of buying EMI from Citigroup?) reported its numbers for the fourth calendar quarter of 2010(which is actually its fiscal first quarter). Oh dear. Total revenue ($789m) down 14% from 2009, down 12% on constant currency basis (ie allowing for exchange rate fluctuation); digital revenue of $187m was 24% of total revenue (yay!), up 2% from last year (oooh), but sequentially down by 5%, or 7% on constant currency.

Operating income before depreciation and amortisation down 20% to $90m, from $112m a year ago. All of which led to a net loss of $18m, compared to a net loss of $17m a year before. In other words, things are still bad there. And it’s still got some heavy gearing: cash is $263m, long-term debt is $1.94bn. Warner might want to buy EMI, but it would put a hell of a strain on it. And the music business isn’t exactly looking like a place where you’d want a bank putting your money.

Second, Fred Wilson, a venture capitalist who spends upwards of $60 per month – and by his estimate around $2,000 annually – on music and music subscriptions was forced to turn pirate in order to get hold of the new Streets album:

“searched the Internet for the record. It was not even listed in iTunes or emusic. It was listed on Amazon US as an import that would be available on Feb 15th, but only in CD form. I’m not buying plastic just to rip the files and throw it out. Seeing as it was an import, I searched Amazon UK. And there I found the record in mp3 form for 4 pounds. It was going to be released on Feb 4th. I made a mental note to come back and get it when it was released. I got around to doing that today. I clicked on “buy with one click” and was greeted with this nonsense “

Which was Amazon saying that because he wasn’t in the UK, he couldn’t buy it. Unable to find a VPN that would let him masquerade as a Briton, he took the next step:

“So reluctantly, I went to a bit torrent search. I found plenty of torrents for the record and quickly had the record in mp3 form. That took less than a minute compared to the 20+ minutes I wasted trying pretty hard to buy the record legally.

“This is fucked up. I want to pay for music. I value the content. But selling it to some people in some countries and not selling it to others is messed up. And selling it in CD only format is messed up. And posting the entire record on the web for streaming without making the content available for purchase is messed up.”

Well, you could argue that an inability to actually wait for the few weeks, perhaps a month, before he could hear the songs via a licensed US label was what’s messed up. Is there no other music in the world that he can hear first? Nobody else? True, it would make sense if contracts were signed so that everything happened at once. But the record industry is still rather like the book industry: because it generates most of its money from physical things, it organises itself around those things.

And finally to Mark Mulligan, music analyst at Forrester Research.Writing on the Midem blog, Mulligan points out that “Digital music is at an impasse” because “it has not achieved any of its three key objectives”, specifically:

1 – to offset the impact of declining CD sales
2 – to generate a format replacement cycle and
3 – to compete effectively with piracy.

Mulligan notes that

“the divergence between emerging consumer behaviour and legitimate music products is widening at an alarming rate. And consumers are voting with their feet: Forrester’s latest consumer data shows digital music activity adoption is flat across ALL activity types compared to 1 year previously (in fact the data shows a slight decline).”

The hope on the part of the music business that the iPod, and the iTunes Store, and then digital music stores of all sorts, would be its saviour has turned out to be false. As Mulligan notes,

“all music activity is niche, except for video. Just 10% of Europeans and 18% of US consumers pay for digital music. Only music video has more than 20% adoption (and only in Europe at that): YouTube is digital music’s killer app.”

(If you are, or know, any young teenagers you”ll know that this is absolutely true. YouTube, and of course in Europe also Spotify. The problem with Spotify being, in the eyes of the record companies, that it simply doesn’t pay them enough. Whereas in Spotify’s eyes the record companies have for too long demanded too much.)

Mulligan adds that the “transition generation” – the 16-24 year-olds – aren’t the future. Instead, the future lies with the 12-15 year olds.

“In fact, when you look closely at the activities where 16-24’s over-index [do more than other age cohorts], you can see that their activity coalesces around recreating analogue behaviours in a digital context. The 16-24’s started out in the analogue era. They are the transition generation with transitional behaviours.

“The 12-15 year olds, though, don’t have analog baggage. All they’ve known is digital. Online video and mobile are their killer apps. These Digital Natives see music as the pervasive soundtrack to their interactive, immersive, social environments. Ownership matters less. Place of origin matters less. But context and experience are everything. The Digital Natives are hugely disruptive, but their disruption needs harnessing.”

So why does this matter, asks Mulligan? Because

“current digital music product strategy is built around the transition generation with transition products to meet their transitional needs and expectations. Neither the 99 cent download and the 9.99 streaming subscription are the future. They are transition products. They were useful for bridging the gap between analogue and digital, to get us on the first step of the digital path, but now it’s time to start the journey in earnest. We’d be naïve to argue that we’re anything close to the end game yet. But the problem is that consumer demand has already outpaced product evolution, again.”

It’s time, he argues, for the music companies to deal with the world as it is, rather than as it used to be or as they liked it. Many in the business will tell you that that is exactly what they are doing; and nothing that Mulligan says in any way detracts from the (real) efforts that are being made by many record executives, who are not as clueless or uninformed as many would like to think. Instead, they’re frequently dealing with institutional and sector-based inertia that’s hard to get moving. Plus if Simon Cowell can discover a singer on a talent show and propel her to the top of the UK and US album charts (the first British act since the Beatles to achieve that), selling millions of CDs, well, is his strategy so wrong and everyone else’s somehow so right? Realities like that give even the most digital executive pause.

Back to Mulligan, who points out that

“the digital natives have only ever known a world with on-demand access based music experiences. …And the experience part is crucial. In a post-content-scarcity world where all content is available, experience is now everything. Experience IS the product. With the contagion of free infecting everything the content itself is no longer king. Experience now has the throne.”

So what’s needed? He thinks future music products need “SPARC” (no, not the Sun processor architecture). Digital music products, he says, must be:
• Social: put the crowd in the cloud
• Participative: make them interactive and immersive
• Accessible: ownership still matters but access matters more
• Relevant: ensure they co-exist and joint the dots in the fragmented digital environment
• Connected: 174m Europeans have two or more connected devices. Music fans are connected and expect their music experiences to be also.

His parting shot: “Music products must harness disruption, that isn’t in question. What is, is whether they do so quickly enough to prevent another massive chunk of the marketplace disappearing for good?”

I think Warner may have answered that already, actually.

My commentary: after reading this, if you were a music industry executive you’d probably want to slash your wrists. But things may be both worse and better than it seems  for the big music publishers. Here’s why.

Firstly, experience can be excluded, branded and sold. The predominant form of musical experience today is not the download but the live music festival or concert. Large multinationals are already aggressively into this space (think LiveNation) and we should expect this to continue. Secondly, experience can be a good as well as a service: that is, really well produced and packaged vinyl can be an experience (although only a niche experience – but then again, all music is niche now anyway). Finally, certain aspects of the music market are not being disrupted in the same way as downloadable songs – for instance, royalty streams where the end customer is large enough to warrant legal pursuit by collection agencies.

On the other hand, in some ways, things really are as bad if not worse than the Forrester report suggests. Free music is not going away, and today’s teenagers really don’t expect to pay for it. That battle is over. So the future for recorded music may really be truly non-excludable and free. That’s a challenge that no-one in the industry seems willing to face up to, even those advocating streaming or subscription models. Finally, the recent history of the music industry suggests that music publishing executives – indeed, musicians themselves – struggle to understand the new paradigm, even twelve years after Napster.

Why are orchestras so worried?

From my article on the ABC’s The Drum/Unleashed website today:

… when we talk about cultural policy in this country, the debate is always dominated by one issue: funding for cultural institutions. That’s not because they’re more worthy, more noble or more excellent than all the other things a cultural policy might fund or regulate. It’s because a noisy and well-organised arts lobby has made cultural policy all about funding for a small number of privileged organisations.

And how they scream when someone – anyone – suggests that perhaps we should take a second look at the status quo.

In late July, for instance, prominent composer and opera director Richard Mills let loose a cannonade in The Age, blasting attempts to “to advocate a radical reallocation of government funding” and launching a bizarre assault on the cultural validity of art forms like jewellery and new media arts, which he memorably described as “meretricious, self-serving claptrap.” The article was apparently an excerpt from a piece commissioned by the Australia Council itself, and is due to appear on its website soon.

The tirade was picked up by The Australian a week later, in an article by Rosemary Sorensen which gave Mills’ views a prominent splash in the national daily’s arts pages.

“From where I sit,” says Mills – the composer is also artistic director of West Australian Opera – “these don’t seem to be friendly times for the major performing arts sector and there is, in the industry, a perception of subliminal disapproval of our work emanating from Canberra that is puzzling and frustrating.”

On ABC1 News in Sydney this week, the Australian Chamber Orchestra’s Richard Tognetti went even further, whipping up a non-issue into a frenzy of fear and loathing. In one of ABC News’ less balanced efforts, viewers were informed – literally while violins played in the background – that “leading orchestras fear for their future because of potential government funding cuts”. There are no cuts announced, of course – but that didn’t stop Tognetti from warning that “one of the orchestras or leading companies might be destroyed.” Wearing his hippest flannelette shirt, Togentti was given just enough rope to say some very silly things indeed… such as “it’s a bit like saying we’ll burn all the books because we’ve all got iPads now.”

The heritage wars heat up

The Adelaide Symphony Orchestra plays Mahler in 2007. Source: Victoria Anderson

Well well, who would have thought an essay about cultural policy would generate so much heat?

A book chapter for the Centre for Policy Development by Marcus Westbury and myself has started to gain some serious attention in the high arts in Australia. I’ve already covered Richard Mills’ reaction to it here. But today in The Australian, there is a long article from Rosemary Sorensen about the debate, which includes the first formal response from Australia Council CEO Kathy Keele:

Australia Council chief executive Kathy Keele agrees that the dichotomy is unhelpful. “It’s not either-or,” she says, “it’s about doing it all.”

While she welcomes the debate, Keele does say that Westbury, who has created festival events under the Australia Council’s banner and also helped write one of its arts guides, has not done his homework well enough.

“He’s talking about an Australia Council that does not exist,” she says. “This whole conversation about heritage is not relevant: it’s really that we need more funding for the arts across the board.”

Keele laughs off the idea that an orchestra playing Bach or a theatre company performing Shakespeare is somehow out of date because the composer or the playwright is no longer with us.

“The people going to see it are not dead,” she says.

“Those performances are still about today.”

Of course, regular readers of this blog will know that this is in turn a misrepresentation of Marcus’ arguments, and I humbly suggest Keele should have a careful read of our essay. In it, we don’t actually say that Shakespeare or Bach are “out of date” because they are “no longer with us”, but we do point out the Australia Council’s overwhelming funding bias towards a small number of cultural organisations and a narrow range of cultural expressions.

As we point out in the essay, while there is substantial funding for organisations to perform works by Bach or Shakespeare (including funding for an entire company devoted to Shakespeare), only 2% of Australia Council music funding goes to contemporary music, only 5% of the arts funding in this country is devoted to living artists making new work, and the Australia Council gives five times as much funding to one opera company as it does to its entire Aboriginal and Torres Strait Islander Arts Board.

The debate is set to continue, so stay tuned.

Richard Mills tries to defend the heritage arts; fails

I couldn’t let this one go … distinguished composer and WA Opera Director Richard Mills had a wonderful defence of the heritage arts in The Age last week. Sounding like a critic trampled in the riot on the first night of Stravinsky’s Rite of Spring, Mills thunders on about the new media arts in a tone that would be shocking if it were not so risible:

Some recently emerging mumbles in the national conversation appear to advocate a radical reallocation of government funding to various enterprises seen as exemplifying greater diversity of engagement, relevance (to whom or what is never stated) and, of course, innovation. I suppose I should begin by nailing my colours to the mast through making this confession.
I was a member of the Australia Council for the Arts in the 1990s when the New Media Fund was set up. I opposed it vehemently – and in vain – as it seemed to me just another example of meretricious, self-serving claptrap, which confused content with process, masquerading to the weak-minded as new, with a healthy sense of entitlement to whatever funds might happen to drop from the perch of government.
To educate and enlighten my misguided ways, I was taken to an office in Melbourne by an earnest, believing colleague. This office was the hub of revolutionary “new media” enterprise. I was ushered in and shown, in an atmosphere of hushed reverence, some examples of “new media” which, so far as I could tell, consisted of pictures of yellow flowers changing and moving about a bit on a TV screen.
“Humbug,” I exclaimed, “this belongs to the visual arts” – only to be howled down by the entire clutch of councillors of the day (except, if my memory serves me correctly, Christopher Pearson).
Thankfully, this nonsense, and other things like it, were recognised in their true colours some years later when my esteemed colleague Jonathan Mills (no relation) encouraged the abolition of the New Media Fund with enthusiasm – and final success.

Apart from the important new revelation that we can sheet home some responsibility for the abolition of the New Media Arts Board to Jonathan Mills, the article is an amazingly short-sighted defence. I’ve responded over at Inside Story:

Like the best satire, Mills’s essay skates close to the ridiculous. (When was the last time someone cried “humbug” in a policy discussion?) As spoof, Mills’s essay is a near-masterpiece. As sincere argument, it’s a train wreck. Mills gloats over the destruction of the Australia Council’s New Media Arts Board in 2004, as though it were some victory in the culture wars. He advances factually wrong statements – for instance, that grassroots music depends on musicians trained by symphony orchestras for the supply of expert teachers. He makes frankly embarrassing comments about jewellery and computer programming. More generally, in his rage against the dying of a light, he reveals himself to be as reactionary and ill-informed about other artforms as he is proficient in his own.

Mills’s essay is destined to become an important source document for those studying the current shape of Australian cultural policy. Sadly, one of Australia’s finest living composers has shown himself to possess a narrow critical mind. But Mills has also done us a favour, because he has been honest enough to reveal a widespread attitude among influential decision-makers in the Australian arts: the attitude that some forms of art, particularly their own, are more meritorious than others.

Big record labels sue gyms and win big

Gyms that play copyrighted music in Australia are up for a big hike in their licensing fees. Image: Chicagonow.com

Today marks another victory in the inexorable legal campaign for more licensing fee revenue by big Australian record labels, led by their industry body, the PPCA.

As Bellinda Kontminas in The Age reports today, the Copyright Tribunal has ruled that gyms must now pay significantly greater royalty fees to labels for the right to play copyrighted music to exercising gym-goers:

The decision, handed down today by the Copyright Tribunal, means that fitness centres will be slugged $15 each class for the use of the music or $1 per attendee of each class.
Gyms had previously been charged 96.8 cents a class, with a cap of $2654 a year.
Fitness Australia said it was “disappointed” with the decision which it said represented a 1500 per cent increase in music costs for an average-size fitness centre.
Chief executive Loretta Stace said it was now reviewing the decision to determine whether there were grounds for appeal.
She said record companies had “shot themselves in the foot” as many fitness centres were already starting to use music that was not subject to PPCA copyright.
Susan Kingsmill, owner of Hiscoes Fitness Centre, said music artists would would now be disadvantaged.
“This decision will lead all fitness centres to seek more affordable music alternatives to the detriment of Australian performing artists, but the artists only have the record companies to blame for this.”

For those of you not aware of the background of this case, it stems from a similar suit brought by the PPCA three years ago against the nightclub industry, in which the big labels similarly won a massive royalty hike. I covered that decision, and the opaque governance structure of the PPCA, in an in-depth article for Arts Hub in 2007.  Representing around 75% of the recorded music industry by sales, the PPCA is effect a legalized cartel (like APRA, it even has a special dispensation from the Australian Competition and Consumer Commission in order to operate as a monopolistic collection agency).

The decision is something of a win for the big labels, who have run into serious troubles in the past decade owing to high debt loads, falling CD sales, rampant downloading and an industry shift towards touring and merchandise.  It’s also another example of the increasingly skewed nature of copyright law in Australia, which is now titled decisively towards copyright holders, like famous artists and big publishers, and away from rights-users, like libraries, schools and gyms.

Links – 11th May

1) Google Editions analysis: Robert McGarvey thinks that Google Editions “is rewriting all the rules of book buying“. Also worth a look is Megellan Media’s blog by Bryan O’Leary.

2) Independent games developer Jarrad “Farbs” Woods was recently named by Game Developer magazine as one of the 50 most important contributors to the current state of the games industry. Here, an interview.

3) The second-largest video rental chain in the US plans to liquidate. Could Blockbuster be next?

4) Despite downloading, recorded music sales are in fact rising in 13 territories. One US indie label is still making a profit selling CDs.

Illegal downloading in Australia

A snapshot of illegal downloading in Australia. Source: CoreData/news.com.au

CoreData and news.com.au have teamed up to survey more than 7,000 Australian consumers about their illegal downloading habits.

While we don’t know the full methodology, the survey is one of the largest and certainly the most current snapshot of consumer behaviour in this field.

And, for those of us who have been following the technology-related troubles of the cultural industries since Shawn Fanning invented Napster, the results should not surprise:

Most people who illegally download movies, music and TV shows would pay for them if there was a cheap and legal service as convenient as file-sharing tools like BitTorrent.

[…]

The survey canvassed the attitudes of more than 7000 people who admitted to streaming or downloading media from illegitimate sources in the past 12 months.

It found accessibility was as much or more of a motivator than money for those who illegally download media using services like BitTorrent.

More respondents said they turned to illegal downloads because they were convenient than because they were free, when it came to all three types of media covered by the survey — TV shows, movies and music.

And more than two-thirds said they would pay for downloads from a legitimate service that was just as convenient if it existed.

The hypothetical legitimate service was described as giving users access to TV shows, movies and music they wanted, when they wanted them, without ads or copy protection.

This survey is more evidence, if any more were needed, that the key barrier to a paid content future remains industrial competition and the strategic errors of big cultural businesses, rather than the rampant illegality of ordinary consumers.

Of course, some will protest that consumers are simply lying in such a survey.  But a more convincing explanation is that the cultural industries are yet to give consumers exactly what they want, and that this explains the slow uptake in digital content payments. It’s also another example of the problem of rivalry and excludability in the content industries: compare the prices Australian consumers say they are prepared to pay for downloaded movies (approximately $2 dollars) to the average admission price of a cinema ticket here (as high has $17 for a first-release movie). You don’t need an MBA to see the revenue gap there.

Can studios and record labels make money on prices like these? Of course they can, especially if new business models are created. But that’s not what Big Content will tell you. They’ll use data like this to lobby for more stringent industry protections, in the form of draconian copyright legislation and other anti-competitive regulations.

Spotify and Lady GaGa

Lady GaGa leaves her London hotel, March 2010. Image: Rolling Stone

I don’t think I’m alone in the world in expressing my sincere admiration for the sheer artistic commitment of Stefani Germanotta, better known to her millions of fans as Lady GaGa.

While an in-depth critical dissection of the songwriting, performance and (perhaps most notably) entrepreneurial talents of contemporary music’s hottest new star are outside the scope of this blog, I will probably post something about this fascinating artist from a musicological perspective down the track. (Just one thing that intrigues me: GaGa’s Italian-American ethnicity and the clear inspiration she seems to have taken from another Italian-American, Madonna).

But GaGa’s relationship to the changing economics of the music industry certainly is a topic of this blog. And that’s been much in the news lately, with the revelation that Spotify, the hit new streaming wesbite based in Sweden, paid GaGa only US$167 for more than 1 million downloads.

The news quickly spread around global media, as horrified musicians and collection agencies mobilised to fight the latest threat to artistic livelihoods. Sam Leith has weighed in at The Guardian, as have a number of other commentators.

So, is this more evidence of the internet destroying recorded music as we know it? Well … no, actually, as Steve Lawson points out:

[The original report about the Spotify royalty] does mention that she’s had 20 million paid downloads. 20 MILLION paid downloads. (that warrants a Dr Evil pinky-in-the-corner-of-the-mouth pose).

Yup, that’s not the headline, that her digital strategy that includes Spotify has lead to her selling 20 MILLION downloads – in an age when any of those 20 million sales could’ve been grabbed from a file sharing service or copied from a friend (I’m taking a wild guess that Lady Gaga fans run in packs – she doesn’t strike me as the kind of artist that appeals to the friendless reclusive goth kid with the idiosyncratic taste).

Lawson concludes that even if Spotify only functions as a streaming radio service, the artists are still winning.

In fact, Spotify has since responded to the criticism by saying that the $167 figure was only a small part of GaGa’s royalty earnings. According to Paul brown of Spotify, quoted in Billboard,

“This figure is over 15 months out of date and relates to a short period of time, just after Spotify had launched back in late 2008 and is not an accurate or current reflection of the total royalties paid out to an artist and composer like Lady Gaga. It also only relates to royalties due from STIM (the Swedish collecting society) in respect of plays in Sweden ONLY and none of the other markets.”

On the other hand, there is no doubt that the revenue streams once available to artists from music sales are far less than they hay-days of the 1980s and 90s, as Peter Kafka points out in this post:

Remember when people used to predict that digital music sales would make up for the disappearing CD? That’s officially over now: Last quarter, for the first time ever, the number of digital songs sold in the U.S. declined.

More on Spotify: Information Is Beautiful has a typically impressive post about this very point, and the Guardian’s Charles Arthur has an excellent post breaking down the known information underlying Spotify’s business model.

Ticket prices for music festivals skyrocket … and the punters can’t get enough

The crowd enjoy the performance of The Flaming Lips at Splendour in the Grass 2009. Image: Sportsgirl

The announcement this week of the biggest-ever line-up for the Splendour in the Grass music festival underlines one of the most important trends in the music industry of the past few years: the triumph of the gatekeeper.

What do I mean by this? Literally, the importance of high fences and hulking security guards to the future of the music industry. As sales of recorded music have fallen since the late 1990s due to rampant downloading, the music industry has responded by transforming itself into a predominantly live industry. The result is  that music festivals and the live performance circuit have become more important to the economics of music than at any time since Edison invented the phonograph.

A recent article in the Los Angeles Times about California’s Coachella festival confirms the trend:

“We almost didn’t do Coachella this year,” said Paul Tollett, 44, the organizer and founder of the 11-year-old show, which is promoted by concert heavyweight Goldenvoice and owned by AEG in Los Angeles. “We felt the economy wasn’t looking so hot. But festivals seem to be hanging in there, and I’m as surprised as anyone.”

The sellout is all the more noteworthy given a change in pricing this year that does away with single-day $103 tickets in favor of one entry fee for all three days that, with service charges, pushes the cost above $300.

“Coachella has been established as a tribal rite among hipsters who go just so they can say they’ve been there,” independent music industry analyst Bob Lefsetz said of the sellout.

Here in Australia, music festival prices have also spiralled without any apparent effect on demand. Splendour in the Grass is charging close to $500 for 3-day tickets, once camping is taken into account, but the stellar line-up and strong reputation of the festival (once based in Byron Bay, NSW and this year moving to Woodford, QLD) is still luring huge interest.

As the L.A. Times article observes,

Live music is thriving, even as other parts of the music industry are faltering. Recorded music continued its downward spiral, with U.S. album sales falling 8% in the first three months of the year, according to Nielsen SoundScan. Even digital music, which had enjoyed a drumbeat of increasing sales, fell 1% in the first quarter, its first such drop since 2003, when Nielsen began tracking digital downloads.

But worldwide concert ticket sales busted through $1 billion in the same period, up 6.2% over the same quarter of 2009, another surprising first given that the quarter typically is slow for concerts, according to Gary Bongiovanni, editor in chief of Pollstar, a concert industry trade magazine.

The growth of the live performance industry is a vindication of the theories of thinkers such as Corey Doctorow, who wrote in a 2006 article entitled Giving It Away that:

This isn’t the first time creative entrepreneurs have gone through one of these transitions. Vaudeville performers had to transition to radio, an abrupt shift from having perfect control over who could hear a performance (if they don’t buy a ticket, you throw them out) to no control whatsoever (any family whose 12-year-old could build a crystal set, the day’s equivalent of installing file-sharing software, could tune in). There were business models for radio, but predicting them a priori wasn’t easy. Who could have foreseen that radio’s great fortunes would be had through creating a blanket license, securing a Congressional consent decree, chartering a collecting society and inventing a new form of statistical mathematics to fund it?

Who’d have thought the music industry would end up thriving by effectively giving away most of its recorded product for free (albeit illegally) over the internet, and instead returning to the tried-and-tested model of constant touring and performance perfected by medieval troubadours?

More turmoil at EMI

Image credit: The Guardian

The death throes of former music publishing giant EMI continue, with the announcement of the resignation of CEO Elio Leoni-Sceti. As the Times Online reports,

Mr Leoni-Sceti, who joined 18 months ago, was drawing up a business plan to save the label and was due to present a plan to bring in new investment in the next eight weeks. But [Chairman of EMI, Charles] Allen said he had chosen to leave: “Elio thought he had done what he had been asked to do.”
In a story familiar to followers of the US newspaper business, EMI was taken over in a leveraged buy-out by private equity firm Terra Firma. Terra Firma’s mogul, Guy Hands, has reportedly alienated many artists on the label’s roster with his aggressive cost-cutting techniques, but departing artists are the least of his worries.  Although EMI’s music operations are actually making money, the group is buckling under the weight of massive interest repayments on the approximately 2.6 billion pounds of debt Hands  borrowed in order to buy EMI in 2007. As a result of write-downs and these debt repayments, EMI lost 1.75 billion pounds last year.