Guy Gets His Hands On EMI

Guy Hands looks to have grabbed EMI at the throat by threatening to drop artists who aren’t working hard enough and promising to "unpick" its own executives’ pay packages.

"While many [artists] spend huge amounts of time working with their label to promote, perfect and endorse their music, some unfortunately simply focus on negotiating for the maximum advance . . . advances which are often never repaid," he wrote in a widely leaked internal memo.

Announcing that unsuccessful acts will be dropped is hardly introducing a new business strategy to the recorded music industry, which has often been charged with not giving some talent sufficient time to develop properly.

"It will be open to us to choose which artists we wish to work with and promote," he wrote.

Coming from a man whose Terra Firma private investment group paid £3.2 billion (US$6.7 billion) to buy EMI at a time when credit markets were starting to tighten, a plan to can acts who aren’t cutting it sounds less like an oft-repeated record company mantra and more like a promise.

A battery of speculation from the weekend business pages is hardly necessary to see that Hands will have to find deep cost savings to make the deal work.

What worries him, he says, is that existing structures have been put in over a couple of decades and unpicking them is not going to happen overnight.

In September he described EMI as the worst business in the most challenged sector, and is now promising to set out "a coherent, high-level vision" for the company early in 2008.

What will concern those with the job of scouting for talent for the label and likely amuse their counterparts in the live music business is Hands’ challenge to how his creative execs get paid.

He’s concerned that EMI’s compensation system rewards senior recording executives for signing up new acts, regardless of whether EMI makes a return on the advance.

Is he suggesting record company A&R staff be paid on results?