The music industry, like many industries is in a constant state of flux, the slightest changes in style or technology can bring about a completely new target audience or musician, and like all music industries EMI has to spend billions of pounds to stay at the forefront of new music and in the ‘black’.
EMI traces back to the beginning of recorded sound, developing one of the first gramophones, and so has always been one of the first companies to notice and develop with any changes in technology. When digital music was first developed in the 1990s, unsurprisingly EMI was the first to notice and cash in on the digital phenomena sweeping the globe.
The CD was first developed in 1979, and revolutionised the way the consumer may listen to music, with no more need for large turntables, CD players became much more versatile and so did the ability to personalise the cover with a picture or logo. With digital music the same occurred. Entering the 1990s the ‘era of digital music’ had just begun, with no more need for CD burning, the creation of a track can be made almost immediately via a computer and marketed in seconds of its recording, cutting out the middle-man that is the record store, and moving into the new market of online retailers such as; Amazon and iTunes.
EMI’s first websites went on in 1993 and 1994, and were the first company to stream an entire album, Mezzanine by Massive attack in 1998. The next year EMI was the first company to release a completely digital album to download, David Bowie’s …Hours. They also released the first digital video single, Lenny Kravit’s Dig In, in 2001. In 2002, EMI was found to be the first music company to release all of their newly released tracks digitally to consumers as well as making them available for radio stations. This lead in 2007, to them being the first music company to release all tracks without DRM (Digital Rights Management), giving their tracks a much higher quality than that of their competitors.
In May of 2007, EMI was bought by the private equity firm, Terra Firma for $6200 Million. After the offer was accepted, Terra Firma took control of the company late into 2007, removing EMI’s shares from the London Stock Exchange.
EMI not only has a broad spectrum of physical music, in the form of CDs and Music, they also sell digital music via hundred of retailers world wide, partnering with other companies to find new, constructive ways of helping consumers find and enjoy their music, new initiatives include subscriptions and online radios/Jukeboxes, digital car stereos, mobile phone ringtones and videos. Their ability to synergise with these companies, allows EMI to draw on profits from various areas, whether it be mobile phones or subscriptions to their websites.
EMI’s other recent enterprises include the acquisition of independent music company Mute in 2000, with artists such as Moby and Depeche Mode under their umbrella. They also bought the 45% stake in the Japanese owned Toshiba-EMI held by Toshiba Corporation, giving them the 100% majority.
EMI continues their expansion globally, priding themselves on their catalogue of foreign music including; Utada Hiraku (Japan), Wir Sind Helden (Germany), Cali (France), Bebe (Spain), Thalia (Mexico) and many other artists, on top of that, they hold some of the best artists across America and England.
The audience that EMI caters to is massive, owed to the diversity of their music. They are a world famous label, with world famous artists. The development of music continues, and music industries have to be able to mould new music into something the consumer likes, and wants to go out a buy or download at home, and as a new genre develops EMI always has artists to meet demand, and so keep a profit.
Emi as well as being as a music conglomerate, sees that through music they may affect the lives of people and cultures around the world, and so works to contribute positively on the lives of people, even if they can’t hear the songs they make, by releasing charity singles and funding projects around the world. Emi also has the ethos that they want their company to have a positive impact on the business and through that their employees.
The takeover by Terra Firma, restored Emi’s accounts, as it was saddled with lots of debt previously, and allowed them to expand their back catalogue and regenerate. The music market continues to expand, and Emi and other music companies continue to make a massive profit. The removal of singles from high-street stores has pushed forward download over the internet, on iTunes and other stores, making it easier for the consumer to download, listen and play on their iPhone and other products.
Emi recently signed a lucrative contract with apple to allow their music to feature on games, on their newly released iPhone, which brings their music to a new field, and may lead to the consumer liking the song and downloading it. Emi not only makes profit from track sales, it makes profit from the sale of merchandise, including; DVDs, t-shirts and sheet music. These do not make Emi its’ greatest profit, but it ensure brand loyalty, and for every person who buys and wears a t-shirt they get free advertising.
Going into 2008, EMI announced a series of wide-ranging initiatives within its Recorded Music division to enable the group to become the world’s most innovative, artist friendly and consumer-focused music company. The chairman of Emi, Guy Hands, unveiled various changes which would reshape the business to reflect the rapidly changing nature that the music industry is. These changes included:
- Developing a new partnership between Emi and its artists, based on trust, helping new artists to monetise their work, doing the same to their existing artists. They would do this by opening new branches of income, focusing mainly upon digital services and corporate sponsorship arrangements.
- Bringing all wings of Emi’s key support activities including sales, marketing, manufacture and distribution under one, single division, with a unified global leadership, reducing the gap between artist and the finished music.
The changes were implemented over the next six months, and saw more groups invest in Emi’s A&R [1]branch, both to identify and sign new and promising bands and artists and maximise the roster that Emi already held.
([1] Artists and Repertoire (A&R) is the division of a record label that is responsible for talent scouting and the artistic and commercial development of the recording artist. It also acts as a liaison between the artist and the record label.)
The restructuring continued through Terra Firma’s three month consultation of Emi and its takeover, and the measures implemented all come from suggestions by staff, artist or their managers. Terra Firma takes the stance that to develop Emi they have to work with all their branches to make it work and prosper.
The restructuring however came with different reasons other than to recreate Emi. The reduction will enable the group to become more efficient but behind this it cuts costs of over £200 million a year, the restructuring lead to a worldwide headcount reduction of between 1,500 to 2,000 people.
Recently, just into February 09, Emi released new that their digital revenues grew to £102 million since September 08. The 38% rise comes at the end of a year of intense cost-cutting and appears to have shielded the job cuts suggest by Guy Hands.
The profits however of the interim year show a sharp decrease in their profit margins and increase in their outgoings, but the growth in digital media may have increased their overall profit but leaving them a lot less profit to use to develop, especially while still going through a restructure.
Interim report 2008/09 Half Year Maltby Income Statement

[1] EBITDA - Earnings before interest, taxes, depreciation and amortization
[1] Depreciation is charged before calculation of profit, on the grounds that the use of capital assets is one of the costs of being in business and one of the contributors to profit.
[1] Amortisation - An annual charge made in a company's profit and loss account to reduce the value of an intangible asset to zero over a period of years.