Over the years, some strange characters have turned up in this column. Some have wandered on to the stage for just the odd solo turn; some stay around for a while.
One of the latter is Guy Hands, the financier behind Terra Firma, the private equity company that took a €4.7 billion punt on EMI in 2007. Terra Firma put the storied British record label in the same shopping basket as German petrol stations Tank & Rast, the Odeon cinema group, and Northern Ireland’s Phoenix Natural Gas.
The result was, as many predicted, not pretty. The combination of a financier who thought he knew what he was doing and a record business that also thought it knew what it was doing turned out to be a spectacular and short-lived car crash.
By 2011, Citigroup (Hands’s bank) had taken control of ailing EMI, which sold it off in various bits and pieces to other major labels following due diligence from European and US regulators. The big five of old (Universal, Sony, Warners, EMI and BMG) became the big three of today (Universal, Sony and Warners).
Hands was again in the news recently when he gave up the ghost in a legal case against Citigroup. He alleged that the bank had misled him over the deal; the bank naturally denied the charges. Hands was stuck with the legal bill, which will run to millions. He probably wishes he had never come across EMI in the first place. That old saw that EMI stood for “every mistake imaginable” seems apt in this case.
Aside from the court case, Hands also came to mind when record label people began to wonder aloud about what Apple Music and Amazon are playing at of late.
Copyright creation
The online magazine Music Business Worldwide highlighted how those heavyweights appear to be dabbling in the world of music copyright creation, with albums by Chance the Rapper and compilations such as Songs of Summer. There have also been deals with such blockbuster acts as Taylor Swift and Drake.
It would be a hell of an interesting proposition if Apple and Amazon went from dabbling to full-scale immersion. They certainly have the funds to invest in a business that is often notoriously hard for newcomers to break into, thanks to the control of the established players.
Unlike Hands, the companies beginning with A would also come to the table with in-depth knowledge, experience and expertise about how the sector operates because of their prior involvement in the area.
Many of those making a living from music would certainly welcome their arrival as a way to shake things up. You can imagine the people around bigger acts – the ones with already established audiences – licking their lips at the possible paydays they could leverage for themselves as a result of a call from Apple or Amazon.
Piece of the pie
The last paragraph is probably key in this analysis. When you look at the palaver around recent releases from Beyoncé, Radiohead, Drake et al, you can see that the 1 per cent pull all the attention and, as a result, all the money. Any new arrival would naturally be looking at some of that pie to deliver immediate results.
There are many acts who gripe and moan that the current system empowers the music industry’s caste hierarchy. Yet there is the undeniable fact that the current system’s research and development also requires regular and ongoing investment in new acts.
Would Apple and Amazon be interested in signing and investing in acts who can’t yet deliver scale? That is the multi-billion-dollar question.
