EMI to axe 2,000 jobs in 'revolutionary' overhaul

Thousands of EMI workers were facing the prospect of redundancy tonight after the music giant’s private equity owners announced a “revolutionary” overhaul to the business.

Up to a third of the workforce are to be axed under the proposals, which may also see corporate sponsorship for bands.

The firm’s private equity owner, Terra Firma, said as many as 2,000 jobs would go in the next six months to help save €265m a year and enable the label to meet the “challenges” of the digital age.

Other planned changes include beefing up and changing the roles of EMI’s talent spotting network, nearly halving the marketing spend, and the elimination of “significant” duplications within the group.

The turnaround is aimed at the recorded music arm of EMI – whose artists include Coldplay, Robbie Williams and Lily Allen – and which has struggled with falling CD sales across the industry due to digital downloading and piracy.

The company made pre-tax losses of £263.6 million last year. Terra Firma, led by financier Guy Hands, took over the business last summer in a £3.2 billion deal.

Mr Hands has outlined how he wants to see EMI’s talent spotters – currently around 6% of the recorded music arm’s 4,400 staff – concentrate on scouting and maximising artist potential.

A new unit called music services is being set up to maximise the artists’ potential and co-ordinate how their music is sold and retailed.

Initiatives include helping performers and bands to “monetise their work” through sponsorship deals with firms, similar to those in the football industry, and linking up local bands with local businesses.

Mr Hands said he believed the “revolutionary new structure” for the EMI group would improve every area of the business, but there were warnings that the plans risk offending the “artistic sensibilities” of big-selling acts such as Coldplay.

Robbie Williams’ manager has already accused Mr Hands of acting like a “plantation manager”, while it was reported last week that the pop star himself has threatened to withhold new records until he gets assurances over marketing and distribution.

But in an interview, Mr Hands denied that Williams had refused to work on a new album and effectively gone on strike.

He said only Williams’ manager, whose percentage cut of the artist’s advances could be threatened by the changes, had suggested the singer would withhold his work.

“Robbie is still working in the studio, but he’s working at a slower pace, which is appropriate to producing the best music he can, and that’s something we at EMI support him in,” Mr Hands said.

Hermann Verseraaten, who works in artwork production for EMI, said: “Obviously, it’s sad news, but we hope the new plans will work and we will come out stronger.

“Everybody is very worried about job losses, but we don’t really know the details yet. We are just waiting to find out.”

John Webster, from the Music Managers Forum, branded aspects of Mr Hands’ strategy for EMI as “naive”.

On the prospect of corporate tie-ups for artists, he said: “People have tried this for years but it’s always foundered on artistic sensibilities.

“It’s not impossible – the Rolling Stones have always had their price for example.

“But people have to consider that some bands aren’t interested and fans could potentially be turned off something like that.

“At the end of the day, this business is all about relationships and the main relationship is between the band and its fans.”

Coldplay, who are one of EMI’s biggest recent success stories with more than 30 million album sales, have been an active supporter of various social and political causes including Oxfam’s Make Trade Fair campaign and Amnesty International.

Lead singer Chris Martin famously branded shareholders the “great evil of this modern world” as their third album was released in 2005.

The band’s manager Dave Holmes told the Financial Times he was keeping an open mind before hearing the full plans about EMI’s restructuring.

But he added that he would “definitely not” advise one of the new artists he represents to sign to the label because it was going through “too much change”.

EMI’s total worldwide headcount is around 5,500. Mr Hands has set up a board at EMI that includes former BAA chief Mike Clasper, former BBC director general Lord Birt and former Northern Foods chief executive Pat O’Driscoll.

Ms O’Driscoll, who has been brought in by Mr Hands to identify what talent the new slimmed down EMI needs, told the Financial Times she wanted to see the changes in place by the end of June.