Think about it too long and your head would explode. EMI, the UK’s last remaining major label, is now under the control of the US bank Citigroup, until it can find a buyer willing to take on the firm’s £1.2 billion debt. Thing is, Citigroup itself went bust in the credit crunch, and was propped up by $300 billion of federal funds. Which means the next Gorillaz album will be effectively bankrolled by US taxpayers.
All of which does sort of beg the question – is it just the music business that’s in crisis? Or is it capitalism itself?
We’re constantly told that the financial industry is the engine of the UK economy, staffed by geniuses who’ll quit the country if they don’t get their multi-million pound bonuses. So how did financiers – chiefly Jerry Springer lookalike Guy Hands, whose blundering investment firm Terra Firma bought EMI for £4.2 billion in 2007 – take a legendary music label, the historic home of The Beatles, The Rolling Stones and Radiohead, and turn it into a corporate disaster-zone?
The numbers make your brain throb. Hands has lost at least £100 million of his personal fortune. Terra Firma and Citigroup have lost £3.9 billion between them. The BBC’s Robert Peston calls the EMI purchase “one of the worst ever deals in corporate history”. It’s possible this write-off of debt could be a good thing for the company’s employees and artists – a spokesman called it a “positive development” – but the whole thing still looks like an unholy mess.
How do you balls something up so profoundly? Obviously, the recession didn’t help. But the takeover was doomed from the start, for the simple reason that artists themselves didn’t much like being pawns in a colossal transatlantic Wall Street/City dick-swinging contest.
Radiohead and Paul McCartney left the company in protest. The Rolling Stones swiftly signed a new contract with deadly rivals Universal. Pink Floyd didn’t leave, but found a way to sue the label anyway. Short of Lily Allen burning a Wicker Man-style effigy of Guy Hands onstage at The O2, the signals could not have been more clear.
So what happens now? EMI won’t be sold on immediately. Insiders think it could take at least a year. Will it be swallowed up by Warner Music, as some people are predicting? Maybe not. Competition regulators might not allow it. Besides, according to FT.COM, Warner itself recently conducted an audit of itself – so who knows what its owners are planning long term.
Whatever EMI’s fate, let’s hope it finds new owners without being carved up too brutally. It deserves some dignity. After all, it would be nice if EMI were to be remembered as a much-loved, generation-spanning record label – rather than a dispiriting cautionary tale in how not to run a company.