EMI: Hands handed arse; tries to save face

It's been a while since we heard about Guy Hands, the man who borrowed large sums of cash to buy EMI and then discovered he wasn't very good at running a record label.

He's been in court this week, trying to blame his failures at EMI on CitiGroup, in a legal case which was basically Hands' Terra Firma going "waah waah, why didn't they tell us".

The fraud case was supposed to last into July - rather like Euro 2016 - but ended somewhat abruptly with a humiliating defeat - rather like England's Euro 2016.

Hands climbed down:

“Terra Firma confirms it unreservedly withdraws its allegations of fraud,” David Wolfson – standing in for lead QC Anthony Grabiner – told the hastily convened court. Terra Firma will also pay the costs of the US bank, likely to run into millions of pounds.

Hands, who had been claiming at least £1.5bn from Citi, had been questioned by the bank’s lawyer for the previous two days, and his evidence had been expected to last into next week. He had faced repeated questions about his recollection of events in 2007 when Terra Firma took over EMI just before the credit crunch and had been accused of having a “hazy memory”.

At one stage during his questioning of Hands, Mark Howard QC, representing Citi, said: “The problem is, Mr Hands, your story is shifting and it is impossible to reconcile these different versions.”

Much as EMI had relied on releasing poorly-conceived best of 'special edition' collections, Hands was trying to sell a bunch of remixes of old material, but the court wasn't really buying.

His case having crumbled underneath him, Hands was left trying to whistle a brave tune:

Hands, who was not in court, said the latest claim had been brought in good faith. “However, it has become evident that our documentation of the fast-moving and complex events, and memories of these events after nine years, are no longer sufficient to meet the high demands of proof required for a fraud claim in court,” he said.

“The matter is now closed,” said Hands, saying that the Terra Firma business he founded in 2003 was looking to the future. “We have an exciting portfolio of companies, a talented and experienced team, supportive and loyal investors and €1bn of capital to invest,” he said.

It's funny, isn't it, that he hadn't noticed he couldn't remember all that "fast-moving" stuff until he'd been taken to pieces on the stand.

And while Hands might believe the matter is closed, that isn't entirely true. Terra Firma have agreed to pick up all of Citi's costs. That Billion of capital might be whittled down a bit in the coming weeks.

Pete Doherty is set to offer us a new album

You'd have hoped that juicing what's left of The Libertines' mystery for cash would have kept Pete Doherty busy enough for the time being, but... oh, no. There's a secret solo album coagulating somewhere. He's told NME all about it:

The album will be titled 'Flags From The Old Regime'. "I've got 10 tunes done now," he says. "There's that one song 'Down For The Outing', which I've had for a while now, but it's incredible - Johann's made it sound like a brand new song."

Doherty also announced that the album has been recorded without his Babyshambles bandmates and instead with "kids around the studio". "There just seems to be a blockade against it, which I don't understand," he says.

He also admits that his record label don't yet know that he is recording the new material. "I don't know what the deal is with EMI Publishing," he says. "I've been told not to tell anyone about the album, but I'm supposed to be someone who writes songs and makes records."

Perhaps EMI is taking part in some sort of set-aside project for musicians, where governments pay the label not to make records with certain artists. You could be putting a large cheque from Brussels at risk, Pete.

I have a dream

You know what might be a nice gesture on the 50th anniversary of Martin Luther King's I Have A Dream speech?

How about if EMI - which holds the copyright on the recording - released it into the public domain?

Parlophone moves from one empire to another

As part of the deal to allow EMI to become part of Universal, Parlophone had to be put up for sale.

The idea being that if you take EMI out of the marketplace, power becomes highly concentrated in just three major labels' mechanised-hand-like-claws, and that would be a bad thing.

So, who has bought Parlophone, to save us from this idea that most of the Western world's chart music will be held by just three companies?

Universal.

I know what you're thinking: how does Parlophone being held by a different major make things more competitive?

But that is to misunderstand competition law: it exists not to allow everyone to compete equally; it functions to ensure that those who are already rigging the market play nicely amongst themeselves.

The Independent, by the way, thinks the key detail in this deal is something else:

Russian-born billionaire Blavatnik buys Blur and Coldplay in £500m Warners Parlophone takeover

Obviously, given the person paying for the ink and the Windows licences at the Indie, being Russian-born is rather more significant for that paper than it might be for the rest of us.

Telegraph sees hope for HMV

There's some cheerful news for HMV today, as the Telegraph has some words of encouragement about the chain's future:

It is understood Universal is liable for the rent on approximately 40 HMV stores after buying the retailer's former parent company EMI earlier this year. The rent liabilities highlight the close relationship between HMV and its suppliers, which are trying to support the retailer with a series of initiatives.

EMI guaranteed rental agreements on HMV stores when the retailer was spun out of the record label in 1998. It is understood that Universal then assumed these guarantees when it acquired troubled EMI.

Obviously this is good news of the 'you need chemo, but you look good in a hat' variety.

First, it's not actually anything to do with the core business - not about selling things, merely suggesting that as the decline continues the's a bit more strength in the props.

Secondly, Universal are obviously only one supplier to the chain - they might have an interest in keeping the thing alive (beyond the cash all the majors are pumping in to help Nipper keep his nose above water), but why would the other labels - or studios, or manufacturers of games or headphones - give a raspberry fart about how much extra hurt Universal would feel if the store vanished?

Sure, Universal has its mitts on a massive share of the music business, but if a store could survive by its catalogue alone, there would be Universal-branded shops on the high street.

Finally, the fact that the bill will only sting Universal if no new tenants are found for the stores - true, times are tough. But these are the 40 stores which HMV have stuck with since being spun out of EMI in the last century. Presumably the reason why these branches haven't moved or been closed already is because they're in great locations - Universal are underwriting the best bits of the network. And a good location for HMV is probably going to be no worse for a Sainsburys Local. It's hugely unlikely that Universal would have to pick up the tab for every place.

In short, then: less "good news for HMV", more "mildly discomforting news for Universal but they can always do with more tax write off".

Apart from anything: the likely cost of writing off an HMV failure would have been factored into the price Universal paid for EMI this year.

Making Rubber Soul

From the exhaustive A Warm Gun tumblr, a 1965 production line producing Rubber Soul.

This is what EMI used to be like.

Fuller swoops for EMI offcuts

There's a clutching of handkerchiefs to mouths at the news that Simon Fuller might buy the bits of EMI regulators are making Universal sell as the price of merger.

Fuller! Imagine! He did the S Clubs and game show pop stars! The very idea.

And, yes, the idea of an already rich and poweful man becoming a bit more rich and powerful is hard to celebrate.

But there's actually an upside, which does make the idea of Fuller rummaging in the EMI bins something we should welcome.

First of all, he's apparently thinking of buying all the bits - Mute, Parlophone, the 50% of Now Thats What I Call Music - the whole lot, rather than taking a couple of bits.

It'd actually be enough, surely, to count as a fairly considerable label in its own right; and still based firmly in the UK. Wasn't the loss of that something we were meant to mourn when EMI was sold off?

Also, whatever Simon Fuller's other faults, he is a pop music man. Isn't it better for Parlophone to be owned by the bloke who put together S Club 7 than Guy Hands and his Motorway Service Station business? Or, indeed, than Universal, a tiny part of a conglomerate that might have spun off its water business but still doesn't seem to moved on from pushing sewage about?

It would be lovely to think Parlophone could be turned into a worker's co-op, or Mute become a John Lewis style concern, but that's unlikely to happen. Also, can you imagine the meetings when Chris Martin started to pipe up?

So, the whole thing in the hands of a man who understands how to sell music? Could be worse.

And at least it's not Cowell.

EU, US allow Universal and EMI to decline together

It's been a long, slow process, but today both the EU and American authorities have sighed and said it'll be fine for the two decaying bodies to merge themselves into a single, leeching exercise.

As part of the deal, some chunks of EMI will be cut off and left to flounder on their own - Parlophone will be looking for a new, different owner to manage its decline.

Experts nodded wisely at the news that the Universal-EMI merger will finally happen, noting that formal EU approval officially kick starts the long, slow process towards Universal-EMI merging with Warners.

UMG lob even more out the balloon

Is the hot-air-balloon of the UMG takeover of EMI rising high enough yet?

Apparently not - even throwing Parlophone (except the good bits) out of the merged company isn't pleasing European regulators, and so UMG is now looking about for other parts of the company to divest in order to keep everyone happy.

If it keeps agreeing to sell off bits at this rate, Universal might wind up smaller than it was before it tried to swallow EMI. The whole thing is starting to feel like the sort of 'what is point' that Quentin Letts might feel like investigating.

Universal takeover of EMI hits more grief

In Europe, Universal are pleading with the EU like a dumped boyfriend trying to respark a relationship ("How about if I stop with the Parlophoning? Babes, I'll get rid of Virgin if you want me to...").

Now the EMI takeover is running into trouble in the US, with the Senate starting to wonder if it's good news. MediaGuardian reports on the meddling:

Senators Herb Kohl and Mike Lee, the chairman and ranking member of the Senate antitrust subcommittee respectively, have written a six-page letter to FTC chairman Jon Leibowitz urging him to closely scrutinise the deal to see if it will substantially injure competition in violation of anti-trust laws.

The letter raises several concerns, including that the new combined company could threaten the development of new digital music services and that CD prices could rise.

"We believe this proposed acquisition presents significant competition issues significant competition issues that merit careful FTC review to ensure that the transaction is not likely to cause substantial harm to competition in the affected markets," the letter says.

Universal could always play the "hey, we already act like a monopoly - that's what the RIAA is for" card. But that might not help.

Universal throw more stuff away from EMI takeover

Universal is now so desperately scared of not being able to takeover EMI that it has proposed a deal whereby it'd offload European rights to the EMI catalogue:

EMI chief executive Roger Faxon has written an internal email to his staff outlining which parts of the music business Universal has proposed to sell off, including Mute, Chrysalis (excluding the Robbie Williams catalogue) and Ensign labels.

Included in that disposal would be the Pink Floyd catalogue and the recently concluded new deal with Guetta, along with his catalogue.

Pink Floyd's EMI catalogue includes Dark Side of the Moon, Wish You Were Here and The Wall – albums that still sell extensively and are believed to bring in millions of pounds a year.

Faxon said the divestments only relate to the exploitation of EMI's repertoire in Europe.

It's an interesting move - if only because it might raise a question for American regulators about why Universal thinks a combination of it and EMI would distort the European marketplace, but not the US?

Offloading Parlophone

As Universal continue to try throwing things out the basket to see if their EMI takeover can get lift-off, the latest plan is to try and flog Parlophone to BMG.

Yes, yes, BMG had stopped being in the recorded music business when it withdrew from what is now Sony alone, but that doesn't mean it wouldn't be interested in getting back into such a vibrant, profit-loaded sector, right?

There is a slight problem with the plan, thought. The idea is to convince that the EU that the embiggened Universal wouldn't control too much of the market for the biggest selling acts, but, says MediaGuardian:

One source with knowledge of the situation said that any potential sale of Parlophone, one of EMI's most famous labels, would include Universal "cherry picking" key artists to keep such as the Beatles and, potentially, Coldplay.

It's like those hoarding programmes where the guy agrees to get rid of his enormous collection of plastic horses, only to get to the shop and announce that he's keeping all the dappled ones.

Universal get more time

As the Universal takeover of EMI gets caught up in regulators' worries about monopoly, Citibank have offered Vivendi longer to complete the deal.

The cash was supposed to have changed hands by September; now, to give time for the company to work out how to offload enough parts to keep everyone happy.

Hilariously, Richard Branson is talking about buying back Virgin:

"Richard Branson and Virgin have been assessing how to get back into recorded music business for many years," said a spokesman for Virgin Group. "The potential disposal of Virgin Records by Universal Music offers a wonderful opportunity to recreate a dynamic independent label in the market."

For many years? He can't have been assessing how to get back into music for more than five years, as up until 2007 Branson was part-owner of V2. Which was, erm, sold to Universal.

(It's worth noting that when Branson founded V2, he only owned 5% of it; the rest was held by Morgan Stanley. I know, imagine a record label mostly owned by a bank. Crazy, huh?)

While it might be fun for Richard to buy back Virgin, the failure of V2 should be evidence enough that he doesn't have a magic touch. And V2 was founded in 1996, when the music business still bore a superficial resemblance to the one in which Branson thrived in the early days of Virgin. And while the Virgin Group had a retail network.

However much people might want to believe that Beardie back at Virgin Records is a Leno-returns-to-Tonight story, it's much more likely to be akin to that awkward couple of episodes where Bet Lynch went back to Corrie, look confused and was swiftly written out again.

Universal-EMI merger catches in The Voice

Here's some fun: the ill-fated deal to funnel off the acts from the UK version of The Voice to Universal hasn't just lumbered the label with a barn full of unsaleable singers; it's a mighty spoke in the deal to bring Universal and EMI together, too. MediaGuardian explains:

The European commission document is understood to have raised the spectre of "over exposure" that the enlarged Universal Music will get across all manner of media platforms and markets. If combined, the two companies would distribute 41% of music sold worldwide.

A particular concern of the commission's is the share of airtime Universal artists would get on radio and key TV shows – it is understood that the Universal-dominated BBC talent show The Voice is raised as an example – where three of the four judges, will.i.am, Jessie J and Tom Jones, are signed up to labels owned by the company.

Obviously, there are plenty of other examples of how one company dominating the music industry is bad for everyone (effectively, the way they sing with the one note of the RIAA-IFPI cartel proves how rotten that is), but how amusing if the attempt to hammer a super-major falls down in part because of The Voice.

Executives haunted for all time, when they close their eyes, by a vision of Jessie J spinning round on a chair yelling "this is how Team Jessie does it" over and over and over.

UMG-EMI merger goes to Washington

The US Senate is currently grinding through a decision on whether it should smile upon the merger of Universal and EMI. Yesterday senators held a hearing to allow themselves to be better informed before (meeting shadowy lobbyists, accepting small envelopes and) delivering their verdict.

As MusicAlly reports, much of the focus was on the digital music market. Warner's Edgar Bronfman Junior fretted that the 50% of biggest-selling artists held by the new Universal would allow it to decide which digital services thrived, and which wilted:

”At 50% of the hits, Universal can say no to anything”

Universal were shocked, shocked, at the suggestion they might use their new superpowers for anything but good:

UMG boss Lucian Grainge disagreed.

“The thought that we would constrict our artists who we’ve invested in, and construct the investment we make in EMI to dissolve the market would be commercial suicide,” he told the hearing. “We would be insane not to license, develop, make our music available through as many platforms, through as many retailers as possible.”

Yes, the idea of a major label trying to use its catalogue to strangle upstart, disruptive businesses and technologies - where would anyone get an idea like that, eh?

You suspect, though, that Bronfman is less worried about the idea of record companies taking on digital companies than he is about the new company's greater heft within the RIAA, the majors' preferred choice of digital closedown.

MP3tunes driven into bankruptcy by EMI

Remember mp3tunes? It was an early online music locker of the sort that are becoming increasingly common these days. But it never took off, mainly because EMI spent a long time calling for them to be closed down, even after they'd been given an OK from the courts.

EMI will be happy now, though, as they've won their war of attrition. Mp3tunes have filed for protective bankruptcy.

Mp3tunes aren't happy:

"EMI spent an estimated $10 million dollars with multiple law firms to arm their attack against MP3tunes in an attempt to thwart unlicensed personal lockers," according to Robertson. "They know it's difficult if not impossible for startups to fight long costly legal battles... This happened with the music search engine Seeqpod, Muxtape, Favtape and many others that have quietly faded away."

EMI, naturally, are indicating they'd like to kick the corpse around a bit longer, and will pursue the lawsuit to prove something or other. Probably that EMI have no idea when to stop.

George Martin pinpoints "the worst thing music has ever faced"

Music has faced some terrible things in its time.

The second act of Peter Andre's career.

Paul Weller chumming up with Noel Gallagher.

The invention of the banjo.

But now, according to George Martin, it is facing its biggest challenge yet.

Er, the takeover of EMI:

Sir George has claimed the deals will hand both Sony and Universal a “virtual monopoly”.

“I am saddened that great companies have been swallowed up by the giants, and the domination of the recording and music publishing industry by Sony and Universal can only lead to a virtual monopoly in the European market. Is this what the people want?” he asked. “I always thought that democracy ensured a level playing field for our music industry, but I am wrong.”

Given that the majors act as a cartel anyway, and that there's precious little difference between having three clown cars drive over your foot, compared with having four, it's hard to see what difference it makes.

If Martin had piped up years ago - earlier on in the consolidation process - maybe he'd be a voice worth listening to; perhaps when Sony swallowed BMG, or more usefully when Polygram and MCA became one.

If Martin really wanted to "democracy" to save EMI, perhaps he should have been a little less quiet as the music industry started to be dominated by global conglomerates whose power and reach tended to go beyond or around that of nation states.

Or he could have suggested that the IFPI and RIAA appeared to be little more than a large company's club which forced the music industry to be run for their convenience rather than the good of the artists or the music fan.

But it looks almost as if Martin's worry is that democracy is taking away EMI, rather than any genuine concerns about plurality in the record business.

But it couldn't be that, could it?

[Tahnks to Michael M]

Grooveshark splits up with EMI

Music streaming service Grooveshark has upset most of the major labels, but had at least managed to come to a proper licensing deal with EMI.

EMI, though, is now suing the company, saying it never got its money.

EMI says it's cancelling the deal, and wants $300,000 it says its owed.

Grooveshark has responded with a 'well, I never liked your hair anyway and your feet smell':

“Grooveshark was recently forced to make the difficult decision to part ways with EMI due to EMI’s currently unsustainable streaming rates and EMI’s pending merger with Universal Music Group, which we consider monopolistic and in violation of antitrust laws. To date, Grooveshark has paid over $2.6 million to EMI, but we have yet to find sustainable streaming rates.”

And, to be honest, you'd suspect that EMI's ire is more about their new owners finding an out from a contract than any real beef.

Now that's what I call throwing your weight about

The Men That Will Not Be Blamed For Nothing had been enjoying some success with their Now That's What I Call Steampunk album.

Enough success, indeed, to bring down the ire of EMI upon their behatted heads. As Steampunk Chronicle, erm, chronicles it:

It seems that EMI records have taken offense with Now That's What I Call Steampunk, Vol.1, the 2010 release by British steamrockers The Men That Will Not Be Blamed For Nothing. EMI has copyright on the name "Now That's What I Call Music" and has also released other compilations under the "Now That's What I Call" moniker.

The album was yanked off iTunes, and the band have reluctantly renamed the record The Steampunk Album That Cannot Be Named For Legal Reasons.

But hold on a moment - how can EMI claim to own "Now That's What I Call..." in its entirety?

As Wikipedia (correctly, in this case) points out:

The series took its name from a 1920s advertising poster hanging in an office for Danish meat products which showed a pig listening to a whistling cockerel.

So EMI claim to own copyright on a phrase they pinched from an out-of-copyright work by someone else entirely.

I suspect they would insist their claim is based on trademarks rather than copyright, but it's still a bit rich to rip off soembody's advertising slogan and then say that nobody else can do the same.

[Thanks to Scary Boots for the tip]

What's worth the more than EMI?

Here's a surprise: as All Things D points out, a Gartner report puts the value of the ringtone market at about £1.3bn.

Ringtones. In 2011.

Worth one hundred million quid more than the whole of the EMI records business.

Now, that's a stylishly declining industry.