Guy Hands, the man whose Terra Firma private equity fund took over EMI Group last year, was brutally honest this week about whom he blames for the fact that his acquisition is not going exactly to plan: A&R men.
These mysterious characters (the acronym stands for “artists and repertoire”), who have been responsible for signing acts to music labels, have not been earning their money, and certainly not being held accountable for it, according to Mr Hands:
The power and the decision has sat with the A&R man, who is someone who gets up late in the day, listens to lots of music, goes to clubs, spends his time with artists and has a knack of knowing what would sell.
They were committing money with no sign off, no nothing.
What we are doing is taking the power away from the A&R guys and putting it with the suits – the guys who have to work out how to sell music. Trying to persuade 260 people to give up their power has been hard.
We had labels at EMI that were spending five times as much on marketing as their gross revenues. We told them you could stick a £50 note on the cover of a CD and have the same effect, and we also wouldn’t have to pay them. Those sorts of comments don’t go down too well.
We’re getting there – a little slower than I would like, but I’m always impatient.
My instinctive sympathy lies with Mr Hands on this issue. He has taken a lot of stick from EMI bands such as Radiohead about not understanding the creative spirit and being a financier who is only interested in money.
But the reality of the industry is that both bands and A&R men (people, perhaps, although most of the top A&R names are men) are hardly uninterested in money themselves. Indeed, the A&R profession is accustomed to earning spectacular sums of cash for leading, as Mr Hands points out, a very nice life.
Given the straits of the industry, it seems fair enough to question whether they have the special powers that they claim, or whether they are simply rent-seekers who have inserted themselves between bands and investors and soaked up a lot of money.
This seems to me one of the most interesting issues facing the industry. You could mount a good argument that the internet and digital distribution has undermined the rationale for the bloated A&R overhead. When new artists can be discovered on MySpace, it surely brings into question whether quite so many highly paid talent-spotters are necessary.
Highly-paid A&R people tend to proliferate in the industry because the big labels are made up of many smaller ones, each with their own infrastructure. I remember being struck years ago by a Vanity Fair article that detailed how many millions some A&R men were raking in.
We shall see whether Mr Hands wins this fight, or whether the A&R fraternity manage to use the bands to discredit the suits, the tactic they have employed thus far.
