John Gapper

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.

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John Gapper

Amid the uproar about Microsoft bidding for Yahoo, you may have missed the news that Yahoo is closing its subscription music service and instead throwing its weight behind Rhapsody.

Subscription music services, which offer you unlimited access to streamed music through your personal computer (and through your stereo, if you have the right equipment) are favoured by a lot of people in the music industry, and cognoscenti outside it, as the industry’s new financial model.

Instead of buying music, you in effect rent it for $12 to $15 per month. This turns music into a subscription service rather like cable or satellite television.

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