Full Text Of Leaked Guy Hands' Letter To EMI Staff

LONDON (Hypebot) – We've all seen excerpts and the news reports, but now we've got

the fill text of the leaked letter from Terra Firma chief Guy

Hands to his troops at newly acquired EMI. The subject is

Radiohead, but the underlying message is clearly that drastic

changes lie ahead.

You can read the full letter after the jump, but an excerpt

that we had not seen elewhere:

"EMI Recorded Music still has value to the vast majority of

artists – in funding their development and in distributing and

marketing their music – but highly successful bands have other

alternatives for making money (such as touring) and a few,

especially the more established ones, may be able to abandon

their label and try to go it alone. You can see why they might

choose to do so…"

This according to our sources is the full text of Guy Hands

letter to EMI staff.

Dear all

RADIOHEAD

As you know, Radiohead, a band with whom we have enjoyed a long

and productive history, have decided to release their new

album, In Rainbows, directly to consumers via their own

web-site. They have also allowed fans to download the digital

album at a price to be set by the consumer. While some

recorded music executives and other firms have expressed shock

and dismay at this development, it should have come as no

surprise. In a digital world, it was inevitable that a band

with the necessary financial resources and consumer recognition

to be able to distribute their music directly to their fans

would do so. Radiohead is one of the most iconic, original and

successful bands in the world, and one of the few with a fan

base large and devoted enough to support the costs of such an

initiative.

However, whilst most bands, including many successful names,

will not be able to – or want to – follow in their footsteps,

there are some important lessons to be learnt which support our

analysis of what needs to change in the recorded music business

model and which many of you have touched on in your letters and

emails to us since Terra Firma bought EMI.

In this note, I want to address what Radiohead’s decision means

for EMI and what it means for artists generally.

For EMI, this is a welcome reminder of the new digital world in

which we operate and the need to focus on the services we

provide to our artists. Those artists break down into three

categories:

  • Those who are already established and in whom we have

    invested heavily;

  • Those with whom we are working to make really successful;

    and

  • New, start–up bands.

    EMI needs business models which work for all three categories,

    the reality being that the vast majority of the third category

    will fail to achieve commercial success and have historically

    been cross-subsidised by the first category.

    EMI Recorded Music still has value to the vast majority of

    artists – in funding their development and in distributing and

    marketing their music – but highly successful bands have other

    alternatives for making money (such as touring) and a few,

    especially the more established ones, may be able to abandon

    their label and try to go it alone. You can see why they might

    choose to do so. Why should they subsidise their label’s new

    talent roster – or for that matter their record company’s

    excessive expenditures and advances – particularly when they

    are providing income to their record company through their

    catalogue sales?

    We will need to give artists at all levels a deal that is fair

    to both sides, perhaps one that moves away from the large

    advances model of old and provides a true alignment of

    interests and transparency.

    However, for every artist being signed to us, regardless of

    level, we need to deliver them maximum value and a world-class

    service; we need to develop products that the consumer wants.

    We need to develop revenue streams both for our artists and for

    EMI that come from many channels and not just from CDs. We

    need to be best in class at identifying and developing these

    revenue streams where best in class is not being judged against

    the recorded music business, but against international

    businesses of all types. We are determined to do so and to

    ensure that EMI Recorded Music has the people with the skills

    to provide such a worldwide service. It is only by doing this

    that we will be the best home to musical talent and the most

    innovative and creative music company.

    In effect, the recorded music business needs to become more

    like the music publishing business which provides its writers

    multiple opportunities for distribution of their product in

    order to maximise copyright fees and royalties. In this

    effort, EMI publishing continues to be at the forefront of

    innovation and provides a broad range of services.

    The recorded music industry, while seeking to develop some of

    these services, has for too long been dependent on how many CDs

    can be sold. The industry, rather than embracing

    digitalisation and the opportunities it brings for promotion of

    product and distribution through multiple channels, has stuck

    its head in the sand. Radiohead’s actions are a wake up call

    which we should all welcome and respond to with creativity and

    energy.

    If you have any comments, please do feel free to email me as

    usual.

    With best wishes

    Guy

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