EMI to combine two labels

By Geoff Boucher, Times Staff Writer
January 26, 2007


Ailing music giant EMI will merge two of the music industry's best-known labels, Capitol Records and Virgin Records America, in a sweeping reorganization prompted by the company's financial troubles.

EMI on Thursday unveiled the new Capitol Music Group, retaining the name of its iconic label whose roster once included the Beatles and Frank Sinatra. Capitol President Andy Slater was forced out, six months into a five-year contract extension.

The news caused considerable concern at the landmark Capitol Records tower in Hollywood, where employees have feared for some time that EMI operations in America will move east to New York.

That could free the 13-story building, which resembles a stack of records, to be converted for residential space or other use. Slater, who took the reins of Capitol in 2001, had advocated keeping the tower and its storied studios in the record-making business. The building and adjacent properties were sold last year for $50 million to New York-based developer Argent Ventures and leased back to Capitol.

Capitol staffers who didn't want to be identified because of the sensitive situation said they feared major job cuts were coming, noting that some employees were being told that they would have to interview to keep their jobs.

Seeking to ease fears, EMI Chairman Eric Nicoli said the reorganization was a necessary retrenchment.

"The combined artist roster, talent and market share of this new label group establishes Capitol Music Group as one of the U.S. music industry's leading labels," Nicoli wrote in a memo. "We will maintain operations in both New York and Los Angeles."

But Art Alexakis, singer of the band Everclear, which has been on the Capitol roster since the 1990s, said he believed that the move signaled EMI would be on the sales block soon.

"I think really it's no secret that they're bringing in people to get the place in shape so that they can sell it," Alexakis said. "The only way to make it look profitable on paper is to downsize. The heyday of the entire music business looks to be long gone, and so I think now you see companies trying to figure out what's next."

Nicoli named Jason Flom, chairman of Virgin Records America, to head Capitol Music Group. He will report directly to Nicoli.

The Nicoli memo praised Flom for his ability to seek out opportunities in the still-unpredictable digital marketplace. The EMI chairman also signaled that uneasy days were ahead.

"These changes won't be easy," he wrote. "Some of you will be asked to take on new responsibilities and roles. But these measures are absolutely necessary for our business to succeed in a world where fans are more demanding and expect instant access to their favorite artists and music."

This month Nicoli replaced EMI Music Chief Executive Alain Levy, who left the London-based company along with Vice Chairman David Munns in a shake-up that followed a dismal performance by the industry's third-largest company. EMI labels were shut out from the top 10 CD list for 2006.

The formation of this combined U.S. label group is part of EMI Group's larger restructuring program, designed to deliver $217 million in annual savings across its businesses.

Capitol's current roster includes Coldplay, Chingy and OK Go, whose success last year was fueled by a quirky music video that became a Web sensation.

But EMI has had its share of disappointments as well. Its highly touted "Love," a re-imagining of the Beatles songbook and released last year by Capitol, failed to meet sales expectations, as did Virgin's release of a Janet Jackson comeback album.

Slater's background made his hiring a bit offbeat: Instead of a steady corporate path, he had been a journalist and then an acclaimed manager and record producer.

Flom, who is based in New York, took over the helm at Virgin in 2005. His background includes a stint as chairman of Atlantic Records, a position he attained thanks in large part to his success with Lava Records, whose roster included Kid Rock, Matchbox 20 and the Corrs.

EMI hopes its fortunes start improving next week, when its Blue Note label releases the third album from singer-songwriter Norah Jones. An initial shipping of close to 1.5 million copies signals that EMI is betting heavily that the CD will be a hit.

But the U.S. pop charts remain anemic. The soundtrack to the film "Dreamgirls" hit No. 1 on the list but did so by selling about 60,000 copies, the lowest bestselling mark since 1991, when SoundScan introduced the current retail tracking system.

Many financial observers have weighed in that EMI could be better off if merged with Warner Music Group. The two companies have been involved in a corporate mating dance for years but have been unable to consummate a deal.

EMI offered to acquire Warner last summer, but Warner rejected the bid as too low. Warner then made a bid for EMI, which was in turn rebuffed.

The departure of Levy has been seen by some as a cleared obstacle to the merging with Warner in some fashion.

The Stones' contract ended with ABB, although whether EMI still have first option on live albums and repackages until they find a new label I'm not sure, but they probably have some say.

If Capitol get to put out their next album (say, a live album for the sake of argument) that would be quite an unusual feat to have their label be bought over twice within the lifetime of their current contract. They signed to Virgin in 1991, Branson sold the label to EMI a few weeks later (using the Stones deal as his dealbreaker) and then EMI get eaten up by this new label.

Gazza Wrote:
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They signed to Virgin in 1991, Branson sold the label to EMI a few weeks later (using the Stones deal as his dealbreaker)


My whole first year at EMI was spent working with the team that did the Virgin deal. It was so exciting. At first, I was just really happy because Keith was on the label, and then they bought the Stones, I was ECSTATIC. At one point the deal was almost dead in the water and BMG almost bought Virgin, but then that fell through and EMI got them. I was SO EXCITED!!! It was a really cool time.

Man that record business stuff is sometimes complicated (for a simple Rock and Roll fan like me) ;-)

You know, all you Americans, while all the Stones albums from Some Girls through to Undercover were distributed still by ATLANTIC Rec. in the U.S., EMI had the distribution in Europe during that time. That was before the age of Compact Disc of course, although the first CD (Undercover) was still EMI, but soon afterwards the back catalogue was released on CD by CBS.

So, when Virgin Rec. was sold to EMI, for the Europeans it was kind of "the second round"... and that is because (and please correct me if I'm wrong) at present time there are only three (or five???) major companies (SONY, BMG, EMI...???) that have all record labels as sublabels under them.

It's kind of sad to read that a label as historic as Capitol has to struggle so hard, but I believe that the record industry is facing major changes anyway due to new distribution ways over the internet etc...
Let's see where it will take us...and I'm pretty sure that The ROLLING STONES, because of their history and their significance for contemporary music as such, will be a part of record business in some way or another - definitely.

donnywas Wrote:
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> It's kind of sad to read that a label as historic
> as Capitol has to struggle so hard,

totally agree...

i like to collect lps and the capitol stuff from the 50s, if you're into sinatra, nat king cole, june christy, etc, is just spectacular... both the music and quality pressings (the turqoise/gray label capitol lps are some of the best sounding)..

The problem is if the band leaves Capitol, there will be a no-compete period during which the remaining stock will be budget-priced to move. That would mean no tie-in CD with Scorcese's Shine a Light project which would certainly be a missed opportunity. While I don't foresee another megadeal after Virgin's thorough exploitation of the back catalog and considering they're in their sixties not their late forties like the last time they faced this situation, I still can't imagine any label not wanting to add to the catalog with new music of some sort.

Its really a question of whether the band accepts what the industry thinks they're worth and if the label pushes compromises like outside collaborators and duets (which Virgin was certainly moving toward in recent years). On the plus side, it could mean we finally get bonus tracks since straight reissues would have little value in the marketplace. Maybe Warner can buy the ABKCO catalog and the Stones back catalog. I'd settle for an opening of the vaults and a series of live box sets if there isn't a new studio album coming somewhere down the line.

I'll be curious if any new music from the Stones or Jagger graces the Ruby Tuesday animated film and whether Jagger adds solo tracks to the soundtrack of his remake of The Women. Like the Alfie remake, the subject matter would seem to interest him lyrically. Ronnie can stick with fantasy camps and Keith can always negotiate for Pirates of the Caribbean 4. Wonder if there will be a Keith action figure? Good lord, this makes me feel old.

donnywas Wrote:
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> So, when Virgin Rec. was sold to EMI, for the
> Europeans it was kind of "the second round"... and
> that is because (and please correct me if I'm
> wrong) at present time there are only three (or
> five???) major companies (SONY, BMG, EMI...???)
> that have all record labels as sublabels under
> them.

The big ones at the time were Sony, EMI, Warner, BMG, Matsushita, & Universal. Virgin was the largest independent before their acquisition by EMI.

...I C that CC is making the rounds today....(must be Friday and the Coke Machine is full-hehe).......

I haven't had any Coke today! I've been cutting down (sob sob sob, but I miss it - why does it have to be so GOOD!)

Ok, I just talked myself into it, off I go!!!! :-)

Wasn't looking too good, but I was feeling real well.

Interestingly, Virgin Records' website no longer lists The Rolling Stones or Mick Jagger on their artist roster. RollingStones.com has also deleted their Virgin Records link. Gazza's been saying its all over now for months and I've been arguing he's wrong. The Stones are without a label for the first time in 16 years.

Re the Capitol 50's music with Sinatra, June Christy, couldn't agree more.

The actual Capitol building in Hollywood is one of the most fabulous monuments to music that exists.

I just turned down some coke...

anyway,

i like to collect lps and the capitol stuff from the 50s, if you're into sinatra, nat king cole, june christy, etc, is just spectacular... both the music and quality pressings (the turqoise/gray label capitol lps are some of the best sounding)..

Yeah, check out the original Gene Vincent stuff on teal Capitol labels...wooof...

JR

Hell, they may never release another CD of new stuff. It took forever to get ABB.

Sadly, their studio recording career is pretty much over.

EMI/Virgin Sweden talks about the probable next live album as being on their label.

Vilhelm
Nordic Stones Vikings

First time I've ever seen Sweden and virgin in the same sentence!

what happened to all the folks who were saying "who needs record companies"
on that other thread recently? has the New Paradigm collapsed already?

You should pay more attention! Stonesvikings and EMI/Virgin Sweden are very close, they feed of us , and we feed of them.
But, speaking of virgins in general in Sweden, we´we taken care of that a long time ago. So if the boys tour Europe 2007, lock up everything connected with the female gender, cause The Nordic Stones Vikings are coming, in more than one sense of the word.....

Vilhelm
Nordic Stones Vikings

with sssoul Wrote:
-------------------------------------------------------
> what happened to all the folks who were saying
> "who needs record companies"
> on that other thread recently? has the New
> Paradigm collapsed already?

Good question, who needs record companies today? They are totally obsolete. They just have to realize it, and then they can do something else, selling cars or whatever.

Are the Rolling Stones really without a record deal???????

I've noticed at my local independent record store that everything from STICKY FINGERS on is in the bargain bin for $9.98. Better get'em while you still can! Looks like they're all going out-of-print for a while...maybe forever. It may be that you will only be able to download them to you computer and iPod from now on...no more physical CD's and cases to hold in your hand. Sad.

The quote from the first post says a lot of what their problem is and in fact the problem in the industry:

"These changes won't be easy," he wrote. "Some of you will be asked to take on new responsibilities and roles. But these measures are absolutely necessary for our business to succeed in a world where fans are more demanding and expect instant access to their favorite artists and music."

Fans are more demanding and the people who run the labels are NOT fans and do not listen to creative ideas from the outside. Most bands are kept so far away from the loop they do not know what their fans want released.

Digital downloading of new releases can be slowed down if more artists such as Springsteen release the duel disc format and give you a DVD side with videos, interviews, etc. More bang for the buck and it gets people into the stores.

I still miss albums.

A dedication for mickijaggeroo - "She Saw Me Coming"!

ohnonotyouagain Wrote:
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> Sadly, their studio recording career is pretty
> much over.

for all intents and purposes it ended about a quarter century ago - get over it already....

The difference is that during the last quarter century there was always the possibility of "hope" (and I am not as hard a grader, I guess, cause I still listen to B2B, select tracks from VL and AB

Now, there seems to be more of a finality setting in.


btw JJ Flash from Flash Point just came up on my shuffle....wtf? It sounds like a track from a Broadway musical.........

Glass Slide Wrote:
-------------------------------------------------------
> The difference is that during the last quarter
> century there was always the possibility of "hope"
> (and I am not as hard a grader, I guess, cause I
> still listen to B2B, select tracks from VL and
> AB
>
> Now, there seems to be more of a finality setting
> in.
>
>
> btw JJ Flash from Flash Point just came up on my
> shuffle....wtf? It sounds like a track from a
> Broadway musical.........

courtesy of the Matt Clifford Synthetic Orchestra

You got that right--Jeez Louise. What a travesty. I don't hate that record but the version of JJF is not good. It reminds of the Broadway soundtracks my girlfriend listens to. AND, they play it like they have a plane to catch or soemthing.....

I hate when people download albums. The quality isn't as good, and the whole thing with "Everybody's got a chance to get their music heard" is just a question of too many cooks. They'll get around some time when the music sucks enough. It'll be like it was before, but we have to go through this lame downloading period.

JumpingKentFlash

As the Virgin/Emi website doesn't list neither Rolling Stones nor Mick Jagger anywhere, they should indeed be free at the moment. That doesn't mean that they are on the market. What used to be called Rolling Stones Records, Promopub B.V. is still their label, and with many huge bands (as opposed to big bands ;-) going independent at the time (e.g. The Eagles), it may well be possible that the next new Rolling Stones release will appear solely under a distribution deal with Promopub B.V., and that they will hire a marketing company themselves to promote it. They are big enough not to need the label machinery, as these label machines don't seem to run as smoothly these days as they used to, and as seemingly all of the components of these machines are available as individual services. Most likely, the band themselves, who are the shareholders of Promopub B.V., can't be bothered with setting up at the moment, because they are still busy with their tour, but it could well be that their people are already developing something for them.

Honestly, I can't see the Stones catalogue becoming unavailable any time soon, because that provides a big part of the band's income.

>>Honestly, I can't see the Stones catalogue becoming unavailable any time soon, because that provides a big part of the band's income.<<

The income which they need urgently to fill up their fridge?