Hands Crafts Slimmer, Smarter EMI; Industry Reacts

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Few questioned the seriousness of Terra Firma head Guy Hands following a Tuesday morning meeting, one that confirmed EMI Group layoffs of between 1,500 and 2,000.

But questions now linger on whether the slimmed-down EMI can become both nimble and profitable.

The staffing reduction will happen within six months, according to Hands, and that will produce annualized savings of roughly £200 million ($391.5 million).  That lightens the load considerably, and addresses a dizzying decline in album sales, though Hands expressed a desire for a stronger talent pipeline.

In official correspondence, the company noted that the changes would “enable the group to invest more in its A&R operations both to identify and sign promising new artists,” while also “maximizing the potential of its existing roster.”  Existing superstars – including Coldplay and Robbie Williams – are less convinced, and have been demanding proper marketing, sales, and staffing support.

Meanwhile, Hands reaffirmed that EMI is moving away from large, upfront advances, and instead shifting towards performance-based bonuses.  The Terra head also confirmed the receipt of £250 million in fresh financing, a sum that will be used to accelerate the restructuring efforts.  Hands is slated to speak to US divisions starting today.