Resnikoff’s Parting Shot: Post-EMI

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This is what the end of a major label looks like.

What, did you think EMI was just going to hang a ‘Sorry, We’re Closed’ sign outside?  Instead, we get fireworks: investor lawsuits, desperate, late-stage dealmaking, swirling acquisition possibilities.  And this could go on for years, depending on how much oxygen Guy Hands can negotiate.

If a five-and-dime closes, the place gets boarded up and a liquor store moves in.  Similarly, a flopped startup gets ‘wound down,’ according to VC-speak.  But in the case of EMI, ‘the end’ might be hard to recognize.  Publishing might go over there, recording catalog over here, a retrofitted operation created there, etc.  Perhaps the EMI ship keeps floating in some radically modified or stripped-down manner.

This is a substantial entity, and instead of most modern-day models, EMI actually controls important intellectual property and creative capital.  There are seriously-valuable assets and artist relationships in the balance, ones that can be re-configured and re-arranged within other businesses.  The house never really burns down; it never goes to zero.

Perhaps EMI Music survives as a largely catalog-focused company, instead of attempting to develop newer acts.  Really, who knows what the final arrangements look like.  Let the investors bleed it out, and salvage the scrap metal before walking away.

And then what?  What happens after EMI – as we now know it – goes poof?  In the near term, the other majors will continue to putter along, pursuing 360-degree deals, digital initiatives (however unsuccessfully), and a smattering of over-the-top victories (the Biebers, Boyles, Sades, and Gagas that mean so much to the bottom line).

They (WMG, Sony, UMG) will continue to struggle, while the environment around them continues to radically change.  Perhaps Warner Music absorbs the worthwhile EMI catalog, and discards the rest.  The game may be over for EMI, but the ‘big three’ still have time on the clock to transform, reinvent, radically realign.

The bigger question is who successfully fills the vacuum, the growing opportunity to service the insatiable demand for music.  How many more Biebers can be plucked and pumped-up by the major label machine?  Or, can others create sustainable – and monetizable – artist stories in a similar fashion?

Welcome to the great riddle of the 2010s.  EMI is already in the rear view mirror, but consumers are still devouring music, on all levels.  Remember, all of those screaming teenage girls are still there, waiting for their Biebers, their next Justins.  Just ask Scooter Braun or James Roppo, both battling legal charges for not properly quelling a Bieber riot – a ‘good problem’ if it ever existed.

Perhaps the majors are simply a dying, ruling class that never gets replaced, but all of this early-stage experimentation is normal for disrupted, formative industries.  Turns out, this is how new markets get formed.  In the coming years, expect lots of failures – from older, established entities to five-minutes startups – but also expect some survivors, and in turn, an emerging class of power-players.  The fall of EMI is the end of one book, but an early chapter for another.

Paul Resnikoff, Publisher.