KEY POINTS:
The appointment of a little-known Italian marketing executive to run EMI's recorded music division is the latest step in the reinvention of the beleaguered label by Guy Hands, its private equity backer.
Elio Leoni-Sceti was recruited from Reckitt Benckiser, the consumer products giant responsible for Cillit Bang and Airwick, and is one of a series of non-music industry appointments that are central to plans to separate EMI's creative and business roles.
Leoni-Sceti's appointment will also see Hands step back from president to non-executive chairman of the company. "Elio's career achievements and outstanding leadership qualities are ideally suited to ensuring that EMI is a successful business," Hands said.
Hands' group Terra Firma paid £3.2 billion ($8.3 billion) for the company last August, after a string of profits warnings sent the stock price plummeting. In May 2007 the company announced a £264 million loss, as its share of the UK album market slipped from 16 per cent to 9 per cent and digital downloads ate into sales and margins.
The problem is affecting the whole industry. Sales of physical products are declining, as digital players such as iPods take over the consumer market. In 2007, recorded music sales dropped 8 per cent globally. The labels are also fighting a rearguard action against digital piracy and although legal digital music is growing fast it is not enough to fill the gap.
In January, EMI announced redundancies of 2000 out of a worldwide staff of 5500 to help meet a target of £200 million of annual savings. But the most significant change is the separation of the artists and repertoire (A&R) role which includes finding and developing the label's artists from other duties such as marketing, promotional agreements or digital strategy.
Traditionally, music company senior executives are drawn either from those who have risen up through the creative ranks, or lawyers or accountants who have specialised in the music business. But the proposal at EMI is for creative specialists to concentrate on finding the next big thing, and leave the label's newly created Music Services division to handle negotiations with retailers or merchandisers.
At a time when the launch of an album includes up to 200 different products, Leoni-Sceti's background in marketing and branding could be a considerable asset.
"It used to be that the big labels were only about having the most popular bands, because that is what people were buying, but now the attitude is that the company is selling an 'entertainment experience', and it will give away music for free if can make money another way, from live gigs or merchandising," Adam Daum, a media analyst at Gartner, said.
The problem is how far the "creatives" be they artists or A&R people baulk at the changes. Paul McCartney had already left EMI by the time the Terra Firma deal went through, claiming that the company had become "boring" and "symbolic of the treadmill". But he was not the only high-profile defection. Radiohead quit the label in artistic disgust in December. Thom Yorke, the lead singer, told Radio 4: "Companies buying and selling themselves and seeing the artists' work as simply part of their stock are devaluing music."
Leoni-Sceti and EMI's new management are unlikely to have long to prove the validity of Hands' vision of a 21st century music business.
Meanwhile, EMI must be doing something right. It clocked up number ones on both sides of the Atlantic last month with Coldplay's Viva la Vida album and Katy Perry's I Kissed a Girl single.
- INDEPENDENT
