The Light Bulb - the comeback tour Friday, March 14, 2008
Seth Godin has posted an excerpt from Dan Kennedy's new book and Dan's thoughts on record label executives looking at changing a light bulb.
First of all, before we change anything, is the light bulb really burned out? Maybe we just need to breathe some life into it; repackage it, maybe the light bulb could do a duet with somebody (Sheryl Crow? Tim McGraw?) in hopes of getting some crossover appeal, maybe it could be in a beer commercial, maybe we could get it out on the road with a brighter light bulb. The other thing to think about is that this summer, Honda is rolling out a 100 Million dollar campaign for a new car aimed at thirty-somethings who consider themselves adventurous/spontaneous but can't really afford something like a luxury S.U.V. and it might be a perfect campaign to tie this light bulb into, at least it would be the perfect demographic, in terms of age.
Also, and this is just an idea: what if we found out what video games are being released in the third quarter and maybe pitched the idea of having our light bulb make an appearance in the video game at some certain level of completion; like, you get to a dark cave, let's say, if it's an adventure game, and if you have enough points you can get the light bulb - and it would be our light bulb, obviously - and then it's easier to see in the cave. The other thing is this: worst-case scenario the light bulb is, in fact, burned out. Is that really the end of the world? I mean, maybe that's actually of more value to us in the long run: Picture this for voice over: "The light bulb is dead. . . but the legend lives on. . . re-released, re-mastered, revealed. . . the light bulb. . . IN STORES NOW." It almost makes more sense than taking the time changing it, plus, if it's dead we can sell it without dealing with it, you know what I mean? No demands from it, no hotels, no road expense, no delays in the project from its end, etc. But, like I said, I'm just thinking off the top of my head here, just brainstorming, and none of this is written in stone. But the first thing we should do is figure out how we want to handle this, because the light bulb's manager is a total nightmare and we're going to have to take a meeting and listen to him sooner or later, and we should know what our plan is before we sit down with him. And let me tell you right now that the first thing out of his mouth is going to be, "This light bulb should be the brightest light bulb in the world, and it could be the brightest light bulb in the world, but you need to support the light bulb, you need to give the light bulb TV ads, you need to be more active in giving the light bulb tour support, we need to have some promotion from your end!" and on and on. And in that meeting, if you're in it, the only answer from our side should be that we're obviously very excited to be working with the light bulb, that we don't think it needs to be changed, that the only problem is people haven't seen how bright the light bulb could be, and our plan is to do everything we can to make this light bulb happen.
I'll send out an email to everyone before the meeting to remind people of our position on this, but the bottom line is we don't have the budgets right now, and basically we need to see something happening with the light bulb before we go throwing good money after bad, but obviously we can't have the light bulb's manager hearing that. I can tell you all that I'm personally very excited to be working with the light bulb, I think it will light up very brightly, and we're not going to stop working the light bulb, in whatever ways budgets will permit, until it does, in fact, light up very brightly. . . the light bulb is a very big priority for us from the top of the company to the bottom. Period. We can talk more about this when I am back from Barbados next week, and I'm going to need everybody's help on this. I know we can do it, but we need everybody working hard.
posted by John Wilson @ 10:46 AM Permanent Link
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If it's broken, you'd better fix it - EMI Monday, January 14, 2008
Today's FT carried an interview with Guy Hands of Terra Firma on the subject of EMI.
Amongst several stats trotted out, one section stood out for me:
Mr Hands also hinted at a clear-out of EMI Music’s roster of 14,000 artists, saying just 200 of them made most of its revenues.
About 85 per cent of artists lose money for their labels, he said, and EMI spends £70m a year subsidising the 15 per cent who never produce an album. The group has exceeded marketing budgets by about £60m a year, he added, and wastes £25m a year scrapping unsold CDs.
posted by John Wilson @ 4:04 PM Permanent Link
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The joy of youthful innocence Friday, November 16, 2007
I happened to be speaking to an ex-EMI employee this week, who'd only recently left the company. When I suggested that Terra Firma would probably break the company up, to leave themselves with the publishing and back catalogue bits, she got most annoyed.
"Guy Hands verbally promised the staff that he wouldn't do that and he'd lose a lot of face if he did".
Hmmm. I can see that weighing heavily on Guy's mind were he to face the dilema that a breakup of EMI represented the best value option. "Shall I lose face with EMI staff or with the City and my investors who look to me to make them (and myself) stellar returns?"
I also learnt this week from a senior EMI executive that Guy's new management team are doing a root & branch review of the business asking penetrating questions of the EMI staffer such as
- "What do you actually do?"
- "Why, on earth, do you do that?"
- "How does the company make money from that?"
Don't forget these are generally people (like myself) who've not worked in the music industry and so aren't acclimatised to the culture and practices of the music sector. People, who instead, are driven by the profit motive and who may not understand the importance of pandering to big music stars, albeit I confess their are tons of similarities between the music industry and the City (egos, remuneration....).
Labels: EMI
posted by John Wilson @ 9:02 AM Permanent Link
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Cliff Richard's new buying group Monday, October 29, 2007
Welcome to the Cliff Richards download lottery - or should that be buying group?
Today's news that Sir Cliff is embracing the new world of disruptive economics is fascinating on so many levels. In case you missed it check the story here, but in essence Cliff and his record company EMI are embracing the notion of buying groups and bulk discounts.
Here's how - Cliff is setting a maximum price of £7.99 to download his new album, but depending on how many people pre-register for the album, the price could drop to £3.99. And of course, fans can help drive the price down by encouraging others to download it too! Cliff maximises his revenues, gets good PR, and of course drives up album sales so that he may get to top the album charts.
The music industry is suddenly trying out every economic model in an attempt to find one that works!
Labels: business model, EMI, music
posted by John Wilson @ 8:43 PM Permanent Link
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EMI Shareholders vote Terra Firma top of the pops Thursday, August 02, 2007
EMI shareholders back Terra Firma deal with 90.27% of EMI shareholders accepting the offer, thus giving it the green light to purchase the major record label.
I suspect the prospect of Terra Firma walking away because Citigroup might not have agreed to fund an extension to the offer or improved offer must have preyed on some shareholders minds who were fearful that this was the last chance of a decent offer for a while.
posted by John Wilson @ 12:35 AM Permanent Link
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EMI deal Wednesday, May 23, 2007
The likely takeover of EMI by Terra Firma has been widely reported. At the offer price of 265p, the market is obviously anticipating contested bids based on the current (higher) trading price.
Guy Hands is far smarter than I and hence must see how to squeeze much more out of this business, something which I confess I'm struggling with. This is because I think recorded music is quickly establishing itself as having a perceived price of "zero".
Illegal downloads and music file sharing services are not to be condoned but they are having a dramatic effect on many people's perceptions of the price that they attach to music. Moreover, increasing numbers of online music services are enabling many people to consume the sorts of music they want at a very low cost (often zero).
An added factor in my view is the entry of Amazon into the music space. I recently met the Head of Corporate PR at EMI at an event. As a consequence of my "City" label, I was immediately deemed to be on the side of evil given EMI's poor showing in the City (to which I retorted it wasn't the City's fault that the company was performing poorly, nor was it responsible for the screw up over announcing results).
Anyway, she was praising their deal with Amazon (few days ahead of announcement) saying that it would help introduce greater competition into the music retail space. DUH!
As I pointed out to her, greater competition in the supply of a commodity/homogenous item will usually drive prices down, which I couldn't believe EMI wanted. Sure, it may temporarily help increase download volumes but it seemed inevitable to me that big distributors like Apple and Amazon would soon be returning to EMI to "kindly request" that EMI reduces its' wholesale prices for music downloads. It was therefore unclear to me that any increased volume would offset for lower prices. Moreover, if EMI's view was contrary to mine, it would have made sense for them to have lowered prices themselves to benefit from this tradeoff.
At the same time, what would this "transformational" entry do to their existing retail relationships both online and on the high street? You can imagine HMV jumping for joy. NOT.
If the Terra Firma deal does go through, it's going to be fascinating to see the nature of the transformation measures that will be applied. Their analysts will have been crawling over this deal for some time, so expect change.
It will also be interesting to see what impact operating under the cover of (demanding) private ownership will have versus living in the gaze of public markets.
posted by John Wilson @ 2:27 PM Permanent Link
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