EMI Group announces that it will eliminate about 20% of its staff. There is a frisson of demiexcitement in the indie community as a transient feeling of “I told you so emerges.” Then the realization sets in that the 20% of the 9,400 employees who will be given their walking papers are probably individuals who are not of the corner-office variety, just regular folks who are going to be thinking long and hard about putting down $18.95 or so for a Lenny Kravitz disc. Meanwhile, the suits—who undoubtedly dress in a more calculated déclassé manner befitting of the rockdom that they inhabit—continue on in their positions. Oh, yes, and some 400 acts will also be unsupported, or have their legs cut out from under them. You can be confident that these people will not be getting the Mariah Carey treatment. Most of them will probably get dunning notices from the accounting offices of Capitol, Virgin, and other EMI labels.
Does this shaking of the manufacturer whose products sell at a level that makes it the fifth-largest recording company in the U.S. indicate that there is a real threat to Big Business by small labels and Internet downloading? Probably not. Rather, it is simply the same sort of thing that is happening throughout corporations, whether they’re manufacturers of cars or copying machines. Companies are looking for the ways and means to bolster their stock prices, and one way of doing that is by dumping what many of them refer to as their “most valuable asset”: their people. In the case of EMI, the debulking, according to EMI Recorded Music CEO Alain Levy, should save the firm $140 million a year by 2004; margins, he calculates, should be up to 13% by 2005, from an anticipated 5.1% this year. You’d think that people who run businesses would come to the recognition that what makes a company make money is great product, not the elimination of people. (Certainly, if there is waste in the organization, then it should be worked out of the system. But muda-busting alone will not be the solution for success.)
Interestingly, what helped the outfit make its nut in late 2000/early 2001 was the release of an album by a non-existent group: The Beatles. Its 1., which was simply the repackaging of music that had already been, in effect, bought and paid for at an earlier time, sold exceedingly solidly. Not even the guys at Enron could pull off a feat like that.
When announcing the cuts to a group of stock analysts, Levy is reported to have stated, “Not having star power tends to take the margins out of the music and makes it a commodity.”
Sure, and having a diminished roster of performers so that’s what is likely to be left is nothing more than brand-name acts (i.e., “star power”) is to do something other than to create commodities that will sell in greater volumes. One thing it will do, certainly: Make the stock analysts happy.