Electric and Music Industries or EMI as it is more commonly known is one of the world’s big four music companies today.EMI was brought as a merger in 1931 (in response to the Great Depression that had also hit the recording industry) of two major players in the British recording industry at the time, The Gramophone Company and The Columbia Graphophone Company, They are credited with opening the world’s first custom-built recording studio at Abbey Road in London, from where in 1962 the Beatles started recording and went on to become one of the most commercially successful and critically acclaimed acts in the history of popular music. It also owns Capitol Records in Los Angeles and has a number of top artists on their Label such as Coldplay, Pink Floyd, and Robbie Williams. In 2007, EMI was acquired by Maltby Capital the acquisition vehicle setup by Guy Hands the chief of the parent company Terra Firma for whopping sum of £4.2bn. The deal was sealed just weeks before the global financial crisis, and now the firm admits that the company is worth only around £2.2bn. EMI is currently under risk of being seized by their main creditor Citibank if they are not able to persuade investors to inject another £120m. If Citigroup takes control of the label, then it is likely that Citigroup would sell the record music business to Warner.
2External Environment Analysis
2.1Classification of the External Environments
Figure 1 is a graphical description of the external environment (Unit 2, B820 Strategy) classified into the Macro (Far) and Industry (Near) environments. This works as a baseline for the different levels of analysis that would be carried out on the external environment
•Figure 1 Macro(Far) and Industry(Near) environments
2.2Macro (Far) Environment
Table 1 analyses the Macro Far Environment based on the STEP Model (Unit 2, B820 Course Book).
Governing ForceIn relation to EMI
SociologicalThere is a lesser stigma of being associated to a big label. More artists are moving towards smaller labels that provide a more personal interaction and are prepared to take the risks (fighting the corporation attitude). However record companies do offer a simple manufacturing and distribution only deals which give the artist a higher percentage. Shows such as the X-Factor and Britain’s Got Talent have opened new venues for newer artists which already have a huge fan following behind them before they even need the music company to work for them. This leads to tougher contracts for the music company. The YouTube/IPod/Iphone generation also makes it easier for smaller music production companies or the artists themselves to release their own music as there is an already wide international audience for this channel. This acts against the costly distribution channels that have been set up by some of the music majors in the early years.
The overhead of searching for new talents could be considerably offset by such shows as the X-Factor. Publicity costs would be reduced as the artists signed through these channels would have a considerable fan following and would not need the same amount of publicity as compared to an unknown talent. TechnologicalOnline Stores such as iTunes /Amazon and streaming sites like Napster/Spotify have brought about a huge/immediate requirement for change to the CD manufacturing distribution logistics infrastructure music companies had in place, even if it was outsourced. This combined with the rate at which piracy has grown allows for buy once play/share anywhere has made it a difficult market for physical CD sales. Significantly Lower costs of high end production software and drop in hardware prices have meant lower entry thresholds and also that bands could operate independently and bypass the big music companies.The Online stores like iTunes/Amazon have also opened up new channels for sales for music companies. They are also able to offset...