Far From Business As Usual At EMI
As I mentioned yesterday, Terra Firma's plan to change EMI's organizational structure, what Guy Hands has called a "global functional matrix organization," strikes me as an oddly timed experiment. And yes, it really is an experiment.
The Wall Street Journal's Ethan Smith confirmed an earlier report by Fox News' Roger Friedman that Capitol Music Group chairman and CEO, Jason Flom, would not be replaced.
Traditionally, the corporations that own the major labels have organized their operations geographically, with label heads for the U.S., the U.K., Europe and other regions operating with a fair degree of autonomy, overseeing A&R, marketing, promotion and other functions in their territories.Since taking over last year, Mr. Hands has stated his desire to centralize such functions within the company. For instance, A&R executives in North America will now report to (head of A&R for the US and UK Nick) Gatfield, while marketing executives would report to a marketing czar, which EMI is currently looking to hire. Previously, both sets of executives reported to Mr. Flom, whose position wouldn't be filled.
Trink, who announced his resignation, told the WSJ's Smith he was leaving because of differences over Terra Firma's org chart.
In a telephone interview, Mr. Trink said the decision to step down was his, based on a "philosophical difference" with changes EMI's new owners were making."Their view is that there is no local management," Mr. Trink said. "There is no such thing as a president of Capitol Records going forward. I believe that's a mistake -- and not just because I happen to be the president of Capitol."
Some EMI hires have made sense. Former Google exec Douglas Merrill and Second Life co-founder Cory Ondrejka are no doubt tasked with finding new markets and new manners of music consumption and experience. They represent the future music business.
A shift toward technology and away from A&R fits with earlier statements by Terra Firma chief Guy Hands. "What we are doing is taking the power away from the A&R guys and putting it with the suits - the guys who have to work out how to sell music," he said in February '08.
How does the market feel about the strategy? If there is such thing as a score card on EMI's A&R outlook, it is EMI's loss of Radiohead and the Rolling Stones, public bickering of artist managers and Coldplay's sit-on-the-sidelines-and-wait delay in putting out its new album.
But getting rid of label presidents is a far riskier move. It implies one of two things: EMI's struggles are due to organization structure, not specific leadership, or label presidents' value to the company do not justify their salaries. With its new structure, EMI is betting that its "global functional matrix organization" is the best way to greet the future.
The thing about multi-national music companies -- just like other large, diverse corporate entities -- is within the larger company reside many unique company cultures. Each unique business unit may need its own unique leadership. Furthermore, different territories have different music markets -- especially the US and UK -- and managing two large and geographically separated divisions will be a challenge. At the very least, the new structure can run afoul of music industry executives' historical reluctance to work with people they did not hire themselves.
This is not to say the new organizational structure will not work. Hands may very well have on board the people who will buy into his vision -- there cannot be dissent if EMI is to meet its goals. But the timing of the changes adds greater risk to an already risky venture.
[music jobs] New York University is seeking a Department Chair for The Clive Davis Department of Recorded Music.

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