Label struggled to keep pace with technology

Jan 16 2008 by Alex Turner, Liverpool Daily Post

DESPITE launching the world’s first digital download album in 1999 – David Bowie’s Hours – the label has struggled to keep up with the pace of change in digital music technology.

By 2006, digital revenues accounted for only 5.5% of the label’s sales. A year later they accounted for 9.4%, but EMI was forced to make two profit warnings to the City as overall sales fell by 15%.

The American market, where CD sales have fallen even more steeply than in the UK, has proved to be particularly troublesome.

Editor of Music Week, Paul Williams, said EMI’s big problem had been breaking big artists in the lucrative American market.

“The vast majority of the success that EMI enjoys comes from its UK acts,” he said.

“What the big problem has been over a number of years for the label is breaking American artists in America.

“If you have got a company unable to break acts at all in the biggest market in the world, then you are going to be struggling.”

During vinyl’s heyday, EMI artists once held the number one spot in the UK singles chart for 41 weeks of the year.

EMI’s catalogue contains more than a million songs, including some of the most recognisable tunes in pop music by artists like the Beatles, Queen and Pink Floyd.

And having albums such as Beatles For Sale on their list made the label attractive, despite it losing ground to its rivals Universal and Sony BMG. In 2006, EMI and Warner attempted takeovers of each other, attempting to create a merged company which would have had one-quarter of the recorded music market.

But it did herald a long line of other bids for EMI, which culminated in the successful £3.2bn Terra Firma bid last August.

However, the private equity firm’s plans for the music giant have caused concern with its artists even before yesterday’s announcement.