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Penny Fractions: ‘Selling The Pig’, EMI Records One Step Forward, Two Steps Back

Hello, happy to be back from vacation and writing words on my life’s singular passion: backroom deals
Penny Fractions
Penny Fractions: ‘Selling The Pig’, EMI Records One Step Forward, Two Steps Back
By David Turner • Issue #101 • View online
Hello, happy to be back from vacation and writing words on my life’s singular passion: backroom deals and corporate backstabbing within the music industry. I jest, I jest. I’d like to give a big hello to the dozens of college students that were told to start reading this newsletter for class. My email, along with some other small biographic information, is at the end of the newsletter for all you new readers if you want to say hello! Otherwise, let’s just get into this week’s newsletter.

The Final Days of EMI: Selling the Pig centers on the last decade of the British major label EMI Records. For the book, Journalist Eamonn Forde spoke to what feels like an endless number of former and current employees about what happened when Terra Firma, a private equity firm, acquired the “under duress” record label and proceeded to slash staff, alienate musicians (do read the Radiohead story excerpt that was put in the Guardian), and ultimately end up with what could be described as one of the worst large-scale private equity deals. 
Depending on one’s own set of biases there may not be any good guys in this story of clashing corporate interests. Industry rule 4080 would preclude putting one’s faith with EMI Records, though my sympathies rest with the thousands of people who lost their jobs and often appear in the book as the ants crushed by executives. Private equity firms are destroying American retail, journalism, Hollywood…well, nearly anything they can touch. 
The real enemy of the story, however, is Citibank. Guy Hands, who led Terra Firma into the EMI deal and is quoted extensively throughout the book, claimed that Citibank fully knew that EMI was a sinking ship when it helped broker the eventual purchase. Hands alleged—ultimately losing a court case—that Citibank engaged in bad faith lending practices that paralleled the deals banks made through the 00s that led to the 08 economic collapse. The difference is that instead of overburdened American homeowners, it was a massive private equity firm that was nearly brought to its knees. Not quite as tragic, but still a shame! 
A major reason EMI Records got in such bad shape is that the company paid out too much money to shareholders during the 90s record industry bubble, so again, nearly all of the characters involved in the story shared responsibility in the company’s downfall. This newsletter won’t litigate these decade-old banking decisions any further; instead, I’ll focus my attention on the increasing role of the internet on the record industry through EMI’s prism.
Don’t Worry We (EMI Records) Tried It
What’s fun about reading Selling the Pig is the subtle ways in which it pushes against the dominant narrative of what caused the eventual early 00s music industry crash. For EMI, the downturn wasn’t triggered by file-sharing or Napster, but rather the 90s CD bubble, Forde writes: 
Unwittingly, EMI’s board had planted a bomb under its future at a point where they thought the CD-powered good times would never end; this was to play a decisive role in making EMI increasingly vulnerable to a takeover during the digital famine years…“There was that moment where we gave a lot of money back to shareholders at the end of the 90s.” says a senior international executive. “It was something like half a billion pounds. After that, then we had issues with the debt.” 
This is important context for the rest of the book, because the mood of the EMI staffers quoted about the possibility of distributing music via an online store or more experimental channels wasn’t one of dread or fear, but rather bubbling with possibilities. A reason cited was the release of David Bowie’s ‘hours…’, which was the first major label album to be available online on both Bowie and Virgin’s websites back in 1999! Even allowing Radiohead to experiment with peer-to-peer networks for Kid A’s promotion showed that EMI employed plenty of people with a sense of where music distribution was headed (though it didn’t prevent the band from leaving the label). The reactionary nature of the music industry towards online distribution of music wasn’t uniform. Here, Forde gives EMI quite a bit of credit for bucking against these trends, even if it wasn’t for altruistic reasons. 
Pressplay and MusicNet’s early fumbled attempts at centralizing music streaming and downloads under the thumb of major labels were at least privately known to be bungled products. Though, I’ll note that the internal critiques didn’t stem from meager artists payouts, but rather a poor user interface and lack of consumer interest. What takes up a lot of conversation in the book was the arrival of the iTunes Store and EMI’s attempt to alter how downloads worked within the store, as well as the label’s hypothetical plan to capture the market Apple helped establish. 
EMI employees pre- and post-Terra Firma pushed for the record label to abandon digital rights management (DRM), a tool that limits how much control users were granted over music files they purchased from the iTunes Store. This was certainly a worthwhile pro-consumer fight, and one that would push the rest of the industry to adopt this as a standard (this was an early selling point of Amazon MP3 store). The oddly small stakes fight points towards just how quickly the record industry shifted from swimming in CD bubble cash in the 90s to pushing less restrictive consumer technology in the 00s. Another pro-consumer push from the label was Hands’ own disinterest in following the Universal Music Group’s lead in suing fans over illicit downloads. Unfortunately this pattern of being one step ahead too early would soon repeat in much grander fashion. 
An entire chapter is devoted to the idea of EMI.com, which I’ll describe by just quoting Hands: 
It would have been the first real streaming [platform]…It got huge resistance from the business. I wanted to go out and get agreements with other labels to do a streaming service, effectively unlimited and pure subscription, in 2007. 
Forde describes the streaming idea, which sounds totally fine in retrospect, as divisive across the company, even before the rest of the industry got to wrap their heads around it. Holding a clear hindsight bias, I am skeptical of how successful the plan might’ve been considering iTunes’ monopoly over the digital download space at that moment. What’s clear is that over the last couple decades, plenty of attempts at digital music players have launched with strong record industry backing and failed, so getting off the ground without that support is hard to envision. This resonates with me simply because when companies like Spotify are credited for “saving” the music industry, it ignores the many, many attempts at the exact same idea that simply didn’t arrive at the right time to succeed. See, plenty of people knew how to create a broken business model, but not all were lucky enough to sustain a fragile business on top of it. 
There is so much in Selling The Pig that is worth reading, even if only to get a nice blow-by-blow account of a record label’s demise or learn about the repeated failure of a private equity firm. I centered on the tech side because it relates to the central theme of this newsletter, and often the details of the recent past are so quickly forgotten within music business coverage that it was nice to retrace those steps. What feels new in music is often fairly old, and in some cases, what’s new in the record industry happened a decade ago (but no one wants to cite their sources).
Unheard Labor
Music Ally reported on a tweet thread by Amanda Palmer where she spoke about the lingering stigma attached to artists who pursue crowdfunding. Crowdfunding isn’t for every artist, and certainly the fall of PledgeMusic failing to pay musicians is a concern, but I still wish it was more in the mainstream. The other quick story note is that Bloomberg reported that the New Yorker was able to convert former fact-check contractors into full-time employees, and music site Pitchfork is attempting to do the same. The exploitation of contract and freelance labor applies across all industries and certainly music is no different, so best of luck to these Conde Nast publications in contract negotiations. Last note, user-centric streaming may or may not be the future at least according to Deezer, which again I’ll say we must do better than this model but more on that later.  
6 Links 2 Read
There is so much to unpack in this story I could devote an entire newsletter to it. Apple’s proposal for songwriters sounds like a much better starting (not end) point towards fixing the unjust pay scale, which its competition is right now actively fighting to increase. Also tucked away in this article is an admission of Google Play’s lack of profitability, which I’ll just tuck in my pocket to be endlessly cited in coming newsletters.  
I’ve written far too many times on this topic, so I’m going to offer an updated opinion here. If (big if) there must be a weekly ranking of monetary success within the record industry, let’s just use gross album sales over a week long period. This won’t fix all problems, but trying to cram streaming metrics into album sales should’ve stopped back in the digital download era, so let’s end this now. 
A few weeks ago I asked: “Why Not Fake Your YouTube Views?” The resounding answer by the music industry is: Don’t worry, we are! So, I can’t be too shocked that record labels working with Latin artists are juicing their views if Taylor Swift, BlackPink, and Indian artists are doing it as well. I guess my next question is, which rappers are engaging in this practice? 
A source in this piece laments that the FCC is fairly powerless to stop payola, at least based on nearly a half century of history. However, the returned threat of governmental action does show that the shadow economy of record industry capitalism might again be acting a bit too recklessly. 
The continued diversity of music listening in India is certainly an interesting story, but I do hold a bit of skepticism towards K-Pop’s reported popularity considering  Spotify remains in its early days in India compared to Gaana and JioSaavn. 
I don’t support most forms of corporate consolidation, but I do look forward to increased attempts to inflate the Billboard charts to compete with Rolling Stone. Maybe they’ll do a TV show!
My name is David Turner and I started Penny Fractions back in November 2017, as a way to think through various topics within the world of music streaming. Since then, the newsletter, which is delivered every Wednesday morning (EST), has grown to reach over twenty-four hundred subscribers with an archive that can be found right here. I’m currently a Curation Analyst at SoundCloud, so all thoughts here represent me, not my employer. Prior to this I wrote for Music Business Worldwide, Pitchfork, the New Yorker, Noisey, Rolling Stone, and Spin. I also create content on Patreon to help cover email billing costs and to compensate my copy editors, Mariana Carvalho and Taylor Curry. The artwork is by graphic designer Kurt Woerpel whose work can be found here. My personal website is davidturner.work. Any comments or concerns can be sent to pennyfractions@gmail.com.
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