EMI remixed for a digital age

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Managing EMI Music through its recent tumultuous history has been no mean feat. Since veteran marketer Andria Vidler became UK chief executive in 2009 - having joined from Bauer Media, where she was chief marketing officer - the group has teetered on the brink of insolvency, changed hands twice and now faces break-up under orders from the EU (see Timeline^[1]).

The trouble started two years ago after the private equity house Terra Firma’s debt-burdened buyout of EMI unravelled, leading the company’s main creditor to seize control. EMI’s recording labels were sold to Universal for £1.2bn but the deal was referred to the EU over concerns that it would grant the music major too much power in the market. Last September, Universal was ordered to sell a third of its EMI assets, including most of its operations in the UK and Europe.

Add to this the dramatic upheaval of the digital age - represented by the rapid growth of iTunes and the collapse of HMV - and you have a perfect storm, one which any seasoned executive would struggle to weather. Vidler, though, remains cool and confident.

“We’ve remained focused on delivering for our artists,” she says. “And we didn’t drop a ball: we had the top three albums in 2012, in a year when we should have been completely distracted and unfocused.”

Officially, Vidler’s job title has changed to UK chief executive of Parlophone Label Group, the spin-off company that Universal is now selling. Universal has tried to put a positive slant on the EU’s decision by pointing out that it will retain lucrative EMI labels like Virgin Records and prestigious EMI catalogues such as The Beatles and Robbie Williams. However, it is losing the ‘jewel in the crown’ that it had wanted all along: the majority of EMI in the UK, which includes Parlophone, the label behind multi-platinum selling acts such as Coldplay, David Guetta and Tinie Tempah.

Vidler, a marketing veteran of the BBC, is helping to present the newly formed Parlophone Label Group to bidders, with the sale process due to complete in the first half of the year. Although she concedes that the uncertainty around EMI in recent years has created “an additional hurdle” to implementing her strategy, she argues that the UK business has continued to thrive in adverse conditions.

She seems to have a strong business case behind her. EMI’s prestigious UK heritage means that in addition to its existing big-name acts, Parlophone Label Group boasts a vast amount of highly marketable catalogue including Kate Bush, Pink Floyd and David Bowie in their prime. Under Vidler’s stewardship meanwhile, EMI has steadily grown its market share of records sold in the UK from 11 per cent in January 2009 to 15 per cent in September 2012.

She claims this growth is vindication for her strategy of directing resources to a select group of high quality artists - one of the key selling points she is seeking to get across to interested bidders. “I would hope that whoever buys us recognises that our strategy of focusing on fewer artists has worked,” she says. “I hope they would want to continue that.”

Vidler’s powers of persuasion have been honed through an extensive background in marketing that began at the BBC in 1994. As an account director at Still Price Lintas she worked on the launch of Radio 5 Live and impressed so much the BBC recruited her. She worked her way up to become head of marketing for BBC News and then head of marketing and business development for BBC Sport.

She followed this with separate stints as managing director of Capital Radio and Magic Radio before becoming chief marketing officer of Bauer Media in 2008, home to music magazines such as Q and Mojo. She joined EMI a year later.

This career path has given Vidler a clear insight into the role of marketing in different types of media organisations: one that is both complicated but also hugely important. “I can’t think of a creative organisation that doesn’t have at least two audiences,” she says. “Our audience is our artists as well as the fans. But we also have retail and digital partners who are more than just distributors.”

She gives the example of iTunes to demonstrate the importance of business-to-business marketing within the music industry, noting that EMI’s market share is greater with the Apple platform than its overall market share. “ITunes is more than a distribution partner because it does so much promotion,” she says. “We overtrade with iTunes significantly for our market because my account manager on iTunes and the marketing manager of any particular artist work hand-in-hand the whole time.

“That’s the benefit of having a single co-ordinated strategy. If you have a commercial team that isn’t aligned with your artist-facing marketing team, you will drive differences, so I absolutely believe in a single strategy that enables everyone to be focused.”

Slimmer, fitter

Terra Firma began streamlining EMI upon acquiring the company six years ago and this pared-down approach has remained under subsequent owners. Vidler says that in today’s increasingly diffuse digital environment, a music company must show agility and react quickly to the rapidly changing market.

“The music industry is so entrepreneurial and divided into so many bits that you need to be united in order to work effectively with external partners,” she adds. “By working as a single team and focusing externally rather than on competitive internal silos we’ve managed to embrace some of the changes and feel less scared about it. Ultimately, the artist is the one that benefits.”

Vidler’s previous experience in radio has helped inform her thinking about the ‘bigger picture’ in the music industry, encouraging her to find new ways of promoting artists such as by working with non-music brands. For example, to raise the profile of upcoming artist Gabrielle Aplin, Parlophone secured the much-coveted ‘sync’ for John Lewis’s Christmas 2012 ad. Aplin recorded a cover of The Power of Love by Frankie Goes to Hollywood for the spot before releasing it as a single.

EMI acts Tinie Tempah and Professor Green have also benefitted from external brand sponsorship, with the former agreeing tie-ups with Lucozade and BlackBerry and the latter becoming a brand ambassador for Puma. Last year, Puma launched a clothing line designed by Professor Green and promoted the rapper through a gig at its Puma Yard pop-up site in central London during the Olympics.

Vidler suggests that while such partnerships can be beneficial for both artists and brands, the decision whether to branch out from making music is dependent on the outlook of each act (see Marketer2Marketer^[2]). “If you can identify the right marketing partner for an artist, you can create something powerful,” she says. “There’s a range of different things you can do when you put the artist first and then work out.”

EMI’s quest to find effective ways of promoting its artists has also led it to use social media more. Last summer, Blur launched new material on Twitter for the first time by performing two new songs on a worldwide video stream. The live performance had 75,000 streams in the first 10 minutes and trended around the world. Blur later released an interactive app for the iPad and iPhone that syncs with the news feeds from its website, Facebook page and Twitter account.

Meanwhile, to launch Coldplay’s latest album Mylo Xyloto, EMI worked with YouTube to broadcast a live concert of the band in Madrid. The gig was streamed live to 27 countries and had more than 19 million views worldwide. “We launched that album in a way that you couldn’t have done without digital partners,” says Vidler.

The rapid expansion of digital music might offer plenty of opportunities for record labels to promote their acts in new ways, but it also presents dangers. The advent of download sites like iTunes and streaming services like Spotify have put a major squeeze on margins, with album sales in the UK falling 14 per cent in the first half of last year alone.

Instead, consumers increasingly pick and choose the singles they want to listen to and can access cheaply. While album sales nosedived, the sale of singles rose by 6 per cent in the first six months of 2012 because of digital downloads.

Piracy

Alternatively, consumers turn to pirate sites where they can make free illegal downloads. Vidler says piracy remains an “incredibly frustrating” issue for the music industry that requires greater education of the public and more government support. Industry body BPI has estimated that between 2007 and 2012, the cumulative cost to music companies of illegal downloads in the UK will be £1.2bn.

“The music industry pulled together and created a campaign called Music Matters that aimed to educate people,” says Vidler. “I think the Government is also trying to help with its work with Google to ensure that even in the search engine the pirate sites don’t come up first. But the Government can do much more to support the creative industries around piracy, both in film and music.”

Ensuring the internet is a favourable trading environment for record companies is even more important in the wake of HMV’s failure. The retailer’s collapse into administration in January has thrown into doubt the very future of physical record sales on the high street, with some commentators claiming its bankruptcy represents the beginning of a digital-only world for music sales in the UK. Hope for the brand remains, however, after restructuring specialist Hilco bought up HMV’s debt at the end of last month, granting it control of the business.

It’s already suggested that up to 100 stores out of HMV’s 223 stores will close as Hilco uses the support of major film and music companies to run a downsized chain. While Vidler is reluctant to reveal much about the situation, saying only that EMI and fellow labels have done “everything we can to support the business”, she also expresses her belief that a physical music retailer can survive in some form.

“I shop online but I also like to walk into a book shop or a clothes shop, take advice and consider what else I might want to try on or read,” she says. “I don’t always know what I’m looking for and I don’t always have a planned purchase. I can’t see why music and entertainment are any different.”

It is a little-known fact that HMV was central to the origins of EMI: back when it was a recording company, His Master’s Voice was one of the labels that joined with others to form the Electric and Musical Industries (EMI) group in 1931. EMI held on to the HMV business as it transformed into a retailer in the second half of the 20th century before it divested itself from the chain in 2002. There are reminders of this decades-old affiliation throughout EMI’s plush London office, from fading paintings on the walls to a huge statue of the HMV dog and gramophone on an upper floor balcony.

Both HMV and EMI are thoroughly British music institutions that are now writing their own futures in turbulent times. EMI was the label that signed The Beatles, opened the legendary Abbey Road recording studio in London and gave the world seminal albums such as Ziggy Stardust, Dark Side Of The Moon and OK Computer. It’s a heritage that Vidler is keen to protect under the new umbrella brand of Parlophone Label Group.

References

1. ^{^} see Timeline (www.marketingweek.co.uk)
2. ^{^} see Marketer2Marketer (www.marketingweek.co.uk)