Friday, September 24, 2010

Politics and music – dangerous liaisons, or not?

By Emmanuel Legrand

UK Music CEO Feargal Sharkey
Feargal Sharkey is taking the UK Music brass band to what we hope will be a sold out tour of this season’s political party conferences. It started this week with the Lib Dem gig in Liverpool, and will continue at the Labour Party do next week and end with the Conservative Party hootenanny in October (apparently there’s no visit planned to the BNP or the Greens).

A party conference is hardly Glastonbury in terms of entertainment values – although some reports suggest that quite a few MPs know how to get the party started - no pun intended. So why would the former Undertones frontman spend time in such company? And why is something that 20 years ago would have been anathema now seems so perfectly normal?

Because it matters! And because that’s why he was appointed chief executive of UK Music. His brief is to be the advocate for the British music industry, first and foremost to the country’s policy-makers. That he had been a howler in a punk band they all remember (and probably grew up listening to) helps open doors (it’s easy to imagine Sharkey handing his business card to some MP, adding ‘You've Got My Number (Why Don't You Use It?)’…).

However, it hasn’t always been like that. Creators, by nature, are weary of getting too close to politicians. It can be a painful relationship. You can quickly fall into the “official art” category, and that’s not a good place to be. But it does not apply to the industry itself, to the point that it’s now impossible for the creative industries to not interact with policy-makers. The world has become increasingly complex with legislation and regulations at national and global level necessary on many issues, from piracy to copyright harmonisation to taxation to organising the free flow of creators to the remuneration of works…

If this is quite new to the UK, in France there has been a more symbiotic relationship between the political world and the creative community, thanks mostly to the socialist minister of culture Jack Lang. Appointed in 1981, Lang re-defined the role of government in the creative sphere, and set a new atmosphere where creators were given prime position. Of course it did not go without its concessions. Artists were asked to “participate” in various initiatives, with most of them doing so, because they trusted Lang.

The upside for the industry was that Lang, to a limit (for example, he never helped quash the 33.3% VAT rate applied on recorded music), was open-minded and sympathetic to industry issues, taking it upon himself to sponsor a groundbreaking copyright law in 1984.

Lang’s tenure created a benchmark by which all its successors have been judged, with some faring poorly. One of his lasting legacies has been to put creative issues into the political agenda. The aftermath could be seen last year when the French government passed the “graduated response” law known as Hadopi. This was strongly lobbied for by the music industry, and it certainly helped that the husband of singer/songwriter Carla Bruni was the host of the Elysées Palace…

No democratically elected government, whichever colour of the political spectrum it is, can abstain from paying attention to this important facet of society (OK, save maybe for Italy’s Silvio Berlusconi and the US under Bush). Over the past 10-15 years within the UK, there has been a shift for the better in the way policy-makers perceive – and work with – creative industries. It’s hard to imagine a symbiotic relationship between the governments of Margaret Thatcher and John Major and the creatives – quite the contrary: the image of Bob Geldof lecturing Thatcher about the VAT rate applied on ‘Do They Know…” springs to mind.

With Tony Blair, however, things got better. Beyond the photo of the Gallagher Bros. sipping champagne with the PM, there was also major groundwork made by the industry to connect with cabinet ministers – not simply at the DCMS, but across the government. Chris Smith and Andy Burnham, especially, were quite sympathetic to the creative sector, whilst Tessa Jowell focused on the Olympics and James Purnell did not last long enough to make a mark. If, earlier this year, the then-Secretary of State for Business, Innovation and Skills Peter Mandelson had not taken personal interest in the Digital Economy Act (with or without the influence of David Geffen), the legislation would most probably not have been passed.

Perhaps the biggest change over the years has been the mindset of policy-makers, with the recognition of the creative industries’ invaluable contribution to the overall economy of the country. It is hard to deny the cultural and social importance of music, cinema, visual arts, literature, photography, etc. The value of a Caravaggio painting, for example, may be huge, but its historical, social and cultural value is even greater. Dealing with the creative aspects, however, does not mean you have to limit the scope to heritage, particularly given that governments would like to confine it.

So with Labour’s patrons of the arts such as Gordon Brown and Mandelson gone, is it going to be any different under a Conservative government? Apparently not. A while ago, when he was leader of Her Majesty’s opposition, David Cameron visited the BPI’s AGM and delivered what many considered to be an impressive speech – remember, at that time, he wanted the music industry to help him “repair” Britain’s “broken society”.

Culture minister Jeremy Hunt has already signalled his interest in fostering good relations with creators and the industry. One thing is certain, given the impending budget cuts, there will inevitably be less money to spend on the creative industries, particularly given that there are a number of important agendas to deal with: the implementation of the Digital Economy Bill; the drought of credit for small and medium businesses (at the Lib Dem conference, Business Secretary Vince Cable – a Lib Dem, in case you forgot – said he was going to make sure the banks “lend again”); the role of ISPs and the remuneration of rights owners; and, the status of Britain as a source of creative works for the world (we know that on this topic, Sharkey has set the bar quite high).

Today, there are forces in motion around the world that aren’t necessarily sympathetic to the creative industries. They have far more powerful lobbying machines and lots of funds, whilst they too know how to connect with policy-makers. So yes, it is imperative for someone like Sharkey to mingle within that crowd, and make the industry’s voice heard. Whilst his punk credentials may be at peril, knowing him, it’s fair to say that he’s unlikely to give a monkey’s about them.

(This story was first published in the weekly edition of Record of the Day, dated September 23, 2010)

Friday, September 17, 2010

Faxon marks his territory at EMI – but time may be running out

By Emmanuel Legrand

Could there be a more damning indictment of the Guy Hands/Terra Firma era at EMI than the 5-page memo its new group CEO Roger Faxon sent to the company’s staff last week?

One could argue that the appointment of Faxon in itself was Hands’ biggest u-turn, as his contempt for the music biz establishment has been well documented. After the guy from consumer goods, the other one from TV, and God knows who else who was going to show the world of music how things should be done, Hands finally turned to the quiet one, the un-flashy one, the guy in the suit in the corner who had constantly delivered the good figures, and who could make Power Point presentations that even investors and analysts could understand. Why don’t we give it a try, must have thought Hands, probably out of despair.

For sure, Faxon ain’t a revolutionary, but be warned, he ain’t a softy either. If you want to witness a masterly exercise of deconstruction in action, just read his memo… For a start, Faxon asserts the obvious: EMI has to become “an artist-focused global rights management business”, and the structure and the people are at the service of artists. The key paragraph in the memo is the following: “We need to understand that we are not a product company at all -- we have to be a service company, and one that is obsessive about discovering great music (or rediscovering great music from our catalogue) and connecting it with an audience through every route available to us."

It comes as refreshing news after two years during which Hands and his cronies gave the feeling that the structure was more important that the creative aspects.

Faxon then proceeds to dismantle the top management structure (losing in passing some good people such as Nick Gatfield, EMI's president of new music for North America, the UK and Ireland; Ronn Werre, COO of North America and Mexico; and Billy Mann, president of new music-international and global artist management at EMI Music), but is putting an end to the multiple lines of reporting and bringing the company back to a simple geographic divide (North America, Latin America, UK/Europe/ROW).

In the process, Faxon appointed himself as head of the US operations, taking the dual position of global head and US boss which, to this date, has never been crowned with success at EMI (see what happened with Ken Berry or David Munns). It puts the CEO in the front line and makes him accountable for an important source of talent, revenues and profits. But then, he is American...

So Faxon knows the onus is on him to deliver success from the US that can then be pushed through the rest of the network globally. In a way, by shifting the centre of gravity of EMI to the USA (as exemplified by the soft – and apparently amicable – departure of London-based corporate communications guru Amanda Conroy last week), Faxon is probably doing EMI a favour in that the company will probably be under less scrutiny by the British media.

The new structure also creates a new powerhouse within EMI in the UK/Europe/ROW division, which is by and large EMI’s biggest unit. Its executive, David Kassler, is confirmed as one of the company’s most important operatives, and anointed as a potential successor to Faxon.

Staying with structure, Faxon announced the end of the Global Business Unit structure, known internally as “the Matrix”, which was the conduit between A&R and the rest of the world. Wrote Faxon, "While there is broad appreciation for the people and skills it has brought us, in trying to focus the business on the key business streams we seem to have created a confusing maze of accountabilities and responsibilities."

How delicately these things are said! Basically, the Matrix, which was supposed to be the organisational answer to EMI’s problems, the joker in Hands’ hand, had morphed into a maze (in plain speak – a fuck-up). It is not difficult to imagine the grin on Faxon’s face when writing that the “the matrix” was dismantled and had ceased to exist. Fact is that many executives at EMI saw the Matrix as a source of confusion and also of dis-empowerment, as projects they had nurtured were taken off their hands to feed the Matrix.

Who on earth could think that a “matrix” was the answer to EMI’s woes? Imagine the dialogue with the artists: “Hello Chris Martin, we need a new Coldplay album because we have to feed the matrix!” Maybe these were the same brilliant minds who added to EMI’s due diligence process before signing contracts with artists a long questionnaire, one which included asking if said artists were overweight and if a budget was required for a weight-losing programme… (We are not inventing it!)

Maybe these were the same brilliant minds that instructed headhunters not to recruit executives who had background in the music industry. One executive from a European country with over 20-year experience in the business once told this writer that he feared he would not get the job he applied for because he was told by headhunters that he was, well, too experienced…(He eventually got the job.)

When Guy Hands bought EMI, we wrote in RotD that EMI was obviously in need of an overhaul, but recovery would happen if the company’s three assets – its artists, executives and catalogue – were properly managed. But we also warned that artists were not cans of beans and required some special attention. So Hands went for the past few years into the deconstruction of EMI to build a new EMI, one that would not be hindered by the excesses of the previous regime.

We were supposed to see a new, mean and lean company, quick to react, artist-friendly and venturing into new worlds (understand streams of revenues). We heard lots good intentions, witnessed admirable visions, and saw executives coming and going at such speed (how many people have been in charge of the company’s digital strategy?), that it is admirable that there was still some business done.

So the elevation of Faxon as CEO of EMI Group, after long years in the shades of Marty Bandier at the publishing unit, is the revenge of the music biz nerds, of the guys in the backrooms who know the business but had to keep quiet while the guys in the front line who knew nothing were lecturing the world about how they would re-invent the music industry.

And Faxon is probably the right person for that – after all, hasn’t he been able to continuously improve EMI Music Publishing’s financial performance under Hands’ regime, despite the ongoing drop in mechanical revenues? Faxon knows how to extract revenues, and he has also configured the publishing unit for this purpose. He also knows that fresh talent is what brings in the goods.

Recent successes with Iron Maiden, Katy Perry and Lady Antebellum show that when given the right material, EMI’s team around the world can work hard and achieve success (but please spare us the trumpeting press releases each time an EMI act goes to No.1 in the US charts – this is what a music company is supposed to do!). As stated by Faxon, EMI now has to work for and with its artists.

But will Faxon have time? Business wise, he has a good window of opportunity, with Sony in dramatic need of leadership and new ideas, Universal waiting to see what Lucian Grainge will do (chop, chop, says the wind from LA), and Warner is going through another disruption with Lyor Cohen’s attempt to assert his power over Warner Bros.

But internally, Faxon will have to deal with scavengers looming over the sick body, shareholders expecting more than a penny in return for their investment, the conflict with Citi, the bills to the pension fund, and the cost of signing, breaking and developing talent. And that’s probably too much.

So we’ll conclude with a brief memo to Hands and his backers: Let Faxon and his team do their job without interference, for this is probably your last chance.

(This story was initially published in Record of the Day, Sept 16, 2010)

Thursday, September 16, 2010


This is the blog of Emmanuel Legrand, a journalist specialising in the entertainment industry.

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