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EMI to merge bands in new bid to cut costs

By | Published on Thursday 1 April 2010

Following the news yesterday that all of EMI’s attempts to mortgage its recordings catalogue in the US market had failed, one last bold plan has emerged from the London-based major’s existing management that they hope can stop Citigroup from seizing control of the company when loan repayments become due in May.

It seems increasingly likely that the only way that EMI will now be able to meet its commitments to Citigroup is if it can convince investors in its parent company Terra Firma to cough up more cash. In a bid to get that support, a new internal report has proposed a radical way to enable further cost savings at the already cut-back major, principally by encouraging bands signed to the label to merge their activities, reducing upfront investment costs and financial risks.

The ‘April Report’, a name seemingly referencing the fact the major only has one month to save itself, was distributed yesterday to Terra Firma investors, senior EMI staff and key artist managers, and claims that so called ‘band mergers’ could be the solution to the major’s woes, enabling the record company to better service what some execs see as an overly expansive roster of artists by pooling marketing efforts into combined releases.

The report outlines some of the first band mergers likely to take place as part of the new arrangement, some of which seem to have already been run by affected artists and managers. If the proposals go ahead, Hot Chip will be partnered with Coldplay, and, despite having only just released their latest album ‘One Life Stand’, could be in the studio with their new bandmates and producer Brian Eno as soon as June. The new album from the combined band, working title Coldchip, should be out before Christmas.

While some merged bands will actually collaborate in the studio, other mergers will see American and British artists combined, with the singers performing under a combined brand name, but only in their home territory. This has echoes with the 1960s system where different artists on opposite sides of the Atlantic would release the same songs. It’s thought Katy Perry and Kylie Minogue, or Katy Minogue moving forward, might be the test project in this regard, with Katy representing the combined band brand in the US, and Kylie in the UK and Australia. There are, of course, also carbon footprint benefits to this particular idea.

But possibly the most surprising of the band merger proposals is that artists already involved in multiple projects with the label will have to pick one brand to perform under. This would affect the projects of former Blur members, whose new work would all be released under the Blur name. This would include all Damon Albarn projects, including Gorillaz, and Graham Coxon’s solo work.

Although it’s not clear if the band mergers proposal was included in the previously reported business plan prepared for Terra Firma investors by former EMI CEO Elio Leoni-Sceti, who quit last month, the proposal is now being spearheaded by the company’s Executive Chairman Charles Allen.

He provides the introduction to the April Report, and writes: “While it is no secret that EMI has had its fair share of problems in recent years, I genuinely believe that this measure will secure the company’s short term and long term future. I realise that many music fans will see it as a controversial move, but they must realise that it is a necessary one. Record companies need to keep their costs to an absolute minimum to stay in business, and when innovative solutions like this present themselves, we’d be fools not embrace them”.

Although most affected artists are yet to comment on the report, a source close to Hot Chip’s management last night confirmed that they had been consulted about the proposal the band merge with Coldplay. The source said: “We had our reservations about the Coldchip proposals, but, while driven by commercial necessity, they actually pose some interesting creative challenges that artists will find exciting. The Hot Chip boys are actually looking forward to working with some brand new bandmates. We’re not 100% sure how it’s all going to work yet, but given Coldplay’s huge global fanbase, it’s also a great opportunity for the guys”.

Other mergers proposed in the report include a new band called The Stones consisting of Angus, Julia and Joss Stone, and, perhaps most interestingly artistically speaking, an album by a combined Massive Attack and Liars, whose new moniker may be Massive Liars.

EMI are yet to comment on the leaked report.

YES, OBVIOUSLY, THIS WAS AN APRIL FOOLS STORY. Though talks with Sony and Universal regarding them licensing EMI’s entire catalogue in North America did fall through on Wednesday, causing the London-based major to fail financial tests set out in its loan agreements with Citigroup.

It really does seem that the only way EMI can now avoid defaulting on its loan in May and falling into the ownership of Citi is if Terra Firma’s investors can be persuaded to put up more cash. But the equity group’s backers are bored of throwing money into the hole that is EMI, and main man Guy Hands long since washed his hands of the EMI experiment.

Something radical would be needed to get said investors back onside. So expect this story to reappear for real in a fortnight. Or EMI to be on sale come June.

And if the boys from Coldplay and Hot Chip are reading, there seems to be quite a lot enthusiasm for Coldchip out there. You can have that idea on us. Even if one half of you did call our April Fools story “cackhanded”!