Perorming rights societies. Whose interests do they really represent? As with all big agglomerations, the opinions of the individual member can get somewhat swamped, and as the big societies are used to throwing the weight of their legal department at whatever industry gnats fly into their path they can overstep their bounds and pursue cases that are innapropriate, unpopular or just downright wrong. In the last link, ASCAP are suing a Manhattan venue for playing music without paying them, and name Bruce Springsteen as one of the plaintiffs in their case as one of the artists whose music has been performed without licence. Fair enough, right? Bruce’s music is on their books, and they’ve got a stated schedule of fees that venues are supposed to pay to perform music (not that the venues get any say in defining how much the fees should be). Ummm… no. Bruce Springsteen wasn’t asked about the case, and doesn’t endorse the court case – he in fact his publicists have this to say about it:
In regards to the ASCAP lawsuit against Connolly’s Pub and Restaurant, ASCAP was solely responsible for naming Bruce Springsteen as a plaintiff in the lawsuit. Bruce Springsteen had no knowledge of this lawsuit, was not asked if he would participate as a named plaintiff, and would not have agreed to do so if he had been asked. Upon learning of this lawsuit this morning, Bruce Springsteen’s representatives demanded the immediate removal of his name from the lawsuit.
Techdirt has a very strong anti rights-agency opinion, and has published some informative posts about it – the thrust of their argument being that the various agencies need to be more sensitive to the opinions of the artists they are supposed to be representing, and encouraging growth throughout the music industry, rather than their current punitive profiteering from grass roots venues and minor infringers.
Since 1st August 2007, when Terra Firma bought EMI for $8,000,000,000 with a 90% approval from it’s shareholders, the bottom line on EMI’s financial reports is set to show losses of more than $1.5 billion dollars, despite Terra Firma and its allies pumping in half a billion dollars worth of equity. EMI managed to meet the covenants imposed on it’s debt by Citibank in January, but is highly unlikely to do so in the coming quarter-year reports without further funding from Terra and Co.
EMI’s earnings are equal to paying the interest on their loans ($215 million!), but if they can’t improve their financials they’ll be in danger of defaulting on their debt and having the company fall back into the hands of the lenders, Citibank. Of course, there is still Terra Firma’s lawsuit against Citi in the offing, claiming malfeasance on Citi’s behalf in handling the auction of EMI – One can imagine a lot of white knuckles and short words as the cheque for the interest payments is signed.
If the debt does turn bad, it seems likely that Citi would break EMI up for parts, the gem being the still-profitable publishing department. Such a move would drastically change the face of the mainstream music industry, particularly in the UK, where most of EMI’s artists are based. A lot of the big sellers would go to the other major labels, but the felling of one of the biggest trees in the wood would make a lot more room for independent labels to grow up from under.
As you may have read here on our blog Terra Firma are suing their advisors/lenders Citibank for perpetrating a fraud against them – essentially Terra are saying that Citibank mislead them about the amount of competition there was for the record label’s purchase, the benefit to Citibank being more than £92 million in fees and lending them £2.5 billion that they claim they didn’t need to borrow. The plot thickens when you realise that EMI was in a huge amount of debt to Citibank, among others and that it was in danger of defaulting on the debt if it wasn’t rescued by a purchaser. The specific accusation is that a Mr. David Wormsley, a Citi employee who was advising Terra Firma told a rather significant pork-pie in an attempt to prevent Terra from dropping out of the bidding for EMI, precipitating a ‘busted auction’ – something that would have massively decreased EMI’s stock price, and thus the value of Citi’s asset, as well as EMI’s ability to repay any value that was still outstanding in their loan from Citi.
These accusations may be coming from a party that is desperately trying to shore up a huge investment in a failing company (look at EMI’s previous 10-K’s for an idea of their year on year losses), but they are pretty frightening for the big 4 labels – file sharing may finally be on the wane, with big torrent trackers like Mininova and The Pirate Bay being forced to go legit, but costs at labels are still outstripping income, and copyrights on some of their biggest selling artists are going to begin running out over the decades to come: the first Beatles song will come out of copyright in the EU in 2012 (unless there’s a change in the law).
Apple, eMusic and some other download stores are breaking ground in making online music profitable, but there are indications that even iTunes market share is dropping – innovation is happening with streaming services like Spotify entering the fray with big-label backing, but the true form of digital music in the decades to come is as yet undecided. I wonder if EMI will be there to see the changes happen.
Perorming rights societies. Whose interests do they really represent? As with all big agglomerations, the opinions of the individual member can get somewhat swamped, and as the big societies are used to throwing the weight of their legal department at whatever industry gnats fly into their path they can overstep their bounds and pursue cases that are innapropriate, unpopular or just downright wrong. In the last link, ASCAP are suing a Manhattan venue for playing music without paying them, and name Bruce Springsteen as one of the plaintiffs in their case as one of the artists whose music has been performed without licence. Fair enough, right? Bruce’s music is on their books, and they’ve got a stated schedule of fees that venues are supposed to pay to perform music (not that the venues get any say in defining how much the fees should be). Ummm… no. Bruce Springsteen wasn’t asked about the case, and doesn’t endorse the court case – he in fact his publicists have this to say about it: