Donald's Encyclopedia of Popular Music

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EMI

Electric and Musical Industries Ltd, formed in March 1931 by the merger of Columbia and the Gramophone Company (see HMV); the biggest record company in the world for nearly fifty years. On the merger Columbia sold the Columbia and General Phonograph Companies of New York (including OKeh) because of poor trading conditions and also to avoid anti-trust problems (HMV was linked to Victor there); the new company also included Pathé Frères in France, Carl Lindstrom and Electrola in Germany, Columbia Nipponophone in Japan, Pathé Orient and the China Record Co. in China, GramCo in India and the Odeon and Parlophone labels of the Transoceanic Trading Company (a Dutch company formed to look after interests of German labels overseas during WWI). There were also subsidiaries in Australia, Italy, Spain, Romania and South America, altogether 50 factories in 19 countries. The only major labels not connected to the EMI empire were fledgling Decca in UK, Brunswick USA, and the former Gramophone subsidiary Deutsche Grammophon Gesellschaft (DGG) in Germany. With Sir Louis Sterling as chairman, EMI opened the famous Abbey Road studios in an Edwardian mansion in North London November 1931; late that year Columbia's Alan Blumlein obtained the first patents for binaural (stereo) records (there were test pressings in 1933; see Recorded Sound).

In the pre-war period EMI had almost every major artist in the world on one or another of its labels: HMV house bandleader Ray Noble was not only a star in UK but (unusually for the time) also sold well in USA; EMI continued links with former U.S. partners Victor and CBS, so most of the major bandleaders of the the Big Band Era were on EMI in most of the world outside USA. During WWII EMI did war work; while Electrola was out of EMI's control the first German million-seller was Lale Anderson's 'Lilli Marlene'. WWI had devastated HMV, which lost subsidiaries in Germany, Austria-Hungary and Russia; in 1945 the company soon reasserted control over German and Italian companies, but Japan was lost (Nippon Columbia/Denon is still independent). EMI even won back control of HMV's Nipper trademark in Germany, lost when DGG was confiscated as enemy-owned property in 1917.

The Australian Sir Ernest Fisk became managing director in 1945, more interested in the electronics side than the music and a failure at both: during the battle of the speeds in the late '40s Fisk could see 'no future for the long playing record'; Decca issued LPs and some of EMI's top artists went over to Decca for that reason. Fisk also presided over the break-up of the world-wide cartel: the historic rivalry between HMV and Columbia had continued since the merger; after WWII the company signed all the greatest classical artists and had the best of everything, including 45 conductors under contract and Walter Legge, one of the world's great classical producers, but with no co-ordination the company would sometimes record the same piece of music in different parts of Europe at the same time. RCA and CBS (Columbia in the USA) felt that they were not getting the best out of the deal, didn't understand the inefficient way EMI was competing with itself, and each felt that they could do better with a licensee that was not also handling its main rival: CBS switched to Philips '52, RCA to Decca '53. (In both cases there was a sell-off period of some years, allowing Elvis Presley's early hits to go out on HMV in '56) Some EMI classical artists had gone to the USA to live, transferring to RCA or CBS; pop music was dominated by the USA labels: EMI lost it all, including e.g. Guy Mitchell, as big in the UK as at home.

Fisk was forced out in '51 but problems continued until Joseph Lockwood took over '54. His background was in flour milling engineering; he had run overseas subsidiaries of UK companies in Europe, South America, Australia; he soon turned EMI into a profit-oriented modern international, so that pop mattered more than classical prestige; he expanded into TV and films and was knighted in 1960. Angel had been launched as a U.S. classical import label '53; in '55 EMI bought Capitol for $3 million: Lockwood was criticized for paying so much, but by '59 Capitol was thought to be worth $85 million. This brought Frank Sinatra back to EMI, and acquired Dean Martin, Nat King Cole, Tennessee Ernie Ford etc. None of the big USA labels took to rock'n'roll; Capitol signed Gene Vincent and Wanda Jackson, but continued to rely on the Sinatra/Martin roster, and later the Kingston Trio.

UK labels came up with pale imitations of USA rock'n'roll stars, each hailed as the UK answer to Presley until Cliff Richard '58, who racked up 100 UK chart entries in 30 years; his backing group the Shadows were also influential. Suddenly U.S. domination had ended: Billboard published an annual list of the world's best-selling artists based on charts in 34 countries; in '63 the top four were Richard, Presley, the Shadows and Frank Ifield: all except Presley shared the same label (EMI/Columbia), as well as UK manager (Peter Gormley), agent (Frank Jarratt) and producer (Norrie Paramour). Number seven on the list was an up-and-coming Liverpool group, the Beatles, who in '64 knocked Richard off the top. In the mid-'60s EMI had the Beatles, Cilla Black, the Hollies, Billy J. Kramer (all on Parlophone); Richard, the Shadows, Ifield, Gerry and the Pacemakers, the Dave Clark Five, Peter and Gordon, the Animals, Herman's Hermits, Georgie Fame, the Yardbirds, the Seekers (all on Columbia UK), Manfred Mann (on HMV), Joe Cocker and the Move (on Regal-Zonophone) and the Beach Boys on Capitol. In '63-4 EMI artists topped the UK charts for a total of 76 weeks, all but one of the artists being British, but this success was not repeated in the USA, where Capitol passed on nearly all these artists (even the Beatles, whose first US records came out on Vee-Jay, later bought by EMI). In '63-5 15 major EMI acts charted in USA; only three were signed to Capitol for all of this period, three others for part of it. Of these acts (including Herman's Hermits, much bigger in the USA than in UK) seven had no. 1 hits, spending three months at the top.

Capitol was losing money by 1970; in '71 the company's annual report stated that 'a total restructuring of the management was necessary'. EMI put in team headed by V. Bhaskar Menon, former head of EMI's Gramophone Company of India (another large country where distribution was a problem), which succeeded in turning the company around. EMI's profits from the '60s were spent on diversification; but the '70s were a disaster: RCA, CBS and WEA established their own subsidiaries in many countries, no longer licensing product to others; they competed for sales and for local talent, while Britain's Labour government hampered EMI by restricting investment overseas; poor management and adverse trading in the music and medical electronics divisions brought the company to the edge of destruction. An attempt to sell half the music division to Paramount Pictures fell through; a takeover from Thorn Electrical Industries succeeded '79. Ironically, EMI's fortunes were changing for the better: just before its demise as an independent it took over United Artists Records including Liberty, Imperial and Blue Note; the late '70s-80s roster included Duran Duran, Paul McCartney, Queen, Pink Floyd, the Knack, Sheena Easton, Kate Bush, Kim Carnes, the Rolling Stones, David Bowie, Bob Seger, the J. Geils Band, Heart and the Pet Shop Boys. The music division remained an autonomous part of Thorn EMI; although Capitol was once again losing money in the '80s, much ground had been recaptured: Blue Note was revived '84 and Manhattan and EMI America labels formed in NYC; EMI bought Hispavox (Spain) and VDP (Portugal), giving EMI's Odeon in the potentially huge Latin American market a repertoire boost; in Venezuela EMI established its first new subsidiary in South America since '27.

Colin Southgate had made his own fortune in the computer industry before he became managing director of Thorn EMI '85; when General Electric bought RCA, he tried to buy its record division to add to Capitol, but the German Bertelsmann company already owned some of it and acquired the rest. If EMI's bid for the CBS record division had been successful the venerable Columbia name would once again have been under UK ownership world-wide, but Sony won it '87 and acquired the Columbia name from EMI '89. Thorn EMI acquired 250,000 songs including ('Over The Rainbow' and 'A Hard Day's Night') from SBK Entertainment for £187m, then 50 per cent of Chrysalis Records '89, soon after that Richard Branson's Virgin Records, one of the last big independents left.

Then EMI itself became an independent again. In general, and despite tough competition, EMI was well managed for a while. Southgate had been urged to sell off the music division of Thorn EMI, but saw that it was the music division that was more likely to be a viable international company, while Thorn was having problems (the venerable UK business of renting TV sets and videotape machines was in terminal decline): Thorn and EMI demerged '96, each figuring to do better without the other, and EMI was now back where it started as a music company, also with retail chains (HMV record shops and Dillons bookshops), and thinking about buying a book publisher. Its international sales figures were helped by 12.5m copies of one of the Beatles anthologies, the Danish group Me and My selling 1m world-wide (mostly in Japan, but proving EMI to be a company that still knew its marketing), respectable sales of a George Michael album, and the all-girl group Spice Girls reaching no. 1 in 25 countries. The HMV retail division was opening shops overseas; EMI was again the biggest record company in Britain, one of the biggest in the world and the world's biggest music publisher. Southgate had a reputation for being able to spot trends ahead of time; synergy, the merging of hardware and software companies, does not seem to have been particularly fruitful, and more demergers may be in order.

But the modern record business was risky for big companies because of the numbers involved; margins are so close that a few big-selling albums have to carry a company for a year. EMI was the second biggest record company in the world in the mid-'90s, but in North America it was fifth (behind Warner, Sony, Polygram and Bertelsmann). The consolidated EMI Records Group North America demanded a rushed album from one of the biggest acts on Chrysalis, Arrested Development; their big hit first album 3 Years, 5 Months And 2 Days In The Life Of '92 referred to the length of time between forming the group and signing a record deal, but the rushed album Zingalamaduni '94 (Swahili for 'beehive of culture') flopped badly, selling fewer than 100,000 copies. (An industry that can't make a profit on 100,000 albums is in trouble.) Problems continued and restructuring was announced May '97, hoping to cut operating costs nearly in half; the head office of EMI Capitol in NYC was to close, losing 35 senior management jobs, and Ken Berry moved from head of EMI Music International and Virgin Records to become president of EMI Recorded Music in the USA. But EMI's share price fell by 21 per cent within two years of the split from Thorn; Berry was thought to be in line for Southgate's job, but he controversially installed his wife Nancy in charge of marketing without consulting Southgate, who abandoned plans to step down in early '98. EMI bought 50 per cent of Jobete Music from Berry Gordy and his sister Esther Edwards mid-'97, including all the publishing of the Motown hits of the '60-70s, for $132m. The deal meant EMI could have had to pay up to $250m for the rest within five years. (The Motown recordings are owned by Polygram.)

In the following decade the entire record business changed dramatically, and giants like EMI were not flexible enough. They did not come to terms with the digital era until it was too late, and the HMV record shops started to close, especially in the USA. In addition, executives seemed to be hard to find: Matt Serletic, who produced hits for groups like Matchbox 20 but had never run a label, was hired in 2002 by EMI as chairman of its Virgin Records label, but was dismissed three years later. More mergers were mooted, but by 2007 EMI was virtually bankrupt and was purchased for £2.4 billion by Terra Firma Partners, a private equity firm, using loans from Citigroup Inc, had to take big write-downs on its investment and make cash injections, and in 2010 was fighting to prevent losing it all to Citigroup. The Guardian reported in February 2010 that the famous Abbey Road studio was to be sold, and the following month Elio Leoni-Sceti resigned as CEO of the recorded music division after two years on the job.

In February 2011 EMI had to be seized by Citigroup, who ended up the sole lender when it could not syndicate the debt. In November it was reported that the recorded music group would be sold to the Universal Music Group for $1.9 billion, and the publishing side to Sony for $2.2 billion. Citigroup recovered more of the debt than was expected, but expected, but had to accept the liability for 22,000 EMI pensions in order to make the deal. It was a sad end for a once-great company. 

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In 2011 the Universal Music Group had absorbed PolyGram including British Decca, Philips and Deutsche Grammophon, and MCA including American Decca), all of which in various groups included legendary labels such as Mercury, Verve, A&M, Island, Geffen, Interscope, Impulse, ECM and many more; it was already the biggest record company in the world when it purchased EMI. It is wholly owned by the French media conglomerate Vivendi; a Wikipedia entry is here