Hands down on trade orgs

EMI chair says three aren't needed

London — EMI Group chairman Guy Hands is calling into question the necessity of music industry trade bodies the IFPI, RIAA and British Phonographic Industry.

Hands, also CEO of Terra Firma, the equity firm that owns EMI, is understood to have sent a damning letter to other labels in which he implies that there is no space in the industry for all three.

"These three bodies cost the industry $250 million a year. I've never come across an industry which spends so much on its trade associations," a source close to Hands said. "They've looked at it and suggested that that kind of expenditure, and having three bodies, might be rather more efficiently spent."

The source said the letter "essentially" suggests a massive overhaul of the IFPI. IFPI chairman and CEO John Kennedy said the association has seen "no such proposal."

"There's no surprises in any of this for me (and) no surprises that it's led by EMI," he said. "It's completely understandable, and it's a sensible business process to go through. It's been a very tough year for the music industry, and so of course, (labels') budget discussions are looking at efficiencies and savings."

However, "I haven't seen any letter from Guy Hands," Kennedy said. "At different times, they have given me figures by way of guidance, and I have responded to those figures with (suggestions of) how we could get to the stage where they were happy."

An IFPI spokesman said: "We are engaged in annual budget discussions, and as one would expect in this market, there is a focus on efficiencies and savings. Meanwhile, we have a very full agenda promoting the rights of our member record companies."

The IFPI estimates the record companies annual spend on IFPI, RIAA and all its other national groups combined is at roughly $130 million.

Hands' letter opens up a proverbial can of worms, made even more complex by the fact that Tony Wadsworth, chairman and CEO of EMI Music's U.K. and Ireland company, also sits as chairman of the BPI.

It's not the first time Hands has stirred up the industry, or indeed his own company. Hands told investors this month that he would drop artists the music group believed were not working hard enough and warned his executives of big changes to their pay structures.

EMI declined comment.

Lars Brandle is global news editor at Billboard.