Time to focus on digital, new EMI frontman says

Leaked memo hints at changes ahead

Denver — EMI's new top executive told staff in a leaked memo that record labels have to get more creative with digital opportunities and rely less on CD sales if they are to survive.

"Rather than embracing digitalization and the opportunities it brings for promotion of product and distribution through multiple channels, the industry has stuck its head in the sand," Terra Firma CEO Guy Hands wrote.

Calling the Radiohead direct-to-fan ploy a "wake-up call," Hands proposed that labels act more like venture capitalists. He suggested that rather than paying artists large upfront advances recoupable against future sales, labels should provide funding for recording a new album or even launching a tour in return for a share of the results — both profits and losses.

Hands' letter offers little in the way of new ideas but is notable primarily for the fact that these ideas are now coming from someone who owns a major record label. The industry has been waiting to see how Terra Firma would shake up the music market as EMI's new owner, and this letter certainly points to some interesting changes ahead that could far overshadow the labels' pioneering DRM strategy.

Antony Bruno is a contributor to Billboard.