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EMI’s Inflation Under Terra Firma Ownership

EMIs Inflation Under Terra Firma Ownership

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As we bathe in the complexities of a rich soup created by the sale of EMI to Universal Music Group, there is an important story to tell without the modern twists of EU sanctions and the brutal coping motion of asset sales. This story is one which originates from the presence of Guy Hands, an English financier and investor who is the founder and chairman of Terra Firma Capital Partners (EMI's previous owner), and ends with Citygroup - EMI's prior owner to Universal.


The reason why this is an important story to tell is because it is one that you might have commonly misinterpreted in the aftermath of EMI's sale to Universal. It is one which demonstrates possible claims that might not be correct.


Although, arguably, EMI's latter history was most likely doomed from the 1992 Virgin Records buy out which cost the label £1bn, surprisingly in an interview given to Bloomberg earlier this week, Guy Hands, claims that whilst Terra Firma owned of EMI during 2007 - 2011, the record labels market share value increased from 9% - 17%. Sadly due to the fact that the IFPI, or any other international body, has not compiled such data for a number of years now these figures cannot be directly confirmed, however if these figures are taken seriously EMI's market share during this period almost rose by a staggering 90%. Now lets burst the bubble... There are some statistics available, but these easily demonstrate how the above figures might not be strictly true. Official Charts Company shows that when Terra Firma took over EMI in 2007, the share in that EMI had in the international album market was 15.7% but this did drop during ownership to 13.4% and then in 2010 recovered to 14.1%. Although this is only half of the market per se, it is hard to evidence how there could have been a 90% market share without increasing the user base in the presence of album sales.


It is definitely a fact that the single sales market has rapidly grown since 2007 but this market would have to account for more than a 100% increase for Terra Firma to actually claim a 90% growth in market share value. In other known figures, in America EMI's albums market share between 2007 - 2010 did grow by 0.8% from 9.4% to 10.2%, but then again under the hands of EMI's new owners Citigroup, the album market share fell by 0.6%.


The figures that we see are reflective of the turbulent times of the music industry. In fact the larger record labels Universal Music Group, Warner Music Group and Sony Music Group, would have had to loose a significant market share if EMI rose so rapidly. It was only this last year that the industry, on the whole, witnessed the first growth in many a year. Whilst it would be interesting to have all of these figures in front of us I think it might be safe to say that Terra Firma's claims might be a little inflated. However, in the hands of Universal, EMI's and its subsidiaries current owners, it is unlikely for us to see any market share increase whilst all of its assets is sold in accordance with EU guidelines.


Edd Harris

As we bathe in the complexities of a rich soup created by the sale of EMI to Universal Music Group, there is an important story to tell without the modern twists of EU sanctions and the brutal coping...

Edd Harris  - 4th March 2013

Article Ref: #EMIInflationTerraFirma