While the details are in flux, insiders say Morris & Co. have an intriguing business model: get hardware makers or cell carriers to absorb the cost of a roughly $5-per-month subscription fee so consumers get a device with all-you-can-eat music that's essentially free. Music companies would collect the subscription fee, while hardware makers theoretically would move many more players. "Doug is doing the right thing taking on Steve Jobs," says ex-MCA Records Chairman Irving Azoff, whose Azoff Music Management Group represents the Eagles, Journey, Christina Aguilera, and others. "The artists are behind him."

Morris and Jobs were once the best of allies. When Jobs began pushing his idea for a simple-to-use download store in 2003, Morris backed him. Industry insiders say Jobs felt that Morris, unlike many other music executives, understood that they had to adapt or die. And in the years that followed, Apple and Universal moved in near lockstep.

But before long, Morris realized he and his fellow music executives had ceded too much control to Jobs. "We got rolled like a bunch of puppies," he said during a recent meeting, according to people who were there. And though Morris hasn't publicly blasted Jobs, his boss at Universal parent Vivendi is not nearly so hesitant. The split with record labels--Apple takes 29 cents of the 99 cents--"is indecent," Vivendi CEO Jean-Bernard Levy told reporters in September. "Our contracts give too good a share to Apple."...

With the Total Music service, Morris and his allies are trying to hit reset on how digital music is consumed. In essence, Morris & Co. are telling consumers that music is a utility to which they are entitled, like water or gas. Buy one of the Total Music devices, and you've got it all. Ironically, the plan takes Jobs' basic strategy-- getting people to pay a few hundred bucks for a music player but a measly 99 cents for the music that gives it value--and pushes it to its extreme. After all, the Total Music subscriber pays only for the device--and never shells out a penny for the music. "You know that it's there, and it costs something," says one tech company executive who has seen Morris' presentation. "But you never write a check for it."

EMI's New Owner: What Did I Just Buy?

Hands plans to cut the marketing budget to 12 percent of projected sales, from 20 percent, but raise spending on A&R (artist and repertoire), which looks for new talent, The Sunday Telegraph said.

The Sunday Times said EMI would also ditch thousands of artists when he announces his plans on Tuesday.

He's approaching it as an investment, which is smart from a financial perspective. I'm sure he's making people nervous by admitting it's all about the almighty dollar (or pound, or euro) but at least he's being honest about it. At any rate, he seems to be in a better position to actually put changes in effect than say, Rick Rubin. I don't know if they'll be of great benefit to the artists, of course. He's probably going to save money by losing Robbie Williams alone (didn't they give him some outrageous chunk of change, like $80 million?)

FT:

Guy Hands is close to raising £200m ($391m) of fresh equity to inject into EMI as he prepares to slash more than a third of the staff in its problem-hit recorded music business.

In his first interview since completing the £3.2bn acquisition, Mr Hands dismissed fears that Terra Firma, his private equity group, could lose money on the deal, struck just before the credit squeeze began.

He accused the music industry of “burying the creative process in bureaucracy” and losing sight of its real function. “Our job is to monetise music for the artist,” he said. Instead, EMI’s network of labels had 19 managers, marketing executives and lawyers for every “A&R” talent scout.

Mr Hands rejected accusations from artists and their managers that he did not understand creative businesses, saying the challenges at EMI were no different from those he had faced in pub, train and aircraft leasing businesses. He declined to say if he would inject more capital but is thought to be close to sealing the largest co-investment round Terra Firma has raised, allowing it to hit earnings targets agreed with bankers and fund A&R investment.

Rolling Stones to leave EMI for Universal

Sir Mick Jagger is to lead The Rolling Stones away from Guy Hands’ EMI, ending a long association with the British record company.

The band is expected to sign up with Universal Music, and the deal is all the more valuable because the Stones will control all their releases since the 1970s, including Sticky Fingers, Exile on Main Street and Black and Blue.

Sir Mick’s decision — on the eve of his 65th birthday — follows a bidding war between all the big record labels, and is a blow to Mr Hands who failed personally to persuade him to stay.

Mr Hands acquired EMI last year for £2.1 billion through Terra Firma, the UK private equity house.

Discord At EMI

Neither company was willing to comment, but sources familiar with the situation said Terra Firma wanted Citigroup to inject up to 300 million pounds ($486.2 million) into EMI and write off about 500 million pounds' ($810.3 million) worth of debt owed by the label's recorded music subsidiary. Citi was unlikely to accept, said the sources, because it would mean writing off a hefty chunk of EMI's 2.5 billion-pound ($4.1 billion) debt pile just for the privilege of staying on as lender.

This does not mean Citi is in any hurry to force EMI into bankruptcy, however. That would mean facing the ugly truth of a realistically-valued EMI in fire-sale mode, which might then squash the bank's dreams of getting its money back. Already Terra Firma has written off half of its own 2.6 billion-euro ($3.6 billion) investment in EMI, two years after the acquisition was agreed.

LONDON (Reuters) - British private equity group Terra Firma <TERA.UL> wants to bring in outside investors to help prop up music company EMI <LNDONE.UL>, which is struggling with 2.6 billion pounds of debt, The Observer reported.

The report said pension funds, insurance companies and foreign banks had been approached by Terra Firma amid fears EMI could default on interest repayments to Citigroup Inc <C.N>, which bankrolled the buyout of the music group in 2007.

Terra Firma on Friday accused Citigroup of fraud and sued the bank for billions in damages in connection with Terra Firma's purchase of EMI, court documents filed in New York showed.

Terra Firma accuses Citigroup of inflating the price it paid for EMI by failing to reveal that the only other bidder, Cerberus Capital Management, had withdrawn hours before an auction for EMI closed.

http://www.nytimes.com/reuters/2009/12/13/business/business-uk-terra-firma-emi.html?_r=1

omg man, give it up already.

Label Group Has Just 90 Days To Find A Miracle

return false" href="http://www.hypebot.com/.a/6a00d83451b36c69e2012876c65b2b970c-popup">sanctumla.com" style="width: 100px; margin: 0pt 5px 5px 0pt;" src="http://www.hypebot.com/.a/6a00d83451b36c69e2012876c65b2b970c-100wi" class="asset asset-image at-xid-6a00d83451b36c69e2012876c65b2b970c " alt="image from sanctumla.com" /> A 90 day clock began ticking for EMI late yesterday when talks to license catalog to Universal or Sony ended, according to sources. Price was reportedly the primary reason that discussions ended, but a concerned creditor who is owed $2.5 billion and at least one pending lawsuit certainly didn't help.

Failure to make the deal, means that EMI will fail its solvency test and miss a major loan payment to Citi. EMI and owner Terra Firma now have 90 days to find an injection of cash as well as to develop a viable plan to move forward. 

Inside EMI, staffers are bitter that their efforts to improve the company's position will have little effect on the outcome. "We're being punished for past excesses in both the record and the financial industries," an EMI veteran told Hypebot.

The Beatles fail to invade UK charts

No big hits after iTunes deal

All the speculation that The Beatles' arrival on the iTunes Music Store might lead to the band's most famous songs re-appearing in the upper echelons of the UK singles chart appears to have been misplaced. In fact, only one song, Hey Jude, reached the top 40 on Sunday - at number 40.

http://www.musicradar.com/news/guitars/the-beatles-fail-to-invade-uk-charts-308629

"Warner Music Group has named indie music industry entrepreneur Cameron Strang as chief executive of its Santa Monica music publishing firm Warner/Chappell Music.

Maybe a move in the right direction for Warner?

Last year, around this time, writer Paul Rogers' published an article in the LA Weekly that discussed the demise of the major label A&R profession.

Here we are a year later, continuing to witness the decimation, if
not outright elimination, of the major label model. It's now apparent
that, in the face of new economic realities, the model that flourished
for years cannot be sustained in its current form. Universal Music Group
has already announced cuts for 2011 of over $138-million in a massive
restructuring plan even after several rounds of layoffs.

http://www.hypebot.com/hypebot/2011/03/the-elimination-of-the-major-label-model.html

The bidding for Warner Music Group is heating up, and a decision
about the future of the New York company could come as early as the end
of the month or early April, according to a source familiar with the
bidding process being conducted by Goldman Sachs.

Warner's board of directors has weeded down an initial list of about a
dozen bids in the second round of the process, the source said. Among
those in still in the running are industrialist Len Blavatnik,
supermarket magnate Ron Burkle, Sony Music Entertainment, Kohlberg
Kravis Roberts & Co. and Platinum Equity.

Several bidders may also be interested in snagging EMI Group, which
was recently taken over by Citigroup. The bank is widely expected to
formally put EMI up for sale in the coming months. Combining with
EMI could present some regulatory challenges because they represent the
third- and fourth-largest music companies in the U.S., according to
SoundScan.

UPDATED: EMI In $4.1B Split Sale To Sony, UMG