EMI threat to music trade bodies

http://www.msnbc.msn.com/id/21999892/

By Joshua Chaffin in New York

Terra Firma’s drive to cut costs at EMI, the troubled record company it acquired in May for nearly $5bn (£2.4bn), is now hitting the music industry’s trade organisations.

Earlier this month, Guy Hands, Terra Firma’s chief executive, sent letters to members of the industry’s two largest trade groups – the Recording Industry Association of America and the International Federation of the Phonographic Industry – threatening to cut EMI’s annual funding commitment by half, according to people familiar with the matter.

One scenario proposed, say those close to the issue, would be to merge the IFPI with the London-based British Phonographic Industry. 

EMI contributes about $25m a year to the groups, a person close to the company said, and believes the groups represent another instance of record industry waste.

Such cuts would save EMI and other record companies several million dollars a year. But they would also saddle each company with greater responsibility to lobby regulators and police pirates, among other crucial tasks.

Mr Hands was travelling on Tuesday, and not available to comment. He and his advisers have been exploring a range of cost-cutting initiatives to shore up EMI at a time when it and other major record companies are suffering through a collapse in compact disc sales.

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