EMI's Hands squeezes trade bodies

Guy Hands has been firing off letters to music industry trade organisations in which he has threatened to cut EMI's annual funding commitment by half.

According to various reports the Terra Firma boss, who acquired the troubled record company for close to $5bn in May, sent out letters to the Recording Industry Ass. of America (RIAA) and the International Federation of the Phonographic Industry (IFPI) last month.

Both the Financial Times and Reuters report that people familiar with the matter said EMI currently pays out some $25m a year to music industry trade bodies.

The sources claim that Hands has been suggesting such costs were a waste of money and that instead the IFPI should consider merging with the British Phonographic Industry.

However, while EMI and other majors could save a sackload of cash by cutting their subs, making such cuts would arguably put a dent in the trade bodies' efforts to crackdown on music piracy.

One of the key tenets of such organisations is to lobby regulators and reel in the pirates that cost the industry billions of dollars in lost sales every year.

Before private equity outfit Terra Firma bought the record company, EMI had been in financial freefall - it reported a £265m loss in May this year, citing disappointing album sales. Hands has been on a crusade ever since to strip out what he sees as unnecessary costs at the firm.

More from the FT and Reuters here and here. ®