Elliott

  

You may have missed it.  Even if you saw it, you may have dismissed it.  Or you plain just didn't care.  Billion dollar company loses a main guy to another billion dollar company.  Big deal.  Well... If you care about the music industry, or even have a passing interest, this is a VERY big deal.

According to Reuters today, EMI hired Google's CIO (Chief Information Officer) Douglas Merrill to be president of its digital music business. "Merrill will head a new global function including digital strategy, technology and business development."  WOW.

Let's quickly recap...

* Labels in control for decades, running the music biz
* Internet becomes a revolutionary force in the 90's and the mp3 is born
* New power brokers enter the scene including Apple, FOX, LiveNation
* Labels gradually and then quickly lose sales, control, value, significance
* Music biz is in a state of flux, new technologies, social networking, increased players, and more access and selection is available than ever before

The labels know they have the history, the knowledge, and the chops to make music.  They just lost the means to monetize it.  EMI made the first step towards this realization by becoming the first major label to offer DRM-free music.  Now EMI is boldly attempting to get back into the winners circle.

THERE'S MORE COMPUTER IN A CAR THAN CAR
EMI, no doubt under the strategic guidance of it's owner Terra Firma (who just bought the fledgling label for $4.7B US last year) realizes the industry they are in.  It's not the music biz.  It's the digital media biz.  Just as GM realized that they are more of a computer technology company than they are an automotive company.  Doesn't it make sense that music making companies actually have leadership with digital based expertise, experience, networking contacts, and vision?  The more I think about it, the more I see this move as the first signal that labels may not become as extinct as we all presumed.  We presumed they would continue with their ostrich-head in the sand, stubborn ways, sticking to the old model until death.  This hiring may be the first snowball of an avalanche of executive moves by the labels, and not just the big 4, in fact, the top down changing of the guard may transform all record labels into some sort of quasi-tech companies.  Why not?  Automotive makers are computer companies now, there's more computer technology in cars than there is automotive technology.  Why not record labels?

THE FIRST TO AWAKE AMONGST THE GIANTS
Labels, like most companies in an industry, copy their competitors. That means just as FOX bought MySpace, CBS bought LAST.FM, AOL boughtBEBO, and Microsoft bought a ludicrously expensive piece of Facebook,the labels will now all scramble to lure Internet CIO executives.  This will be the point in history whereby THE LABELS HAVE WOKEN UP.  So ok, it took a venture capitalist owner to take over the smallest of them  and  lead the way, but who cares, it's happening, and I for one am extremely encouraged.

AND THE WINNER IS... YOU?
Assuming the other labels follow suit, the rightful power brokers of the old medium of music (plastic) will now be able to take back a significant stake in the music biz.  And this won't happen overnight.  Paradigm shifts and multi billion dollar companies do not mix well.  But the labels have been forced, nay beaten, financially, strategically, into submission to undergo this change.  In the end, the media companies who wisely sunk their hooks into online media and music, will now have a much more wise and informed party to deal with.  The result should be a more structured music industry.  And isn't that what we're all yearning for?  Or maybe not...?