EMI READY TO OUTSOURCE?
The magazine claimed three separate sources told them that the storied British company is talking to Universal Music Group, Sony BMG and Warner Music about assuming these functions in the U.S.
Fortune quoted a source familiar with the industry that what EMI wanted to do in the U.S. was outsource its CD distribution to retailers like Wal-Mart and Best Buy.
EMI could reportedly save as much as $300 million a year if it completely outsourced its American marketing and distribution operation.
Chatter that EMI is also considering licensing its jazz and classical division, whose labels include Blue Note and Angel, were firmly denied by company spokeswoman Jeanne Meyer: "EMI has no plans at this time to license its jazz and classical businesses."
The news comes on the heels of the disclosure of massive financial losses in a report released on Oct. 24 by Maltby Capital, the entity through which Terra Firma controls the music company. The report said EMI suffered a loss of 258 million pounds ($415 million) in its fiscal year ending in March 2008.
In September, EMI turned over the distribution and marketing of its physical and digital releases in Hong Kong, Indonesia, Malaysia, Singapore, Korea and Thailand to Warner Music.
EMI has handled the marketing and distribution of Warner compact discs in India, the Middle East and North Africa since 2005.
George Van Horn, a senior analyst at IBISWorld, told Fortune the idea that EMI might outsource its sales and marketing in this country wasn't as surprising as it might sound.
"It's fairly drastic from a historical standpoint," he says. "Looking out at the future, it probably isn't that drastic. That's an indication of how severe the cutbacks have to be [at EMI] to get into the position of being profitable on the business activities you do keep."
