THE HOLE TRUTH
AND NOTHING BUT…

Decentralization is key in a combined UMG-EMI, according to International COO Max Hole, a longtime Lucian Grainge colleague, whose remarks came during a media conference at the London headquarters for international trade body IFPI yesterday.

Hole said one of EMI’s dilemmas had been its unsuccessful attempt to run the business of its various label groups, including Virgin Music and Capitol Records, under one umbrella.

Said Hole: "We operate a multi-label structure, something that had declined at EMI. We have four to five competing labels with separate P&L centers that compete internally. That had disappeared at EMI. They have different labels, but the P&L was centralized. We shall reverse that. Virgin will be Virgin again; Capitol will be Capitol again."

He also noted the company, as well as the industry in general, plans to focus more of its attention on emerging markets in Asia and Latin America, made possible by the global rise of smartphones and computer tablets.

"For the first time, we can communicate with millions of consumers in different parts of the world," noted Hole. "The focus in the last 40 years has been on major markets like the U.S., the U.K., and Germany. Although the revenues from Vietnam, Cambodia, even Africa, are small, the focus in the next 30 years will shift to the emerging markets. We are optimistic because our reach will be broader thanks to the explosion of digital media."

Hole also pointed to more foreign-language acts gaining international exposure in the manner of viral sensation PSY and K-Pop group Girls’ Generation, who are already in the studio for UMG’s Interscope label.

"It won't be long before you see Chinese and Japanese acts also doing well internationally," he added, noting investments in these artists are essential if the industry is to continue to expand.

Hole also pointed out how major labels would prefer to license their music to technology businesses as opposed to investing directly in digital media platforms, citing the opening of a UMG branch in California’s Silicon Valley to take advantage of those opportunities.

"We are not in the technology business; we would leave that to other people. Our investment in VEVO, for instance, was more a question of us and Sony feeling that MTV built an entire business on our creativity and we missed a trick. In the streaming-video age, we don't want the same thing to happen again."