Terra Firma/EMI Shake Up Trade Groups

According to industry insiders, the private equity firm Terra Firma, which bought music publishing giant EMI in May for nearly five billion dollars, has recently initiated an aggressive move to reduce EMI’s contributions to anti-piracy trade groups by more than half.

According to industry insiders, the private equity firm Terra Firma, which bought music publishing giant EMI in May for nearly five billion dollars, has recently initiated an aggressive move to reduce EMI’s contributions to anti-piracy trade groups by more than half.

Terra Firma, founded in 1994, focuses its interest on large wealthy corporations that are experiencing a downward trend in performance, and seeks to improve corporate strategy and produce an exponential return on investments. EMI, with consistently declining revenue for the past five years due to a sluggish response to the exploding digital music market, certainly represented the perfect target for Terra Firma’s goals. The firm hoped to transform EMI’s discouraging circumstances by developing new opportunities to capitalize on digital music consumption.

Now, Terra Firma and EMI have posed themselves against the Recording Industry Association of America and the International Federation of the Phonographic Industry in the continuous battle of the consumer versus Digital Rights Management. RIAA and IFPI have long been advocates of the campaign against piracy and have depended upon support from the four major record label conglomerates (EMI, Warner, Sony BMG and Universal), plus countless smaller independent labels. Terra Firma’s recent letters to these trade groups issuing threats of drastically decreased funding may represent only a tiny dent in the support that RIAA and IFPI receive annually. In the grand scheme of things, one record company’s contribution would not make or break the feasibility of further anti-piracy efforts, according to some who are knowledgeable about the situation. However, Terra Firma’s actions as the hand that feeds EMI might mean that RIAA has to eventually loosen the limitations of DRM in order to benefit the consumer and retailer.

Following on the heels of other events such as the closing of Sony’s and Virgin’s digital music stores, this recent development re-engages the problem of the music industry’s ability to respond productively to the new ways in which people acquire music. File sharing costs the industry billions each single year, but maintaining the fight against it under the banner of “copyright protection,” while the market is inevitably going to keep changing, locks both a frustrated consumer and an unresponsive label in a situation of mutual dissatisfaction.


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