Right Move, Wrong Reason

According to MSNBC, last month Guy Hands threatened the RIAA to cut EMI’s funding to the bully organization. It would be so easy to applaud the perhaps empty threat if Guy’s motives were the result of a true awakening.

Sure, Guy could have told the RIAA that suing the industry’s customers is a bad idea, that there are precisely zero studies that show piracy actually hurts the industry, that bully enforcement only stifles innovation and puts the industry even further at odds with consumers. That EMI was going to take its money out until the RIAA straightened up and actually acted in the best interests of the labels.

He could have. But he didn’t. He told them he finds them inefficient.
Guy wants to save $12.5m per year, half of EMI’s industry group annual payment.

Mr. Hands, it seems, has come to the realization that his firm’s purchase of EMI may not have been the smartest of moves. With a reported $3b equity stake in the $8b purchase, Guy has made a sizable bet and is now counting on mythic cost cuts and dream-like gains to bail himself out of a quickly sinking ship.

I’m betting that the investors in Terra Firma will draw no comfort from a possible $12.5m annual savings. Threatening to cut RIAA funding — for the wrong reasons — smacks of serious desperation.

Trying to lighten the ship only makes the sinking go slower. That $12.5m should buy Guy and EMI about 10 extra minutes.