dimanche 28 février 2010

Why you should not care about Abbey Road

No need to remind the readers on EMI trying to sell the Abbey Road studios. Lots of media and big names (none from the clasical music world) outcrys so EMI's owners backed down and stopped the sale. To ensure that the crown jewel of English culture would never be sold to Chinese investors or worse, the UK government declared Abbey Road a historical treasure, a protected species status or whatever.

Given the huge losses at EMI, private equity investor did exactly the right thing: look at the balance sheet and get rid of non productive assets,which is exactly what Abbey Road studios are, a piece real estate in prime location. A private equity investor like Terra Firma is going to buy companies which are either in turn of turnaround or stable companies bought with debt to generate more value, the so-called LBOs (Levergaded Buy-Outs) made famous thanks to the a splendid business book called Barbarians at the gate which is more gripping than 24 (disclosure: I run a LBO duirng the day ...).

In the first place, the real issue is that Terra Ferma should not have invested into a record company. This is not a good investment: budgets are now going to live events and less to records, piracy among at least the non classical world is dramatic, fickle stars require huge fees and can always create their own label. Gone are the days where a record company could make or break a star.

More importantly, gone are the days where someone would go into a record shop and ask for an EMI CD as a strong brand.

Even more important in our case, days when someone would go into a record shop asking for a CD of music recorded in Abbey Road never existed.

Concert Halls are becoming more and more full of recording technology and are the place where music is being set for posterity. This is true for all sorts of music: the best selling album of Simon and Garfunkel is the magical live at Central Park ..., all major Opera Houses are releasing endless versions of Wagner's Ring in spite of this being one of the most expensive productions to set ...

For classical music which is our focus, record buyers are more likely to enjoy say live from Bayreuth Thielemann's latest Ring cycle over say Solti classic studio pionner because they heard it live. They are more likely to ask for live music conducted by Dudamel on CD or DVD because they have heard them at the proms or on various TV programs ...

Abbey Road is a relic of the past. Terra Ferma should never had invested in EMI and may loose a fortune. I am sorry for them but as a music lover, I want them to have the ability for them to continue doing some recording and help good music be heard and in trying to dispose of Abbey Road, they probably made the right choice.

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