Behind the music: What the Citigroup takeover means for EMI - The Guardian (blog)

Out his Hands ... Tinie Tempah is one of the EMI artists affected by the Citigroup takeover. Photograph: Frank Hoensch/Getty Images

When news broke that US investment bank Citigroup had taken control of EMI yesterday, many were quick to point out that the UK no longer has a major label. Perhaps more important, especially for the artists and songwriters on EMI, is the question of what Citigroup plans to do with the label. What does the takeover mean for the artists and songwriters on its roster, and the British music industry?

When Terra Firma bought the company in 2007, many artists voiced concerns about having a private equity firm in charge of their careers. Guy Hands, the firm's owner, didn't help the situation by implying he didn't understand that running a music company is different from running any other. Some artists, including Radiohead and the Rolling Stones, left the label in protest (never mind that outside businesses have been buying record labels for decades – Canadian drinks company Seagram bought Polygram from electronics giant Philips in 1998, while Universal is owned by Vivendi).

While EMI sources confirmed that Hands didn't know much about the music industry, they conceded he at least acknowledged the fact and was open to learn. And perhaps this is why, while Hands and Citigroup were battling it out in court, EMI appears to have turned into arguably the most progressive of the major labels when it comes to artist relationships. While Warner Music Group (WMG) only signs artists to 360-degree deals that will give the label a share of all income, EMI has offered artists such as I Am Kloot and Hadouken! a selection of services from which to pick, allowing them to create a tailor-made partnership with the label. Robbie Williams's latest deal was also constructed in this way. And though his manager, Tim Clark, compared Hands to a plantation owner soon after the takeover, he later said he wouldn't discount the possibility of Williams re-signing to EMI once his deal expired. Even Pink Floyd recently concluded a new deal with the label, despite having previously taken it to court.

It doesn't look like Citigroup will force the label to change the way it operates. However, no one thinks Citigroup will hold on to it. There has been speculation that WMG and BMG Rights Management/KKR are interested in buying it – or at least part of it (EMI consists of the record label – including subsidiaries such as Parlophone and Virgin – and EMI Publishing, which owns copyrights for songs). They may want to consider that some of the most lucrative master recording copyrights will soon expire. The Beatles' Love Me Do was recorded in 1962 and, according to UK law, master recording copyrights run out after 50 years.

If Warner gets in the running, it may encounter problems from the European Commission, as it would mean a further concentration in the music market if the number of major labels were to be reduced to three. EMI being bought by another label would have both pros and cons. Another label would understand the way the music business works, but it would also, impose its own way of working as well as consolidate and reduce the number of staff.

I have experienced what happens when music companies merge. I signed to BMG Publishing, which ended up being bought by Universal. Many of the people I had dealt with at BMG were sacked, and the people taking over were overwhelmed by the amount of songwriters and catalogues they had to oversee. Record labels and publishers rely heavily on personal relationships. They have to be able to deal with artists and songwriters, who are often sensitive and temperamental – as Hands found out.

After the Terra Firma takeover EMI managed to turn a precarious situation around, preventing a mass-exodus of artists and songwriters and even making itself attractive to artists such as Tinie Tempah who were looking to sign with a major. EMI recently announced that it will invest more in A&R, but will it be able to continue operating the way it has for the last few years? Its fate lies in the hands of an American bank whose only concern is who will pay the most to take the company off its hands.