A century ago, EMI (then known as The Gramophone Company) revolutionised entertainment by bringing live recordings to a wider public. For the first time in history, the average man or woman could afford to hear the greatest singers and musicians of their time. New entrepreneurs ran with the concept and quickly enriched people's lives the world over by bringing them affordable, quality music. Mass entertainment was born.
As we begin a new century, the way people experience music and entertainment is undergoing yet another transformation, thanks to the power of the internet. At EMI, the world's largest stand-alone music company, we have a unique opportunity to lead the digital distribution revolution and even shape the prevailing commerce model for an entire industry. With coming advances in data compression and expanding broadband capabilities, the changing face of the music industry, and the new business models developed by it, will have a profound impact on video, television, radio, feature film, book publishing, broadcasting and education for decades to come.
Digital distribution will bring about not merely the replacement of one medium with another (as when vinyl gave way to compact disc) but rather the redefinition of the roles of music publishers, music aggregators, artists, distributors, retailers and even their relationships with the customer.
Although the other music majors share the same challenge, their ability to act swiftly and independently may be hampered by the resource needs and strategies of competing business units (such as hardware manufacturing) and the competing distribution channels under their control.
Allowing any consumer to purchase any recording, at any time and anywhere in the world, is a phenomenal opportunity. Consumers and artists no longer have to worry about product being out of stock or out of print. But virtual inventory is just the tip of the internet iceberg.
This year, as the internet moves beyond the desktop into a new generation of wireless and portable devices, the very product our artists create - the album - will change as well. The net enables music to be sold, subscribed to and packaged in a range of new ways. Emerging technologies also allow music to be played once, or owned for a week, or passed on to a friend.
These possibilities challenge us to rethink our distribution, repackage our catalogue and develop new business relationships. Just as Henry Ford radically changed our relationship with radio by installing sets in his cars, the capability of unlimited virtual shelf space alters our approach to distribution and retail channels. In a wired world, the real service we can provide to our artists is to get their content to wherever their fans can enjoy it, and to tell the fans when and where it is available. For developing artists, getting them noticed by a few thousand radio stations is no longer enough; we must market to a universe of 600 million web pages - most of which are still set to mute.
The ability to add a soundtrack to people's lives means real incremental revenue growth. Expatriates from all nations can buy 'local' product in faraway lands. Formats without a geographical centre, such as jazz or dance, can now amass their own virtual communities regardless of radio play. By being able to connect artists and fans more effectively, more albums and acts will be profitable.
The real beauty of one-to-one marketing to consumers is more than just incremental revenues to our artists; it means that more of our artists around the world can continue to make a living making music. This is what drives EMI's people to experiment and tackle the challenges of unproven concepts.
The challenge in this ever-changing, expanding marketplace is to leverage EMI's present strengths - broad catalogue, niche market dominance and artist relationships - to develop new revenue streams while the internet itself unfolds at varying speeds around the globe. In addition to preparing our company and our content for this new world, EMI needs to work with trade organisations and governments globally to make sure that the laws that protect and value intellectual property, as well as those covering trade, are modernised to function in the digital age.
In a world where a music fan in Tokyo can download a live performance in Lisbon of a British band covering a US copyrighted song over a Swedish wireless phone connected to a server in Brazil operated by an Indian ISP, laws need to be revised to govern where a sale takes place, how it is taxed and where copyright and performance royalties are collected and paid. Without these laws, and strict government enforcement, the growth of all forms of intellectual property and international commerce will be held hostage by a slow-moving and litigious society.
Progress is the art of change well managed. At EMI, our culture for more than a century has been to embrace change, expand the universe of what can be and share our artists' vision with the world. The internet doesn't change that goal; it just challenges each and every one of us to look a little further into the future.