EMI

• 1. Introduction

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  EMI, which stood for Electric and Musical Industries, began its life in March 1931 as the product of a merger between two of Britain's oldest recorded-sound businesses. By the time it collapsed in 2012, it had shaped the sound of the twentieth century in ways that extended far beyond music. It signed the Beatles. It built the CT scanner. It developed early radar systems during the Second World War. It ran cinemas, hotels, bowling alleys, and a tower in Blackpool.

  How does a record label end up owning the Selfridge Hotel and a chain of Angus Steakhouse restaurants? How does a gramophone company become one of the most important electronics research institutions in Britain? And how does a company that was once the single most successful recording business on earth accumulate around $4 billion in debt and disappear entirely within five years? Those are the questions this documentary will answer.

• 2. Born from the Gramophone

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  The Gramophone Company brought with it a history that stretched back to the very origins of recorded sound. When it merged with the Columbia Graphophone Company in March 1931, the resulting business inherited not just catalogues and studios but a global network of subsidiary operations spanning Europe, the Middle East, Africa, Canada, Russia, India, China, Japan, Australia and New Zealand.

  In Australia and New Zealand, that reach translated into near-dominance of the popular music industries from the 1920s through to the 1960s, when locally owned labels such as Festival Records began to push back. The archive that survived this global operation is remarkable in its own right: over 150,000 recordings on 78-rpm discs from around the world are held in EMI's temperature-controlled facility in Hayes, some of which began appearing on CD from 2008 onward via Honest Jon's Records.

  At the time of the merger, the Radio Corporation of America held a majority shareholding in the new company. This came about because RCA had purchased the Victor Talking Machine Company in 1929, and Victor owned half of the British-affiliated Gramophone Company. That connection gave RCA chairman David Sarnoff a seat on the EMI board. RCA sold its stake in 1935, but because of its 1929 Victor acquisition, it retained the North and South American rights to the His Master's Voice trademark.

  In the same year the company was formed, 1931, EMI opened the recording studios at Abbey Road in London. The space would become one of the most recognisable in the history of recorded music.

• 3. Engineers and Inventors

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  In 1934, an EMI research team led by Sir Isaac Shoenberg developed the Marconi-EMI system for television broadcasting. The system replaced John Logie Baird's electro-mechanical design when it was introduced in 1936. After the war, EMI supplied the BBC's second television transmitter at Sutton Coldfield and manufactured broadcast cameras used not only by the BBC but by the commercial ITV companies alongside equipment made by Pye and Marconi.

  The most commercially successful piece of equipment the company ever made in television was the EMI 2001 colour camera, which was widely used in British television production from the late 1960s until the early 1990s. Exports of this camera remained low, however, and EMI eventually withdrew from that area of manufacturing.

  EMI engineer Alan Blumlein received a patent for the invention of stereophonic sound in 1931, the same year the company was formed. He was killed in 1942 while conducting flight trials on an experimental H2S radar set. During and after the Second World War, the EMI Laboratories in Hayes developed a range of wartime technologies including radar equipment, microwave devices such as the reflex klystron oscillator, infra-red image converters, and guided missiles employing analogue computers.

  The most consequential invention to emerge from EMI's research facilities came later. Working at the company's Central Research Laboratories in Hayes, Godfrey Hounsfield developed the first CT scanner in the early 1970s, with financial support from the UK Department of Health and Social Security alongside EMI's own investment. In 1973, EMI received the Queen's Award for Technological Innovation for what was then called the EMI scanner. Hounsfield won the Nobel Prize in 1979 for the same work. The EMIDEC 1100, the UK's first commercially available all-transistor computer, had been developed under Hounsfield's leadership back in 1958.

• 4. The Artists and the Labels

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  George Martin was among the first A&R managers EMI appointed in its early decades. His later significance is well known: he brought the Beatles into the EMI fold. The 1962 photo session that produced the stairwell image on the cover of the Beatles' Please Please Me album was taken at EMI's headquarters at 20 Manchester Square in London, which served as the company's corporate home from 1960 to 1995.

  In 1969, photographer Angus McBean took a second group photograph of the Beatles at the same location, this time showing the group with long hair and beards, deliberately contrasting with the earlier clean-cut image. That photo was originally intended for the album that would become Let It Be. Both the 1962 and 1969 images were eventually used for the covers of the two Beatles greatest-hits double-disc compilations, the 1962-1966 collection and the 1967-1970 collection, both released in 1973.

  From the late 1950s through the early 1970s, EMI operated under the management of Sir Joseph Lockwood and assembled a roster that included the Hollies, the Shadows, the Beach Boys, the Beatles, Frank Sinatra, Cliff Richard, and Nat King Cole. In 1967, EMI converted the HMV label into an exclusively classical imprint. Two years later it established Harvest Records to serve the emerging progressive rock genre, with Pink Floyd among its acts.

  In 1957, to replace the licensing arrangements it had lost when Columbia Records USA severed ties with EMI in 1951, the company acquired 96% of the stock of Capitol Records USA. In February 1979, it added United Artists Records together with its subsidiary labels Liberty Records and Imperial Records. EMI released its first LPs in 1952 and its first stereophonic recordings in 1955.

• 5. Beyond the Record Shop

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  In 1964, EMI acquired Blackpool Tower from the Bickerstaffe family. Three years later it took over the Winter Gardens complex in the same seaside town and also purchased the Grade Organisation, the UK's largest showbusiness talent agency, for £7.5 million. That acquisition came bundled with the Shipman and King chain of 32 cinemas in the Home Counties.

  Bernard Delfont of the Grade Organisation became chairman and chief executive of EMI Films, which was created in 1969 following the acquisition of Associated British Picture Corporation. At that point ABPC owned 270 ABC Cinemas, a half share in the ITV contractor Thames Television, and Elstree Studios. By 1974, the leisure and cinema interests had grown enough to be divided: EMI Cinemas ran 272 cinemas in the UK, while EMI Leisure Enterprises controlled Blackpool Tower alongside squash clubs, bowling alleys, discotheques, dance halls, licensed premises, and golf operations.

  In 1972, EMI Hotels entered a bidding war against the American company Ralston Purina to acquire the Golden Egg restaurant group from the Kaye brothers for £14 million. The purchase included a stake in Angus Steakhouse restaurants and the Selfridge Hotel, which opened in July 1973. By the end of 1978, EMI owned four additional hotels under names including Royal Horseguards, Royal Angus, Royal Trafalgar, and Royal Westminster. Its restaurant portfolio at the time spanned Angus Steakhouse, Wimpy Bars, Picnic Basket, and Tennessee Pancake Houses.

  Following EMI's merger with Thorn Electrical Industries in October 1979, these non-music interests began to be sold off. Seven hotels and twelve Angus Steakhouse restaurants were sold in July 1980 to Scottish and Newcastle Breweries for £23 million.

• 6. Debt and Dissolution

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  In August 2007, Terra Firma Capital Partners acquired EMI for £4.2 billion. The British market share had fallen from 16% to 9%, and the company had reported a loss of £260 million in the 2006-2007 period. Guy Hands, the CEO of Terra Firma, arrived with plans to cut between 1,500 and 2,000 jobs and reduce costs by £200 million a year. UK chief executive Tony Wadsworth, who had been at EMI for 25 years, left in January 2008. The cuts were projected to affect up to a third of the company's 5,500 staff.

  Artists responded to the upheaval in various ways. Radiohead left following the transition. Paul McCartney had already departed before the takeover. The Rolling Stones signed a one-album deal with Interscope Records while their EMI contract, which expired in February 2008, wound down; they then signed a new long-term deal with Universal Music Group in July 2008. Thirty Seconds to Mars attempted to exit their contract, citing unpaid royalties and the layoffs. EMI filed a lawsuit against the band for $30 million for breach of contract. The case was eventually settled after the band's lawyers invoked a California appeals court precedent involving the actress Olivia de Havilland, which held that no service contract in California is valid after seven years. Jared Leto explained the ruling publicly. The band's experience with the label was later the subject of the 2012 documentary Artifact.

  During Terra Firma's ownership, EMI accumulated around $4 billion in debt. Citigroup, which held that debt, took 100% ownership of EMI from Terra Firma on the 1st of February 2011, writing off £2.2 billion in debt and reducing EMI's total debt load by 65%. Final bids for the company were due by the 5th of October 2011.

  On the 12th of November 2011, it was announced that EMI would sell its recorded music operations to Universal Music Group for £1.2 billion and its publishing operations to Sony/ATV Music Publishing for $2.2 billion. Universal's acquisition of EMI was completed on the 28th of September 2012. The European Commission approved the deal on the condition that Universal divest roughly one third of its total operations, resulting in the creation of the Parlophone Label Group, which was subsequently acquired by Warner Music Group for $765 million in a deal signed on the 8th of February 2013.

• 7. Publishing and Controversy

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  EMI Music Publishing was, at the time of EMI's breakup, the largest music publisher in the world. It had won the Music Week Award for Publisher of the Year every year for more than a decade; in 2009, for the first time in the award's history, it shared the honour jointly with Universal Music Publishing. The catalogue it administered contained the publishing rights to over 1.3 million songs, including works by Queen, Carole King, The Police, the Motown catalogue, Kanye West, Alicia Keys, Drake, Sia, Pharrell Williams, and Calvin Harris.

  Pop star Robbie Williams signed a six-album deal with EMI in 2002 worth over £80 million, or approximately $157 million. This was the largest recording contract in British music history at the time and the second largest in global music history behind Michael Jackson's deal.

  On the 2nd of April 2007, EMI became the first major label to announce it would release music in DRM-free formats through Apple's iTunes Store. Higher-quality, DRM-free tracks were priced at $1.29, while legacy tracks with DRM remained available at $0.99. The DRM-free files became available worldwide on iTunes on the 30th of May 2007.

  EMI was also among the companies found to have engaged in illegal minimum advertised pricing arrangements between 1995 and 2000. A 2002 settlement required EMI and four other major music companies to pay a combined $67.4 million fine and distribute $75.7 million in CDs to public and non-profit groups. Customers were estimated to have been overcharged by nearly $500 million, at up to $5 per album. None of the companies admitted wrongdoing. Apple Records filed suit against EMI on the 15th of December 2005, alleging that EMI had withheld $50 million in royalties. A settlement was announced on the 12th of April 2007, with terms undisclosed.