PEO 2.0: BETTING THE RANCH

I wonder if Guy Hands had even an inkling of what he was getting into when he first mulled a purchase of UK music business EMI? The acquisition has generated a full-blown media storm.

The blogs and columns of the world's media have been buzzing with comment and advice. What Hands had almost certainly not counted on was the Heat effect. Heat is a UK weekly magazine focusing on the vacuous lives of the rich and (in)famous.

He almost certainly knew he was making a high-profile acquisition, but the celebrity domination of global media meant this deal would be front-page news. And buyouts, which are usually the province of pin-striped finance journalists, have become a talking point for a new breed of expert commentators: rock critics.

Most commentators have dwelt on the notorious defections from EMI's label since Hands took over. They point to Hands' savvy as a businessman, but note a clumsy arrogance in his people skills, which they say may be his undoing as he inadvertently manhandles delicate and sensitive artistic talent out of the door.

Radiohead and Sir Paul McCartney have already walked. The Rolling Stones are off to Universal. Robbie Williams is threatening a strike, while Coldplay are maintaining a watching brief on developments.

David Hepworth, a publisher and former editor of pop magazine Smash Hits, joined the fray on his blog And Another Thing.

Hepworth said the classic record company began as a distribution business. It had a pressing plant, lots of employees in white coats and a fleet of vans to get the product to the point of sale. The charts were devised and perfected because they gave the business a way to decide which record to distribute more of and which not to bother with.

“Then it discovered that big talent properly handled could make a lot of money. To increase their chances of attracting that talent they needed money. Hence they became banks.”

Here surely is a rare vote in Hands' favour. After all, if there is one thing a financier understands, it's banks.

Hepworth imagines a meeting between Hands and EMI executives as having something of the Monty Python merchant banker sketch about it during which Hands presumably took the John Cleese role: “I don't want to seem stupid but it looks to me as though I'm a pound down on the whole deal.”

But then Hepworth says if the record company is really a bank then the crux of Hands' dilemma is to whom do you lend? Established under-performers like Williams? Or untried talent?

The latter is certainly among the solutions to EMI's travails proposed by Pete Paphides, UK newspaper The Times' chief rock critic.

He believes Simon Cowell, the X-Factor founder and judge, has had one genius idea in his life, which was realising that “at their crudest, big record companies are stardom brokers – milking the novelty value from a never-ending stock of fame-hungry young singers. And as long as people want to be pop stars, these labels will adapt, not disappear.”

Perhaps that's how EMI will proceed: as a fame factory. Hands needs money-spinning pop acts – if necessary, on 360-degree deals, where EMI takes a share of merchandise and tour revenues, to subsidise the acts that set a label apart as an art-based enterprise, Paphides says.

To enter the meeting where he outlined his vision to EMI staff, Hands, flanked by bodyguards, had to fight his way through the throng of paparazzi. Infamy indeed. This glimpse of the life of the hunted rock star should give him the empathy to coax Williams back out of his cave.

Or maybe this was always part of the plan? Let's face it: there are probably enough people out there who'd pay good money to ensure Robbie Williams and Coldplay never record another note.