British based EMI Group reported to the Associated Press on Monday that the company has recruited Rome-native Elio Leoni-Sceti, a former vice president of household products company Reckitt Benckiser, to lead up its recorded music division. Guy Hands, the CEO of Terra Firma (the private equity firm that bought EMI last September) also reported that he will back away from leadership "to become non-executive chairman of EMI." According to the AP, Leoni-Sceti was formerly a "brand manager at Procter & Gamble before moving to Reckitt Benckiser in 1992" and eventually moving up to lead the European division of the company by 2005.

Last month, leaders for EMI's North American branches, including Capitol Records president Lee Trink, left the company due to Terra Firma's preference for no presidents over the label branches in EMI. In the meantime, representatives and leaders for the music company's Artists and Repertoire divisions were given greater leverage and more power over the running of the labels, even though the plan left artists without the traditional representation that label presidents had provided. This news came on the edge of Coldplay releasing Viva la Vida or Death and All His Friends, with many rumors pointing to that album as a savior of sorts for EMI in 2008.

Since then, Coldplay's album has scored huge around the globe but EMI has fallen to only holding 9% of the music market in the first half of 2008. Guy Hands told the AP that Leoni-Sceti "joins [EMI] at the right time to shape, drive and lead EMI to become the world's most artist-focused and consumer-friendly music company." The new executive may fulfill Hands hopes with his background in brand managing and household products, marketing music in new ways and attracting a larger consumer base.

According to Billboard.com, privately-held music company EMI Group and chairman Guy Hands have made a bid for independent music company Chrysalis (LSE: CHS). The report is based on similar reports by the London Times and Reuters, and indicate that EMI is not the only company interested in the label, with publishing companies Warner Chappell and Sony/ATV making bids, in addition to some private equity firms and other music publishers.

The Billboard report seems aimed at pointing out the publishing rights that would be gained from the purchase, since Chrysalis' music publishing owns the rights to artists like David Bowie, Gnarls Barkley, Athlete, and recently entered a worldwide agreement with Johnny Marr, guitarist with cult 1980s act The Smiths, but perhaps better known to American audiences for working with Modest Mouse on the band's chart-topping 2007 album. Chris Wright, Chrysalis' founder and chairman has previously sold aspects of the Chrysalis name to EMI, with the Chrysalis Records label being sold in 1991. Chrysalis' main objectives since then have been publishing rights, recording, management, and distribution. A radio business was also part of the company until last summer, when it was sold for $340 million, so the company could "focus on its music companies."

Even though EMI is not alone in its bid for Chrysalis, the move hardly seems appropriate in light of the difficulties and new business models the company has been espousing recently. If EMI is successful in its bid for Chrysalis, it would really be another venture Guy Hands and private equity owner Terra Firma are making in the music industry, so the real question would be what kind of change does this mean for independent labels, or the methods utilized by independents. Unfortunately, the group would be absorbed by EMI or any other bidders, so the ramifications would become part of the larger company and not reflect the status of the independent. In any case, whether the rumor is accurate or not, Chrysalis' status and EMI's problems are going to be in the open.

Privately-held EMI Group is just not having a very good week, what with announcing painful changes in the works, and the prospect of several big name artists threatening to withhold new albums until certain assurances from the label are met. Now comes news that longtime EMI act The Rolling Stones will be leaving the label at the end of the band's current contract in May to join industry giant Universal Music Group, owned by Vivendi.

The difference in a big name like The Rolling Stones leaving EMI and say, Radiohead (who have also left since Terra Firma's takeover) leaving, is that the Stones departure follows the company's decision to eliminate 2,000 jobs worldwide.

Any real connection between the Stones' decision and EMI's layoffs is likely limited, since a new deal with another label has likely been in the works for a few weeks or months. However, the band was likely aware of the treatment other artists seemed to be encountering and the difficulties that were arriving after the Terra Firma buyout in August. The band has been signed to EMI since 2003, in a deal estimated at £14 million, but released just one album of new material in the time period, A Bigger Bang. The remainder of the deal involved several compilations and live releases, including an exclusive B-sides disc with Starbucks (NASDAQ: SBUX).

Guy Hands, the Terra Firma executive, who is now the "top executive" at EMI, recently warned staff that record labels need to let the CD go and embrace digital "opportunities" if the industry is to survive in the expanding market, according to a report by Billboard. Terra Firma is a private equity firm based in London that succeeded in buying out EMI in late July and since then both EMI and Terra Firma have been quiet about the direction EMI would go in any business model.

Citing the recent move by Radiohead to take their music directly to the fans (Radiohead was previously an EMI "act"), Billboard reports that Hands "proposed labels act more like venture capitalists" taking both profits and losses from artists recording and touring -- in direct opposition to the standard model of paying artists up front for album production. If that becomes operating procedure, EMI's move in April to discontinue use of Digital Rights Management technology could soon by overshadowed by more "pioneering" and inventive ideas, hopefully designed to give fans better access to the music they crave.

While it is not surprising that the new executives in charge of EMI would shake up the tired model, it is quite telling that a leaked memo as revealing as this could only come in the wake of Radiohead's move for their new album In Rainbows. It seems all too apparent that the record labels needed a very stable artist to make the first move toward a more fan-based market, as opposed to any label risking a move away from the tried and failing model that Hands' cites. EMI is apparently the first label to embrace these new ideas, as was indicated by the DRM move, but hopefully the bigger companies will follow suit in due time. How long can they sit on their "hands?"

MAJOR PAPERS:

• It was revealed yesterday that Terra Firma is among the potential bidders for Ford Motor Company's (NYSE: F) Jaguar and Land Rover brands, reported the Financial Times.
• There is a 40% to 45% risk that a recession will be triggered by the housing market downturn in the U.S., the CEO of Freddie Mac (NYSE: FRE) warned, the Financial Times reported.

OTHER PAPERS:

• From BusinessWeek's "Inside Wall Street" column:
  
• Investors looking for fast growth in the $110 billion business-enterprise telecom market are betting on Time Warner Telecom (NASDAQ: TWTC), which offers broadband connections for data, high-speed Web access, local voice, and long-distance service.
• Plum Creek Timber (NYSE: PCL) is flying high despite the housing slump and market decline driven by the subprime mortgage crisis.
• Universal Electronics Inc (NASDAQ: UEIC), which makes the remote controls for TVs and other appliances, has caught the Street's eye.

WEBSITES:

• Unstrung.com reported that Cisco Systems Inc (NASDAQ: CSCO) is close to buying a WiMax base station company, according to sources, and one possible target is Alvarion (NASDAQ: ALVR).
• Yahoo! (NASDAQ: YHOO) is reportedly going to reduce the amount of money and effort it spends on premium services related to music, games, TV, and movies, reported TechCrunch.com.

Over a week ago, the European private equity firm Terra Firma extended the deadline for its offer to buy EMI Group PLC (LSE: EMI) from July 5 to July 12. It was the second extension the firm had made, and this morning a third extension was made until July 19. According to Billboard.com, by 1 p.m. yesterday, just 3.82% of EMI's shares had been sold to Terra Firma. A week ago, that figure was 3.56%.

Yesterday, the European Commission approved the buyout; the regulatory commission found no antitrust issues. At the same time, EMI stocks dropped from the boost they enjoyed last week, falling from 271 pence on Wednesday's closing to close at 268.75 yesterday afternoon. The stock has fared nicely today, but has not risen much more than one pence in trading.

This third extension from Terra Firma comes in the face of continued hopes from EMI shareholders that Warner Music Group (NYSE: WMG) will make a counterbid. Billboard.com has also commented that "WMG is reported to have appointed Alan Mnuchin, of Wall Street investment group AGM Partners, to re-assess how to make another counterbid for EMI."

A merger between EMI and WMG might be beneficial for shareholders, but consumers of music from both companies may not be as happy. EMI dropped the use of Digital Rights Management technology in April, paving the way for higher quality downloads from online stores like Apple Inc. (NASDAQ: AAPL)'s iTunes Store and a future Amazon.com (NASDAQ: AMZN) store. WMG has remained firm in its support for DRM use. A combination of the two may result in the reversal of DRM-free use of EMI's products.

Billboard.com reports today that the European Commission has approved the private equity group Terra Firma's bid to takeover EMI Group PLC (LSE: EMI). The bid, valued at 2.4 billion pounds or $4.8 billion, now faces competition from a most unlikely source: EMI shareholders who hope for a counter bid from Warner Music Group (NYSE: WMG). Terra Firma's bid is 265 pence, or $5.38, while EMI's stock closed at 268.90 pence today.

According to the report, Terra Firma has only secured 3.56% of EMI stocks despite early hopes that EMI shareholders would take the approved and recommended offer by EMI officers. A year ago, WMG offered EMI 315 pence per share, or $6.40, which was rejected according to Billboard due to fears of a Commission rejection. Hopes for a renewed offer from WMG are the latest in the seven years that EMI and WMG have flirted with merging. Terra Firma's bid originally expired on June 28 before being extended to July 5. After that deadline passed, another extension until today (July 12) was announced and plans to wait until July 26 were also mentioned.

In April, EMI announced that it would sell Digital Rights Management technology-free tracks on various digital stores. Apple Inc. (NASDAQ: AAPL)'s iTunes Store became the first in May by opening the iTunes Plus store. Amazon.com (NASDAQ: AMZN) will open a similar store featuring the same tracks from EMI later in the year.

EMI stock had enjoyed a steady rise since last Wednesday, climbing to close at 271 yesterday. The stock opened at 273.23 this morning before falling over 4 pence to close 2 pence lower than yesterday.

Terra Firma, a European private equity firm, has again extended a deadline for EMI Group PLC (LSE: EMI) shareholders to accept the nearly two month old offer for the company. The firm is willing to pay 265 pence a share, roughly $5.34, but EMI's shares opened at 268.5 pence, or $5.42, yesterday, according to a Billboard report from London. The new deadline is set for July 12 after the previous deadline passed Wednesday.

The Billboard report indicated that Terra Firma had already received 3.53% of issued shares by the time the offer's deadline on June 28 passed. After two extensions, that amount has increased only 0.03%. The report also maintains that a spokesman indicated the firm would be willing to continue extensions until July 26 and that it is possible many shareholders are waiting for a higher counter bid from Warner Music Group (NYSE: WMG). WMG has been rumored since the Terra Firma buyout announcement was made to be preparing for an offer, even though EMI and WMG have flirted with joining for over seven years.

Stockholders may be hopeful for a bid from WMG, but the combination of these two music labels could be an unwanted and unfortunate move for the record industry. Both labels are committed to different and opposing growth models for the industry -- the most important and largest being the place of Digital Rights Management technology, something WMG is devoted to using. EMI dropped DRM use from its tracks in April and launched Apple Inc. (NASDAQ: AAPL)'s new iTunes Plus in May, the first of numerous DRM-free services.