EMI’s digital business isn’t catching up fast enough

One of the reasons for EMI’s poor performance in fiscal 2008 (FY ended March 30) seems to be the underpar digital business at the UK company. When Terra Firma bought EMI in August 2007 they were expecting download sales to increase by some 50 percent in fiscal 2008. The reality, however, is sobering: EMI Music managed to sell digital recordings worth £166 million – an increase of 19.4 percent year-over-year. Digital income at EMI Music Publishing grew only 9.1 percent to £27.5 million.

Worse yet, according to the annual report (PDF): “Research conducted post-acquisition showed that EMI Music’s digital sales had grown more slowly than the digital market (overall): only 115 percent between 2005 and 2007 against market growth in the same period of 148 percent.”

And this is one more detail, that’s just a little hard to believe: “At the time of acquisition its digital organisation was limited: a strategic group disconnected from the main technology workforce across the company. While EMI Music concluded an important deal with iTunes and Google in 2007, it still lacked any relationship with the social networking sites that were becoming an important route to market. EMI Music has not yet fully digitised more than a moderate percentage of its catalogue. Indeed, even today, only around 30- 35% of the part of the catalogue in CD format is available for downloading – and much is not even in CD form.”