42
EMI Canada and Sony BMG Music Canada Inc. are laying off dozens of employees, part of a global music industry shakeup related to declining compact disc sales and free music downloads.
Neither company would talk publicly about the numbers of Canadian employees laid off or the reasons for the staff reductions.
But observers say the cutbacks are the latest manifestations of the toll peer-to-peer file sharing services, such as LimeWire and BitTorrent, are taking on the record industry.
"You've got to go back to the root cause of this. Record companies have been complaining that peer-to-peer file sharing has been plaguing their business and records are in continual decline because of all this piracy," said Neill Dixon, president of Canadian Music Week.
Sales of compact discs in the United States tumbled 20 per cent in the last five weeks of 2006 and 7.8 per cent for the year as a whole. Meanwhile, the pace of growth of digital music sales is slowing -- from a 130-per-cent clip in 2006 to as little as 40 per cent projected for this year.
EMI Group PLC confirmed yesterday that it has laid off an undisclosed number of Canadian staff as part of a global restructuring announced last month. Most of the layoffs are related to the company's decision to get out of the business of manufacturing and distributing compact discs, according to an official who asked not to be named.
Erica Silver, a spokeswoman for Sony BMG Music Canada, denied a report on Billboard magazine's website that the company's Toronto head office has closed. But she would not comment on the story's assertion that 35 to 40 Canadian employees have lost their jobs.
"We're not going to comment on staff reductions, but we're operating, we're here," Ms. Silver said yesterday. Sony BMG is a joint venture of Sony Corp. of Japan and Bertelsmann AG of Germany.
Mr. Dixon said the layoffs could make it more difficult for emerging Canadian artists to land international record deals.
"There's going to be less money put into R&D, if you will. You can already see it happening. The record companies are signing less and less domestic repertoire as their business shrinks," he said.
As it becomes more difficult for emerging Canadian artists to sign with major record labels, Canada's independent music business will continue to grow, Mr. Dixon said.
EMI, which represents Canadian artists Nickelback, Anne Murray and Stompin' Tom Connors, said some of the staff being laid off worked on the music label side of the business, but the company said it remains committed to discovering and nurturing Canadian artists.
Sony, which represents Canadian artists including Celine Dion, Avril Lavigne and Three Days Grace, said nobody was available to discuss how layoffs would affect its efforts to develop emerging Canadian artists.
Last month, EMI Group announced a restructuring plan aimed at cutting £100-million ($196-million U.S.) in annual costs. At the time, the company said the savings would involve increased sharing of services across regions.
"The global music market remains highly dynamic but also continues to prove to be a challenging environment in which to operate," the company said in a release.
Last week, Warner Music Group confirmed it is "in the preliminary stages" of making a takeover bid for London-based EMI.
Analysts said the merger would allow the companies to cut costs. But observers said a merged company would continue to face challenges, including the inevitable demise of the compact disc format and the uncertainty of how to make money in the face of piracy and the difficulty of controlling what consumers do with music they download from Apple's iTunes and other music sites.
In Pictures:
