EMI Erases Digital As Standalone Unit; Merrill Out, Ondrejka Promoted

This story was written by Staci D. Kramer.

The announcement came in a press release that buried the org-chart reasons for the moves: "With digital music sales comprising over 20 per cent of EMI Music's revenues, the company is now completing its integration of all digital functions into its business operations and will no longer run a standalone digital unit." But Leoni-Sceti highlighted just that in his staff memo (first published by MediaMemo but which we've also obtained and posted after the jump.)  Cost-cutting EMI gets to eliminate a layer of senior management, while emphasizing the idea that digital no longer needs to stand alone. But it comes along with a bit of a contradiction: plenty of people at EMI still will be responsible primarily for digital.

For instance, Ondrejka's new role calls for him to "help to advance the company's digital marketing capability, developing new consumer and market insight resources and leading EMI's experimentation with new digital marketing and product models in order to provide the best service to its artists and their fans." (Ondrejka took part in our recent EconMusic conference; you can see the video from his panel after the jump.)

At its most simple, Merrill is gone because he doesn't have a chair left. But Merrill, who no experience in music, was an unorthodox pick from any viewpointand he was handpicked by Guy Hands, who headed EMI's new owner private equity firm Terra Firma and was group chairman of EMI. He reported directly to Hands, as his advisor on all things digital. But Hands turned over the day-to-day operations of EMI to Leoni-Sceti, who inherited Merrill. Leoni-Sceti reorganized EMI Music into catalog, music services and new media business unitsheading new media himself but making Merrill COO. That position continues to exist, with Leoni-Sceti maintaing the job and a "New Music Operating Board" as detailed in the memo. Recently promoted Mark Piibe continues as SVP-Digital Business Development, but will report to Ron Werre, president of music services whose team "now leads all deals and relationships with our digital and physical retail partners."

Just last week, Hands stepped away from daily operations of Terra Firma, too, to focus more on its investments following disappointing resultsand a $1.7 billion writedown, roughly half, of its EMI investment.

Memo from EMI MUsic CEO Elio Leoni-Sceti:

Dear all:

With digital now comprising over 20 per cent of our revenues and growing fast, and with the progress we have made in integrating all of our digital operations fully into the business, we will no longer operate a standalone digital function.

Douglas Merrill has today stepped down from his roles as President of Digital and COO of EMI New Music and will be leaving the company.  I would like to thank Douglas for his contribution and to wish him well for the future.

Digital Marketing

I am delighted to announce that Cory Ondrejka is appointed to the newly-created position of Executive Vice President, Digital Marketing,reporting initially to me and then to our new President of Marketing whose appointment we expect to announce shortly.  We have been planning this promotion for Cory for some time now.  In his new role he will help us deliver our goal of leveraging the power of digital across our business, particularly in the key areas of consumer understanding and analytics, content creation and digital marketing, in order to strengthen the relationship and interaction between our artists and their fans.

Cory is a highly talented executive with a passion for music and a complementary, technology-based skillset.  Since he joined us from Second Life last year he has helped us create a new approach to digital that will be unique to the music industry including establishing a world-class engineering team on the West coast and instituting modern, agile software development practices and tools that are the foundations to help us transform our approach to analytics and marketing.

He will be making further announcements about his Digital Marketing team in due course.

New Music

Nick Gatfield and Billy Mann, our Presidents of A&R Labels for North America/the UK and International respectively, will join the EMI Music Executive Committee and, as members of the New Music Operating Board, will continue to support me directly in my role as President of EMI New Music.

Under their leadership, EMI is building very strong creative momentum.  In the last four weeks alone their A&R Labels teams around the world have signed 14 new artists, three in the US, four in the UK and seven in the rest of the world.

Digital Supply Chain/IT

Peter Baker, VP, Digital Software Engineering, and Dan Levine, VP, Digital Product Development, who have been leading the work on our Digital Supply Chain, now report to Ronn Werre, President, EMI Music Services.  Ronn will be making the Digital Supply Chain a top priority so that we can best serve our artists and our customers.

Richard Piercy, Acting Chief Information Officer, now reports to Chris Kennedy, our Chief Financial Officer.  Richard will continue to oversee our global IT system which is an important strategic enabler and one that is strongly linked to our management and financial reporting requirements.  Chris will ensure that IT supports the company's strategic ambitions effectively and efficiently.

Meanwhile Mark Piibe, in his role as SVP of Digital Business Development, will report to Ronn Werre whose Music Services team now leads all deals and relationships with our digital and physical retail partners.

Building our new music repertoire and embedding digital into everything we do are key to our future success.  With our growing creative momentum under strong A&R leadership and the final integration of all remaining digital functions into the business, we have a solid platform for enhanced performance in this coming year.

Thank you for your continued efforts.

All the best
Elio

By Staci D. Kramer