Record industry goes into terminal phase

Cash, bang, temporary blip. For five years, the international record industry has pretended that its increasingly frequent downsizings are the result of a little local difficulty. Today's bloodbath at EMI gives the lie to that. The industry is entering its terminal phase.

The compact disc has reached the end of its life. An object of glamour and desire 20 years ago, the CD is now a disposable object, given away for free on magazine covers and in computer kits. Children use it to copy music from the internet. No matter how the industry dresses up the CD in so-called "jewel-boxes", fewer and fewer people are prepared to spend £15 on something they expect to be given for free. Protectingthe product is pointless. Encryption-breeds customer resistance and politicians are becoming immune to appeals from music biz moguls for a toughening and lengthening of copyright laws. Music, the industry's lifeblood, is trickling away.

Artists, the human assets, are asserting greater independence. Some, like Mariah Carey, demand more money. Others, like George Michael, walk out on their labels when the wind changes. Desperate executives yield vast tracts of money and power to hold onto waning stars. EMI's £80million? Maria Carey signing from Sony made sense for about six hours. In the cold light of day, Carey looked like a falling star with appalling personal problems - her marriage to the Sony boss had broken up - and a shrinking teen following. The £35million write-off after the flop of her debut disc was inevitable.

Creatively, the music industry does not know where to turn. There has been no big money-spinner since the violent rap wave of the early Nineties and there is little scope for new talent. The industry's entire energies are plunged into massive promotions of main releases, corporately planned and always high risk.

Once based in New York and London, the major labels have moved to the dreamland of Hollywood. Most are linked to movie studios. All are top heavy in suits, whose maintenance in Concorde style and prohibited substances is almost as expensive as that of pop stars.

Alain Levy, the EMI president, conducted a devastating cull at his previous company, Poly-Gram-Universal. Neither round of bloodletting addresses the core problem.

The reality is that the music industry is in its death throes. Artists, relishing independence, are reaching out to e-fans. Music-lovers are getting used to logging straight onto their favourite genre and idol. The middle man is doomed. EMI - along with Vivendi, Sony and Warner - is fading away. Alain Levy's cuts are merely an attempt to prolong an ebbing life by perhaps half a decade.