I want to begin by saying ‘Thank you’.

1. I want to begin by saying ‘Thank you’. For the past few months I have been intensively engaged – alongside my Terra Firma colleagues – in the most extensive listening exercise any business has ever undertaken. Literally hundreds of people – from employees like you within EMI, from the artist and manager communities, and from the wider music industry – have given generously of their time to share their thinking with us. Additionally, we have spoken to thousands of consumers to understand why they are not paying for recorded music today. You have given us your thoughts on every aspect of working for this great creative institution which is EMI. You have set out clearly and cogently the considerable challenges facing EMI – side-by-side with the rest of the music industry. Together you have had a major impact on informing our deliberations and shaping our forward thinking. To everyone who contributed, I want to say again: “Thank You”.

2. Over the last 7 years the recorded music industry, rather than embracing consumers has done a number of things which have alienated them First, as an industry we pushed Napster out of business; Second we had the RIAA sue individuals, literally thousands of them, for uploading music illegally; Third, we resisted the release of DRM free music; Fourth we did not make music easily available for those who have to pay The result is that new music loses money with EMI not having produced a positive result from new releases for over seven years The most important thing we can do as an organisation and as an industry is to stop fighting amongst ourselves and to get consumers to pay No amount of litigation and bullying can win – only working with the consumer can Before talking about what we have learnt from you, EMI’s artists and the record industry generally, I want to share with you any thoughts on the music consumer At the end of all this we have a consumer who, as Radiohead say, regard not paying for music as a victimless crime

3. I do too, and I am truly honoured to be involved in an organisation that plays such a critical part in all of our musical heritages – from The Beatles to Norah Jones; from Simon Rattle to Coldplay. Alongside that shared love of music, almost everyone we engaged with held another conviction – that the whole recorded music industry has to change, and that EMI has to change with it too. Quite a lot of people suggested that EMI could and should show the way. We can, and we will. However, this will not be without pain; whenever one tries to change anything that has been established for a long time, even if people support you, they are normally some way behind. EMI is going to be out in front, even if being in front and telling the truth inevitably results in brickbats. But first, why the need for change? Now turning back to EMI, one message came through loud and clear from every conversation we had. It is a notion that unites and binds everyone in this industry – whether EMI people, or artists, or our partners. Everyone shares a great passion for, and love of, music.

4. Overall revenues across the industry from the sale of recorded music have been declining. But the recorded music industry has neither responded strategically to these challenges nor adjusted its way of operating accordingly. Most of you have told us, the old ways of doing business, designed for a different era, have been protected for too long. They are no longer appropriate if we are to have a sustainable industry which can find, nurture and break the creative musical talent of tomorrow. The irony is that whilst the sales of recorded music have been dropping, music overall – in all of its forms – has been flourishing and growing. Well, as I have said to people I work with since 1995, a world that was once dominated by CDs and record shops would give way to a far more complex era of multiple routes to market, including digital. Music is an integral part of people’s everyday lives as never before.

5. We need to create a company that is profitable and growing, serving its artists and music lovers more effectively than any other organisation. A company with world-class skills and expertise in every musical domain. We need to harness these strengths, apply our creativity to how we sell, market, distribute and indeed finance our artists’ music. The overall challenge for EMI, therefore, is to move to an organisational structure which is best able to monetise its artists’ music in a world where the CD is not the only way in which consumers enjoy their music and many consumers have become used to not paying for it. There are within EMI extraordinarily creative and talented people and our artists count as some of the most accomplished in the world.

6. We want to find and to back the best new talents across the genres. We want to continue to work with great music talent of every generation and to help make great music and I believe we can and we will and so do my investors who are some of the smartest. Indeed they have themselves put in additional $500m into this business. EMI Recorded Music is stronger today than it was a PLC. • But: • we have to do that in much more innovative and economic ways; as I said in my first staff meeting it is impossible to just cut for growth; however we need to be fighting fit and we need a relationship with our consumers which is mutually beneficial • we need a relationship with our artists based on a true partnership, in which we jointly share both the risks and the benefits • we must be great partners, supporting our artists • we will aspire to be best-in-class at optimising the sale of recorded music through every outlet – both physical and digital • we aim to help our artists generate additional revenues from the multiplicity of opportunities that exist beyond the sale of recorded music • and we promise in due course to be the industry leader in producing financial information for our artists which is timely, transparent and accurate In the past few months, we have analysed EMI in a very detailed but simple way, focusing on the money. We’ve done what has been done in thousands of industries before. We’ve looked at the cash received and cash spent and the answers have been disturbing. Overall, new releases, which have been seen as the lifeblood of the industry have been losing money at EMI for several years. Some of our new music is profitable, but most is not, even before overheads. Over time as the consumer moves more to digital, unless more are willing to pay, all will become unprofitable and in those circumstances how will artists develop their careers. We all know that you simply don’t go from a gig in the pub to the 02. Between the two there is a lot of money, people, blood, sweat and tears, We need to find new models to allow us fully to monetise our artists’ work. To achieve that vision, we have much to do, and some of it will be challenging, but I believe that EMI is up for it. Let me say first, however, that EMI will remain right at the heart of music creation.

7. In reshaping the business, and reviewing our relationships with artists, we have been guided by three principles. First, we will believe in our artists for the long term. Second, we need to establish a true partnership, based on alignment of interests in every area. And finally we need to have a shared understanding based on openness, trust and honesty. These principles led us to the following conclusions.

8. Unifying our UK and US A&R structures under common leadership is an important step in allowing us to build and manage our rosters in an integrated and holistic way. Of course, we need to make sure that we have the right people with the appropriate skills and experience. The industry today requires people with a diverse skillset, attuned to the demands of the consumer and the market and with an understanding of how the digital age affects the creation and distribution of music. Only 1 in 20 people in the labels actually do A&R; the rest provide a range of services This makes each label an expensive and inefficient business in its own right. EMI’s labels will be focused in future just on A&R, so they will be able to concentrate on the creative process and on developing partnerships with the artists. We need to position the labels so that they are focused absolutely on A&R, which is what they are trained to do and do best.

9. One of the issues we will be addressing is the sheer size of our roster. In the past, we have followed the industry model of signing up as many artists as possible, while taking huge bets on a few. We actually have over 14,000 artists on our roster. Once again, this is not sustainable. We cannot provide meaningful support for that number and everyone suffers as a result. Going forward, we will have a smaller number of artists on our roster, but we will aim to serve them much better. The role of these core functions – indeed the role of everyone not involved directly in A&R – will be to monetise our music, ensuring that both we and the artists extract the full value from their work. We will develop and test new ways of serving the customer in the digital age; and of exploiting the huge asset that defines EMI music. We will bring together the key support activities under a unified global leadership. In this way, we will coordinate the best talent delivering the best results for our artists at a lower overall cost.

10. The key organisational imperative is to free people up so that they can focus on what really matters to our artists and the economic prospects of the company. The reshaped organisation is designed to simplify what we do and remove much of the noise in the system; and in that way, help us to release creativity and speed up decision making. For example, we have already created dedicated and integrated teams to support the artists’ projects. And we will be exploring how we can develop our relationships with the artists to serve them in more ways than we do at present. To achieve this objective we will have to respond to the technical changes facing the industry. For example, we are exploring new models of both artist discovery and monetisation that will enable relatively niche artists to remain profitable in the new environment. In this way, the new model will be built bottom-up around the needs of the artist and the consumer without the complexity that has built up within EMI and the labels over the years. We can also use the new technologies to give artists much quicker and more accurate feedback on their chances of their making it commercially. At the same time, we want as many artists as possible to be able to develop their creativity within the EMI family on a sensible economic basis.

11. Digital technology has moved power for the organisation to the consumer. The consumer now has the power to choose – we have moved from a “push” to a “pull” economy. • One of the main tasks for the new marketing, sales and distribution functions will be to get inside the mind of the consumer. • We need to listen to the consumer: • How do they want to discover new music? • What would make them buy new music? • How do they want it delivered? • The new marketing function will be able to address these issues in depth as we have never done before. Having really understood what the consumer wants, we then need to deliver – something companies in the sector have not yet been able to do. We will be testing and developing new models. In particular, we will be looking at how we can more effectively drive real value from our catalogue and our archive – underexploited assets in my view; and how we can access consumers directly. EMI will be a profitable business, where consumers get what they want and EMI helps them find what they want; where artists maximise their earnings potential and realise their creative aspirations; and where employees use their passion, expertise and knowledge to connect artists and consumers. We have great assets in this Company. We have many talented, passionate people; we have a superb catalogue and a track record of innovation. However, we haven’t driven enough value from our music assets, and we don’t have a deep understanding of our consumers.

12. The reshaping of the company will focus our business activity into three key, and clearly defined streams. • Labels/A&R will, as I have said, be focused on putting the artist first. • Music Services will deliver music products and services for today’s consumer. • - And Support Services will have the role of achieving the operational excellence necessary to help the other two streams achieve their business objectives.

13. We will not be asking people to reapply for their jobs in a formal way – effectively you will all be evaluated as if you were. • And I think it’s fair to indicate what we are looking for. • The future EMI needs to have people with the right skill sets to do the job: • - highest of ethics • - Dedication to achieving the best • People with creativity and passion. • There will be real personal accountability, with the opportunity to achieve and to be rewarded. • There will be clear goal setting, accountability and a transparent review of performance, with achievement recognition. There will be a Long Term Incentive Plan that aligns the interests of all EMI staff with the interests of the company. It will be for ALL employees, not just senior managers. The intention is that every employee will share in the ownership of EMI. • Those who can add real creative value will succeed in the new EMI. There was no choice when we bought the company - and this was recognised by the previous management and all the other bidders – the only question was when. Over the few months we will identifying job cuts in recorded music of between 1500 and 2000 people. We have to lower costs to create a sustainable future for our company, our artists and the music as currently, it is costing too much to get our artists’ music to the consumer. Restructurings are always painful - and you all have indicated that you understand that. Unfortunately in the past – the restructurings that have been done within EMI have not been seen as fair. This time we are determined to conduct the selection of who stays with fairness, honesty and respect for everyone as an individual. Radical change of the kind – and especially the elimination of duplication – means a substantial reduction in jobs across the Company. Together – this group of people will create a lean, lively and stimulating organisation, with a strong creative and innovation culture.

14. I have written to you today setting out the technical information of the new structure and your team leaders will be sharing with you more details of what the reshaping of the organisation might mean for each of you. I am confident that together we will create a sustainable model for EMI through working with our artists and by understanding the consumer as a team, sharing creativity, discipline and energy. We will give this Company the success that its famous name, its artists and you deserve. Thank you for all your support. I look forward to your questions.