EMI, the British music company behind Robbie Williams and Kylie Minogue, plans to make 1,500 people redundant in the face of rampant music piracy and stagnant sales.

The company said yesterday that as part of a sweeping overhaul of its business it would also drop a fifth of its recording artists — mostly obscure acts from continental Europe — and focus on more bankable performers such as Coldplay and Norah Jones. The redundancies represent 20 per cent of the workforce.

The upheaval at Britain’s largest music company is the latest attempt by the music industry to come to grips with dwindling demand for CDs on the high street, which has been blamed on the rapid rise in internet piracy.

The decline in sales has prompted the biggest music companies to seek savings of about £700 million over the next three years. They have also started to fight back against music pirates by bringing lawsuits against the worst offenders in the United States and Europe.

The British Phonographic Industry said last week that it would take court action against people who illegally swapped songs over the internet. Its warning was followed this week by almost 250 lawsuits filed by IFPI, the global music trade body, against copyright pirates in Germany, Denmark, Italy and Canada.

Sales of recorded music have fallen by about a third in five years, and about 7 per cent in 2003. EMI outperformed rival companies such as Warner Music Group, Universal Music and Sony Music by holding its recorded music sales in the year to the end of March at about the same as last year’s levels.

Although Eric Nicoli, the chairman of EMI, said that the company had “outperformed the industry” in the past year, there was a need for more restructuring. Last year EMI had annual sales of £2.17 billion, a fall of 11.1 per cent from the year before.

But the company, whose assets include the famous Abbey Road studios where The Beatles recorded the album of the same name, said the decisions were part of a “continuing drive to maximise efficiency and effectiveness in the changing global music marketplace”.

The company expects to reap savings of about £50 million a year from the latest job cuts, which follows a £100 million cost-cutting drive in 2002 that saw it shed 400 artists and 1,900 employees.

Alain Levy, chairman of EMI Music, said: “We believe that by concentrating our efforts on a tightened roster of artists we will increase our revenue generating potential while reducing our costs.”

The company refused to identify individual artists being culled, but none is believed to come from Britain and one music analyst said that they would be “stunned if anyone has ever heard of them”.

The reduction will leave EMI with about 1,000 artists on its books. Most of the savings will come from the company’s decision to abandon its CD and DVD manufacturing operations in Uden in the Netherlands and in Jacksonville, Illinois, a move that was expected by analysts.

The closures will result in about 900 jobs being cut. The company did not specify where the other 600 job cuts were being made. It is thought that only a small fraction of the lost jobs will be in Britain and by the end of the restructuring EMI will be left with about 6,500 employees.

“Exiting manufacturing in our two primary regions of Europe and the US will allow us to lower our costs while flexibly meeting our supply needs,” M Levy said.

The company said the restructuring would result in a cash cost of £75 million as well as a non-cash write-down of about £80 million — an accounting charge whereby the company reduces the value of the assets on the balance sheet by £80 million and accounts for it as a loss in its profit-and-loss statement.

Sarah Simon, a music industry analyst at the Morgan Stanley investment bank, said: “The restructuring and job cuts were surprising, but surprising in a good way financially for the company.”

The financial hardship being felt by the world’s big music companies has triggered efforts to reduce the number of players from five to as few as three. Sony of Japan and Bertelsmann of Germany plan to merge their two music divisions in a $5 billion (£2.74billion) deal to create the second-largest player behind Vivendi Universal Music.

In recent years EMI has seen two merger attempts blocked by regulators, one with Warner Music and one with Bertelsmann’s music arm, BMG. Last year it was beaten in the race to buy Warner Music Group by a private consortium led by Edgar Bronfman Jr, the scion of the billionaire Canadian family behind the Seagram drinks empire.

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