EMI boss takes the rap for failing on US stage

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EMI gives new chief of music arm £35m three–year incentive package

The record company impresario who gave the world the Spice Girls and the Beastie Boys suffered his own fall from pop grace yesterday when he was ousted from Britain's biggest music group.

Ken Berry, 49, the son of a telephone engineer and a teacher, earned £3m last year. But he has left EMI "by mutual consent" after a year in which its stock market value has fallen from nearly £10bn to £1.9bn. In a rock'n'roll story of failed multibillion-pound mergers, executive in-fighting and "emotionally exhausted" performers, Mr Berry presided over a slump in EMI's ranking among the world's top five record labels.

He was appointed head of recorded music in May 1997, with the task of vastly improving the company's global sales, in particular in America.

His departure followed a number of setbacks such as the £56m signing of Mariah Carey before she suffered a breakdown. A lack of bankable talent forced EMI to rely increasingly on its vast back catalogue.

His marriage to his former secretary, Nancy, who is vice-chairman of EMI's Virgin Records, also fuelled the gossip pages with descriptions of her as the "Hillary Clinton of pop". They are now divorcing.

EMI, whose repertoire of artists stretches from the Beatles to rapper Snoop Dogg, replaced Mr Berry with Alain Levy, the man credited with transforming the fortunes of PolyGram in the 1990s.

Mr Levy, 54, left PolyGram – now Universal Music Group – in 1998 after lifting its music sales to about £4bn, giving it a film production arm and making it the world's biggest record company.

Industry experts said last night that Mr Berry, whose departure is part of a shake-up by EMI's executive chairman, Eric Nicoli, had paid the price for failing to boost the company's sales in America.

That country accounts for 40 per cent of all worldwide music sales but EMI Group has been reducing rather than expanding its presence there. Priority Records, a record company bought for £66m in 1997 and specialising in urban "gangsta rap" artists, such as Snoop Dogg and Master P, is to be folded into EMI's Capitol label.

EMI issued an unexpected warning last month that profits were about to drop by 20 per cent, prompting a stock market fall that wiped £900m off its share price.

Ajax Scott, editor-in-chief of Music Week magazines, said: "Ken Berry is well regarded as a music man. He has been in the music industry a long time and knows artists and gets on with his artists.

"But he has not turned things around financially, particularly in America, which is the largest and most important music market. They just didn't provide the artists."

Supporters of Mr Berry point out that EMI has had marked success with new and trendy bands such as Coldplay, Gorillaz and Radiohead as well as mainstream talents such as Kylie Minogue. They add that in a global music industry going through a recession – sales fell by 4 per cent in America and 0.2 per cent in Europe last year – all record companies are struggling to maintain their market share.

But critics of the softly spoken Londoner say EMI's fall from influence – it is now fifth in the table of America's five biggest labels – is due to a complacent reliance on a back catalogue of 1,500 artists headed by the likes of the Beatles, the Rolling Stones and Pink Floyd.

EMI's top-selling album last year was the Beatles' 1 compilation, which sold 21.6 million copies, and its next best seller was Lenny Kravitz's Greatest Hits, with 6.7 million copies.

The company's line-up for Christmas – the critical period for music sales – is to be headed by a Pink Floyd compilation.

The distraction of abortive mergers with the American giant Warner and the German group Bertelsmann, as well as costly efforts to set up an internet download venture akin to Napster, have not helped. But Mr Berry can at least look forward to a comfortable future. EMI was said to have agreed a £5m pay-off – the biggest golden handshake in British corporate history.

HITS AND MISSES IN THE EMI STABLE

GOLDEN OLDIES: THE BEATLES

The Fab Four formed the mainstay of EMI's record sales last year, with 21.6 million copies of the '1' compilation. The album was the fastest-selling yet and helped boost EMI sales to £2.3bn. Critics said it underlined the company's reliance on its vast back catalogue

HIP FUTURE: RADIOHEAD

The five friends from Oxford bucked the trend for EMI. Their 1997 album, 'OK Computer', was voted the best of all time by 'Q' magazine, and last year's 'Kid A' went to number one and won the band a Grammy

'OVERPRICED' CONTEMPORARIES: MARIAH CAREY

When EMI announced in April that it had signed her for £56m, industry insiders said it was too high. Their scepticism was confirmed when her recent single was discounted to 49c in the US