EMI in a spin after Sony predicts 15% fall in global music sales

EMI, the music group, saw its shares come under fresh pressure yesterday after the new head of Sony Music said global music sales could be down by as much as 15 per cent this year.

EMI shares fell 3p to 89.25p after Sony said it had taken a deliberately grim view of prospects in order to adjust its cost base. The Japanese-owned music group is cutting 1,000 workers ,the equivalent of 10 per cent of its total.

Andy Lack, who took over as chief executive of Sony Music two months ago, said he was preparing for a fall of between 13 and 15 per cent in the global music market, though he hoped the decline would be about 5 per cent. Industry analysts have been forecasting a fall of about 7 per cent.

One analyst said: "Sony has long been due to reduce its headcount but this just reinforces our view that the music market is in structural decline. But we would not change our numbers on EMI as a result of this. We are predicting a fall [in the market] of 5 to 7 per cent."

Paul Richards, media analyst at Numis Securities, said: "Heaven only knows what would have to happen for the market to go down 15 per cent. I think it is probably a case of a new manager trying to under-promise and over-deliver. I'd be very surprised if the market fell by anything like that much."

All the major music groups have been under pressure from the threat of illegal digital downloads and a fall in the number of blockbuster new acts. EMI is the only music "major" not part of a larger media empire and has seen its shares fall sharply on the back of credit rating agency downgrades and fears of continued weakness in the global music market where sales fell by 9 to 10 per cent last year.

Sony has been trying to build closer relationships with major US retailers such as Wal-Mart and Best Buy, which are increasingly powerful sellers of music in America. Mr Lack is expected to focus on reducing Sony's costs in its artists and repertoire operations. This is likely to mean less profligacy in the signing of new artists as well a more rigorous view on the salaries of Sony's music executives.

The shake-up at Sony mirrors the changes already made by EMI under Alain Levy, its head of recorded music. The former Polygram man has cut the artist roster, reduced pay and stripped out costly overlaps. In the meantime the group has thrown its weight behind established stars such as Robbie Williams and new talent such as the Grammy-winning singer-songwriter Norah Jones.