Interviews with execs from EMI and Unversal:

EMI Group was once hailed as the music company that brought the world the Beatles, Frank Sinatra and Nat King Cole.

But by the time record veterans Alain Levy and David Munns took over the British company's struggling music operations last October, employees were joking that EMI stood for "Every Mistake Imaginable."

Levy became chairman of EMI's Recorded Music division, and Munns vice chairman. Their arrival followed a decade-long string of profit warnings, management shakeups and financial setbacks at the world's third-largest music company. Last year EMI posted a loss of about $310 million.

After slashing 1,800 jobs, firing 400 artists and shutting down several record labels, Levy and Munns are finally putting some hits on the charts by such new acts as Norah Jones, Coldplay, Kylie Minogue and the Vines.

But the industry is suffering from piracy of music over the Internet, which is slowing CD sales. Levy and Munns, who previously transformed PolyGram, spoke candidly in their first joint interview about EMI's problems and other troubles facing the music industry.

Question: EMI was a mess when you took over. The stock market now values EMI at about a third of what it was worth during the mid-1990s. How do you deal with that?

Levy: It's very annoying to see the valuation put on record companies these days. The market is based on perception, and people now have a perception that the music industry is doomed. Is that the reality? I don't think so. The only thing to do is work hard to build a quality music catalog for the future.

Q: Before joining EMI you took a break from the music business. What looked different when you returned?

Levy: What struck me most was how the music business is a world in itself, one where executives are often richly rewarded--even when they fail. In other industries, people understand that when [sales] go down by 10%, you take a salary cut. When the market is down here, these guys think it's everybody's fault but their own. When we arrived, we could see there was a total disregard for the shareholders in this company.

Some of these executives make the same amount of money as the heads of investment banking firms--plus they demand a guaranteed bonus, even if they fail to make a profit. We put a stop to it here...

They're called Universal for a reason. Universal Music Group's Q4 release schedule is nothing short of history-making in breadth and depth. And amid the group's many upcoming platinum-artist releases is something for everyone: rock from Bon Jovi, U2 (greatest hits), Nirvana (retrospective with previously unreleased "You Know You're Right"), Three Doors Down and Sum 41; hip-hop from Eminem (8 Mile), Jay-Z, Ja Rule and DMX; R&B from Dru Hill, Ashanti (remixes) and the Isley Brothers; country from crossover queen Shania Twain and pop from Mariah Carey and Now 11.
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