Guy Hands, EMI, Robbie Williams and Monty Python

The classic record company began as a distribution business. It had a pressing plant, lots of employees in white coats and a fleet of vans to get the product to the point of sale. The charts were devised and perfected because they gave the business a way to decide which record to distribute more of and which not to bother with.

Then it discovered that big talent properly handled could make a lot of money. To increase their chances of attracting that talent they needed money. Hence they became banks. Their main function in the career of a Led Zeppelin or Spice Girls was to pay enough money to sign or re-sign them.

One of the main problems facing Guy Hands, the new owner of EMI, is that he's bought a big record company just as the virtues of bigness are in question. The manufacture is contracted out. The distribution gets less important as tangible product declines in importance. It's no longer about having the promotional muscle to get your act on the TV. Being big is in fact nothing but pain. You have large corporate overheads which mean that you must release a huge number of records you know will never pay back purely in order to give your staff something to do.

I'm sure that there have already been lots of interesting meetings between Hands' people, who know about business, and the inumbents, who know about the record business, meetings at which the underlying business model - to wit, for every hundred Erin Mckeowns you might get one Norah Jones - has been called into question. This must have had something about it of the Monty Python merchant banker sketch during which Hands presumably took the John Cleese role - "I don't want to seem stupid but it looks to me as though I'm a pound down on the whole deal."

Maybe Guy Hands has decided that he no longer needs the structure of a large record company. Maybe he's going to contract out all the record company services - from those things that are mission critical to the "fruit and flowers" - to independents and just put his energies into the one function of the record company that he really knows all about. That's banking.

But the problem for Hands then is who do you lend your money to? Robbie Williams who's sulking in his tent and whose days as a recording artist are probably behind him? Radiohead, who give the impression of slowly turning into the Grateful Dead, and are probably not going to sell any more records than they do at present? Not Paul McCartney. He's got more than you.

You could always invest in untried talent. Now just imagine this for a second. You tear off a cheque totalling a fifth of this year's development money on a kid who is to all intents and purposes off the street in the hope that one of those demos that the a&r man comes and plays so loud in your office could in a year's time turn out to be Robbie Williams's "Angels".

I don't know if I'd have the nerve. Imagine it were your money. It's the longest long shot available in any kind of business anywhere. You get no security. You have nothing you can sell on. You cannot even promise that the product will be ready in time. Or on budget. You cannot even promise that there will be a product of any kind.

The air is thick with artists talking about how clueless the record companies are. Let's see them putting their money where their mouth is and not only financing their own recordings but also taking the next step and signing up the next generation. Of course, they won't. In the history of the music business no artist has ever used their own money to sign up another artist. Why not? Because in ninety-nine cases out of one hundred you may as well go and draw £250,000 out of the bank and set light to it in the street. That's the economics of the record business. And if the traditional record companies are losing their stomach for it, who else has the nerve? I don't see anyone.