Why would anyone want to buy EMI?

Apparently, people do. Richard Wachman has a good piece explaining both the problems and the opportunities of the music business.

It has taken this long for the record companies to fight back by collaborating with legal downloading sites such as iTunes in a bid to offset lost revenue from plummeting CD sales. But internet piracy is still costing them billions a year and the recorded-music arms of the majors look to be in terminal decline.

According to the IFPI, the international music industry lobby group, 40 songs are being downloaded illegally for every legal download. Put another way, they say 20 billion songs were downloaded illegally in 2006 and the situation is set to worsen following the spread of broadband to eastern Europe and other emerging markets.

The effect of piracy on the industry has been to spur consolidation as the big players scramble to cut costs by merging with each other. There are now only four major music groups: Universal, Sony/BMG, EMI and Warner Music.

Last week, British-based EMI, which has been struggling with falling profitability for years, said it was recommending to shareholders a takeover approach from Terra Firma, the private equity group headed by Guy Hands, which only last month tried unsuccessfully to bid for Alliance Boots…