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BOB MOON: The British record group EMI is merging its two main American recording labels, Capitol and Virgin. As a result, hundreds of jobs in the U.S. will go. From London, Marketplace's Stephen Beard reports.

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STEPHEN BEARD: This is the first step in a bid to cut EMI's costs by $200 million a year.

The first casualty will be the man running the Capitol Label. He will lose his job along with several hundred workers.

The new combined operation will be called Capitol, but will be run by Jason Flom the current head of Virgin Records.

This is not just a cost-cutting measure. EMI hopes to galvanize its U.S. operation and end its long record of failing to find successful American acts.

That failure, says analyst David Buick, is reflected in EMI's relatively poor album sales in the U.S.

DAVID BUICK: One statistic staring EMI in the face that they only have 10.2 percent of the market which is way behind the likes of Warner Music and Universal Music.

EMI is also hoping to focus on what it calls "our digital capability in the U.S." It is the only one of the four music majors that have not signed a licensing deal with YouTube.

In London, this is Stephen Beard for Marketplace.