He's a multimillionaire himself, but EMI's new boss threatens to axe stars

A leaked memo from the new owner of the music giant EMI has revealed radical plans to drop recording artists who, despite being big names in the business, are not working hard enough for their label.

Guy Hands, chief executive of EMI's new private equity owner Terra Firma, warned staff of plans for "fundamental change" at the company and sent a clear message to recording artists "who simply focus on negotiating for the maximum advance".

The memo has fuelled intense speculation about potential casualties of the new owners, though the memo did not include specific names. The group includes EMI Records, to which Robbie Williams is signed, and Parlophone, whose artists include Babyshambles, Coldplay, Lily Allen, Kylie Minogue and Joss Stone.

"There is no reason why we should not be more selective in whom we choose to work with", said the memo, dated 31 October. "There has been a lot of talk about what labels offer to artists and to the consumer", wrote Mr Hands. "However, there is not much talk about how artists should work with their label. While many spend huge amounts of time working with their label to promote, perfect and endorse their music, some unfortunately simply focus on negotiating for the maximum advance ... advances which are often never paid".

Among the many names bandied around yesterday, the most high-profile of the artists who could potentially be discarded is Williams. The 33-year-old, who has sold more albums in the UK than any other solo artist in history, was paid a reported £80m when he signed for the label in 2002. But his last album, Rudebox, flopped in the charts and was overtaken by Take That, his former band.

In January 2002, EMI indicated its readiness to ditch failing artists regardless of their former successes when it paid Mariah Carey £19.6m to terminate her contract. Carey was discarded after her widely-promoted Glitter album sold only two million copies.

"It will be open to us to choose which artists we wish to work and promote", wrote Mr Hands, whose firm bought EMI for £2.4bn in August after a lengthy takeover battle with the US group Warner Music. He also threatened to "unpick" executive pay packages at EMI, claiming they were part of a system that "does not encourage the right behaviours or reward the right actions".

"What worries me is that the existing structures have been put in over a couple of decades and unpicking them in a way that releases the good in the company is not going to happen overnight".

Many other artists signed to EMI will now come under greater scrutiny. Among those mentioned by industry experts yesterday were the Magic Numbers, Athlete, Captain, Badly Drawn Boy, and Air Traffic.

The leaking of Mr Hands' memo comes amid heightened tension within the music industry and a turbulent period for EMI in particular.

Already plagued by the late delivery of many albums from its top artists, Mr Hands described EMI in September as the worst business in the most challenged sector around. In a separate memo last month, he told his staff the record industry has "stuck its head in the sand" by refusing to make the most of the internet.

The label's big guns

* Robbie Williams

The former member of Take That once seemed invincible. He has sold more records than any other British solo artist in history, and won 15 Brit Awards. Signed to EMI for a reported £80m in 2002, his last album, Rudebox, flopped badly and was overtaken in the charts by his old band mates from Take That.

* Beth Orton

The Brit Award winner who grew up on a pig farm in Norwich has had a quiet few years, which could be among her last professionally. After several successful albums her most recent, Comfort of Strangers, saw a sharp move away from her electronic folk norm (folktronica) and toward a purer folk-sound. Her fans didn't appreciate the measure; the album disappeared with hardly a trace. Poor sales could see her dropped by EMI.

* Badly Drawn Boy

Real name Damon Gough, he took his stage name from the title character of the TV show Sam and his Magic Ball. His early career was replete with success, including a Mercury Music Prize. But following a lucrative and highly publicised switch to EMI, his popularity has dwindled. His last album, Battle of Normandy, released three years ago, only reached No 17 in the charts. Little acclaimed music has come from him since.

* The Magic Numbers

After their widely praised debut album, the follow-up, Those the Brokes, released last November, had disappointing sales. The English rock group comprising of two brother-sister pairs had acquired a sizeable popular following which is now on the wane. Rumours that Angela Gannon, the percussionist, is planning a solo album won't do much to calm nerves about their future success.

* Air Traffic

The Bournemouth rockers used to practise next to Hurn airport, and took their name from the interference on their amplifiers from passing planes. High hopes were raised with their single "Shooting Star", which the Radio 1 DJ Vernon Kay made his "weekend anthem'. Their debut album, Fractured Life, was massively hyped ahead of release but proved a dismal flop, reaching only No 42 in the UK charts.

* Captain

Another band which raised huge expectations with their first few singles, but who have disappointed the alternative rock scene with their first album. This is Hazelville, only reached No 23 in the UK charts when it was released in August 2006. If their soon-to-be-released second album fails to do better, EMI may lose patience with them.