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As part of its fourth-quarter earnings call, Universal Music Group (UMG) said that a “strategic organizational redesign” it announced Wednesday (Feb. 28) would result in 250 million euros ($271 million) in annual savings by 2026, with a first phase of 75 million euros ($81.3 million) in 2024 and 125 million euros ($135.5 million) in 2025. The redesign is expected to include the long-awaited layoffs that have been signaled by the company for months, though the specifics of how many employees would be affected and what percentage of the overall workforce it would amount to was not disclosed.
The “plan is designed to achieve efficiencies in targeted cost areas while strengthening labels’ capabilities to deepen artist and fan connections,” according to a press release. The first phase will involve a general headcount reduction, while the second phase, which is scheduled to begin next year, will be “a combination of further ex-U.S. headcount reduction and other operational efficiencies,” according to the company’s investor presentation.
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A representative for UMG declined to comment on the specifics of the reductions.
“To put it simply, we’re creating the blueprint to the music company and the labels of the future,” chairman/CEO Lucian Grainge said on the earnings call, adding that labels will have “even greater flexibility and speed” in supporting artists, as well as “access to our highest performing internal teams and resources to bring artists to even higher levels of success.” The redesign “carefully preserves what we’re best at: creative A&R, marketing independence, unique label brand identities” and an entrepreneurial and competitive spirit, Grainge continued. The efficiencies, he said, will “generate more impactful support for promotion, distribution, audience monetization, D2C, e-commerce and other areas.”
In its fiscal year 2023, UMG earned a net profit of 1.26 billion euros ($1.37 billion) on revenues of 11.11 billion euros ($12 billion), the company said.
Layoffs at UMG have been telegraphed for months, ever since Grainge said in a third-quarter earnings call last October that UMG would need to “cut to grow.” Rumors further began to circulate in early January, when Grainge noted in his New Year’s memo to staff that despite UMG being the “most successful company in the history of the music industry,” the company would “further evolve our organizational structure to create efficiencies in other areas of the business, so we can remain nimble and responsive to opportunities as they arise, while also taking advantage of the benefits of our scale.”
The impending layoffs were more explicitly acknowledged on Jan. 12, after Bloomberg reported that UMG would be cutting hundreds of jobs sometime in the quarter. In response, a UMG spokesperson released a statement that echoed Grainge’s note, including that the company would “maintain our industry-leading investments in A&R and artist development,” while also promising to continue “investing in future growth — building our e-commerce and D2C operations, expanding geographically, and leveraging new technologies.”
Things then came into clearer focus on Feb. 1, when Grainge announced in an internal memo that Universal would be restructuring its label operations, adopting a loose East Coast-West Coast operation wherein Republic Records co-founder/CEO Monte Lipman would begin to oversee Republic, Def Jam, Island and Mercury, and Interscope Geffen A&M chairman/CEO John Janick would take responsibility for Interscope, Geffen, Capitol, Motown, Priority, Verve and Blue Note. Days later, Capitol Music Group chair/CEO Michelle Jubelirer announced she was stepping down from her post and was replaced by Geffen president Tom March as chairman/CEO of Capitol and Universal Music Publishing Group veteran Lillia Parsa joining as co-president alongside Arjun Pulijal.
Still, the threat of layoffs continued to loom, with many staffers unsure of their positions and unclear as to when the cuts would arrive. The first phase of the redesign announced today will be “execute[d] on immediately,” according to a press release, though the scale in terms of people remains unclear.
UMG is not alone in instituting layoffs in recent months. On Feb. 7, Warner Music Group (WMG) announced simultaneously that it had just recorded its best quarter in its history and would also be laying off 10% of its staff, or some 600 people, and offloading its owned and operated media properties in an effort to save around $200 million that it said it would reinvest in the company. That itself came less than a year after then-new WMG CEO Robert Kyncl announced a 4% staff reduction, affecting some 270 people, “in order to set us up for long-term success.” Cuts at other large record companies are also expected, sources say.
The broader music and media industry is also in the midst of a brutal run of layoffs: Atlantic Music Group, SiriusXM, Amazon Music, TikTok Music, CAA, Discord, Meta, Downtown, YouTube, TIDAL and Spotify have all undergone layoffs in just the last year alone, to name just a few, some of them more than once.
Atlantic Music Group chairman/CEO Julie Greenwald announced layoffs of about two dozen people Monday (Feb. 26), primarily in the radio and video departments, in an internal memo to staff obtained by Billboard. As part of the announcement, Greenwald also said the company would be “bringing on new and additional skill sets in social media, content creation, community building and audience insights,” with the goal of “dial[ing] up our fan focus and help[ing] artists tell their stories in ways that resonate.”
Greenwald, who has been at Atlantic Records for 20 years, was named chairman/CEO of the newly-formed Atlantic Music Group in October of 2022, with oversight of Atlantic Records and its subsidiaries (Atco, Big Beat, Canvasback) as well as 300 Elektra Entertainment, which includes 300, Elektra, Fueled By Ramen, Roadrunner, Low Country Sound, DTA and Public Consumption. In that role, she is still co-chair/COO of Atlantic Records alongside co-chair/CEO Craig Kallman.
“Our artists today need more support from us than ever — in a world that’s getting noisier, faster, and more fiercely competitive,” Greenwald wrote. “We have to do more, but at the same time, our approach has to be authentic, bold, and bespoke to individual artists. We can’t impact culture if we don’t have the right mix of people who live that culture. That’s why we need dedicated teams of multi-talented, ambidextrous people — our ‘SWAT teams’ — who encircle the artist and do everything possible to help achieve their full potential.”
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The news comes three weeks after Warner Music Group CEO Robert Kyncl announced that WMG would be cutting its staff by 10%, or some 600 employees, amid a broader reallocation of resources that will involve selling its owned and operated media properties, such as HipHopDX and Uproxx. That move came the same day that Warner announced it had had its best quarter ever, with revenue up 17% to $1.75 billion, and that the moves would be about freeing up some $200 million to reinvest in the company.
However, Greenwald made a point to write that this move was not about merging or shuttering labels, but about repositioning the label group for the future. “We’ve all heard the same industry rumors about labels being reduced or merged into one another. I can tell you: this is not that,” she wrote. “We’re deeply committed to the unique cultures across our labels, led by 300, Elektra and Atlantic. Craig, Kevin [Liles, CEO of 300 Elektra], and I passionately believe these identities are crucial to attracting great artists and building great careers. We want artists to be choiceful about the culture and team they belong with, just as we’re thoughtful about deciding which artists we’re signing.”
Read Greenwald’s full note to staff below.
Dear Atlantic, Elektra and 300,
Two weeks ago, during the all hands call you heard Robert and Max talk about the evolution of our music company. They tasked us last year to examine our staffing and ask the tough question, how do we achieve maximum impact for our artists in this ever changing landscape?
As hard as it is to say goodbye to our friends and valued colleagues, it is critical that we keep retooling the company and add new resources and skill sets to our business units. I have now been at Atlantic for 20 years. The company has grown and evolved tremendously, because we have not been afraid to implement change and add new marketers, new A & R, new data and research and even new labels. Always evolving but with a consistent North Star : sign the best musicians and commit to the hardest work of building real careers through true artist development.
Our artists today need more support from us than ever – in a world that’s getting noisier, faster, and more fiercely competitive. We have to do more, but at the same time, our approach has to be authentic, bold, and bespoke to individual artists. We can’t impact culture if we don’t have the right mix of people who live that culture. That’s why we need dedicated teams of multi-talented, ambidextrous people – our ‘SWAT teams’ – who encircle the artist and do everything possible to help achieve their full potential.
The changes we’re making today are primarily happening in our radio and video teams. We’ll preserve our industry-leading position in those areas, while bringing on new and additional skill sets in social media, content creation, community building and audience insights. This will allow us to dial up our fan focus and help artists tell their stories in ways that resonate.
As part of this shift, I’m sorry to say about two dozen people will be leaving us from across our three labels and their imprints. We’ve already informed everyone who is impacted. I know we will all support each other, even more than usual, and I deeply appreciate your empathy and understanding.
We’ve all heard the same industry rumors about labels being reduced or merged into one another. I can tell you: this is not that. We’re deeply committed to the unique cultures across our labels, led by 300, Elektra and Atlantic. Craig, Kevin, and I passionately believe these identities are crucial to attracting great artists and building great careers. We want artists to be choiceful about the culture and team they belong with, just as we’re thoughtful about deciding which artists we’re signing.
Right now, there’s incredible music coming through from artists across the entire group. We have some of our biggest superstars returning, and some extraordinary new artists we’re building in a very real way. We’re taking the right step into the future, and I hope you’ll continue to share your ideas with senior management so we can continually improve.
Thank you.
Julie
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Employees at VICE were informed that the media group is stepping back from online news and preparing a round of heavy layoffs.
On Thursday (February 22), VICE News CEO Bruce Dixon sent out an internal memo informing employees that the media company would no longer be publishing on its flagship news site. “It is no longer cost-effective for us to distribute our digital content the way we have done previously,” Dixon wrote. “As part of this shift, we will no longer publish content on vice.com, instead putting more emphasis on our social channels as we accelerate our discussions with partners to take our content to where it will be viewed most broadly.”
There was more to the stunning development. “With this strategic shift comes the need to realign our resources and streamline our overall operations at VICE,” Dixon added. “Regrettably, this means that we will be reducing our workforce, eliminating several hundred positions. This decision was not made lightly, and I understand the significant impact it will have on those affected. Employees who will be affected will be notified about next steps early next week, consistent with local laws and practices.” The moves would not affect Refinery29, with the women’s lifestyle brand and website that Vice acquired in 2019 continuing as a standalone business.
The news reflects a stunning fall for VICE, which began as a publication covering punk rock and alternative music in Montreal in the 1990s founded by Suroosh Ali, Shane Smith, and Gavin McInnes who would go on to found the Proud Boys, the fascist organization that has aligned itself with the American far-right. At its peak, the Brooklyn-based company delivered news in a highly independent format with correspondents across the globe in addition to original programming such as Most Expensivest hosted by 2Chainz and F—- That’s Delicious by Action Bronson. The “Easy Rider” rapper took to social media on Friday, saying: “JUST WANTED TO MAKE SURE YA’LL KNOW I NEVER STOPPED MAKING F—K THATS DELICIOUS BECAUSE VICE IMPLODED.”
Representatives for VICE declined to comment when contacted by the press. The news comes amid several media groups announcing their downsizing measures such as Pitchfork and GQ, and Complex Media being sold off to the Ntwrk e-commerce platform. They joined news outlets such as The Washington Post, the Los Angeles Times, CNN, and ABC News which had initiated their cuts in recent weeks and months.
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BuzzFeed is selling off Complex Media to an e-commerce platform to firm up its financial footing and also announced company-wide layoffs.
According to reports, BuzzFeed has sold off Complex Media to the Ntwrk e-commerce platform. The group announced the sale on Wednesday (February 21), which cost $108.6 million in an all-cash deal. Universal Music Group will serve as a strategic partner in the deal, with Jimmy Iovine, Goldman Sachs, and Main Street Advisors serving as investors. The key franchises of Complex including First We Feast, and Hot Ones, will remain under BuzzFeed Inc.’s umbrella. Ntwrk released a video reel announcing the acquisition and their plans of the new company being “an e-commerce platform anchored in sneakers, streetwear and collectibles with content and music.”
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The deal also includes BuzzFeed receiving $5.7 million for Complex’s use of their New York offices in addition to “severance- and other employment-related costs.” BuzzFeed also announced that there would be a round of layoffs to reduce costs, expected to cull about 16% of remaining employees. It’s the second such round since last April when BuzzFeed closed its news division and let go of 180 employees.
“The sale of Complex represents an important strategic step for BuzzFeed Inc. as we adapt our business to be more profitable, more nimble and more innovative,” said BuzzFeed Inc. CEO Jonah Peretti in a press release. “This is also an opportunity to unlock greater value for the Complex brand by combining it with Ntwrk’s expansive commerce-driven business.” BuzzFeed originally acquired Complex Media in 2021 for a price tag of $294 million. The brand said it will provide further details on its restructuring on February 28.
“Complex has been a beacon of culture and innovation for over two decades,” Ntwrk co-founder Aaron Levant said in a statement. “My journey with Complex began as an admirer of their original magazine in 2002 and it has now come full circle as I step into the leadership role. Alongside this impressive team, we will create the definitive global content, commerce, and experiential platform of convergence culture.” Interscope Geffen A&M and Capitol Music Group have already declared intentions to work with the new company. “Combining the power and reach of Complex with the Ntwrk engine serving creators across music, fashion, and art will be transformative for the next generation of consumer technology,” Iovine said in a statement concerning the deal.
Eleven months after SiriusXM cut 8% of its workforce, the company announced on Monday (Feb. 12) that it will eliminate another 3% of its staff. The layoffs will impact about 170 jobs based on the company’s head count of 5,680 full-time and part-time employees as of Dec. 31, according to its 2023 annual report.
The cuts will affect every team and business unit and will enable SiriusXM to invest in its content, marketing and technology platform, a company spokesperson told Billboard.
In a memo to staff announcing the cuts, CEO Jennifer Witz used much of the same language that executives at Universal Music Group, Warner Music Group and Spotify employed to explain decisions to restructure those companies and reduce headcount. Not only is SiriusXM reducing its salary expense, but it’s also building for the future and investing in new technologies.
“We made significant progress on the transformation of our business in 2023, but we have just begun to scratch the surface of what is possible here at SiriusXM,” Witz wrote in the memo. “To continue on our path to future subscriber growth and sustain our Company’s success as the competitive landscape evolves, it’s imperative that we become even more efficient, agile, and flexible. Therefore, today we are making several organizational changes, including the difficult decision to eliminate certain roles, which will allow us to move faster and collaborate more effectively in support of our long-term objectives. From uniting teams and better aligning initiatives, to investing in new technologies that will power our transformation, we are focused on increasing efficiencies and redeploying resources to support the strategic priorities of our business.”
Once-dependable revenue growth has been harder to find as many consumers shift their listening to streaming services. In 2023, SiriusXM’s revenue fell 0.6% to $7.95 billion as the company lost 445,000 self-pay subscribers to its satellite radio service. Despite reducing its headcount to 5,680 from 5,869 during 2023, general and administrative expenses increased 5% to $550 million last year, and its operating margin fell from 22.6% to 21.7% .
SiriusXM is hopeful its revamped streaming app — and a $9.99-per-month price tag, which is lower than the satellite radio service — will attract new subscribers and mark the return of revenue growth. The new app launched Dec. 14 and “is yielding promising signs of improved engagement,” Witz said during the Feb. 1 earnings call. The apps personalization features and reduced latency, along with a redesigned SiriusXM logo, have created “a positive lift in brand perception among the growth audience segments we are looking to attract,” she added.
Investors tend to react positively to news of layoffs made to reduce costs and speed a transformation. Shares of SiriusXM rose as much as 3.1% to $5.05 Monday morning and stood at $5.01, up 2.1%, in the mid-afternoon.
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Warner Music Group announced that they were going to commence layoffs within the next few weeks amid a pivot away from digital media.
On Wednesday (February 7), Warner Music CEO Robert Kyncl sent out a memo to the staff informing them that the company was going to lay off 10% of its staff, or 600 people in the weeks ahead. The announcement comes a day before the release of the company’s earnings report on Thursday (February 8). The digital media division will be the hardest hit, with Uproxx, HipHopDX, IMGN, and Interval Presents as Warner Music seeks to “double down on core business.”
“These are dynamic platforms, but they operate outside our core responsibilities to our roster,” Kyncl said in the memo. It is believed that HipHopDX and Uproxx will be sold off to potential buyers, while the podcast brand Interval Presents and social media publisher IMGN will be wound down. “This is a pivotal moment in the evolution of this great company,” Kyncl continued. “We’ve already begun to inform many of the impacted employees, and the vast majority will be notified by the end of September 2024.” He wrote that in knowing that the news is “unsettling,” that “Warner Music would be “moving as thoughtfully and respectfully as possible, so you have the critical information you need, and we’ll support you through this transition.”
The memo also contained numbers from the earnings report showing that Warner Music feels they’re making the decisions from a stronger position. “So, as part of that plan, we’ll be realizing approximately $200 million in annualized cost savings by the end of September 2025. The majority of these savings will be reinvested, putting more money behind the music,” Knycl wrote, pointing to an 11% revenue growth for the final quarter of 2023. The other preliminary data released showed a rise in net income of $193 million versus $124 million in the quarter at that time last year.
The news of the layoffs does come at an uncertain time for the music and media industry which has suffered some similar stunning cuts. Earlier this month, Condé Nast announced that Pitchfork would be folded into GQ Magazine, and Sports Illustrated announced recently that they had laid off most of its staff. The Sports Illustrated Union and the NewsGuild of New York are currently suing the sports periodical’s parent company, The Arena Group.
Warner Music Group announced Wednesday (Feb. 7) that its quarterly revenue grew 17% for the period ended Dec. 31, 2023, up 11% in normalized revenue, to $1.75 billion, its highest quarterly mark ever, ahead of its earnings call Thursday. At the same time, CEO Robert Kyncl announced in an internal memo to staff obtained by Billboard that the company will be reducing its workforce by 10%, or some 600 people, as part of a plan to free up $200 million in cost savings to reinvest into the company.
Much of that workforce reduction, Kyncl wrote, will come in the form of Warner’s owned and operated media properties — such as Uproxx and HipHopDX, which it acquired in August 2018 — as well as in corporate and support roles. “Earlier today, we began exiting our O&O media properties, as well as our in-house ad sales function,” Kyncl wrote. “These are dynamic platforms, but they operate outside our core responsibilities to our roster. We’re in an exclusive process for the potential sale of the news and entertainment websites Uproxx and HipHopDX, with more to say on that soon. After a thorough exploration of alternatives, we’ve decided to wind down the podcasting brand Interval Presents and social media publisher IMGN.”
Kyncl further added that Warner is making the move from “a position of strength,” noting that the company currently has five of the top 10 songs on the Hot 100, “and that’s the smart time to change, innovate and lead. Music is constantly morphing, so we need to morph with it.”
That $200 million in cost savings will be realized by the end of September 2025, Kyncl said in the memo; some of those laid off have already begun to be informed, while the “vast majority” will be notified “by the end of September 2024,” he writes.
“As we carry out our plan, it’s important to bear in mind why we’re making these difficult choices,” the memo continued. “We’re getting on the front foot to create a sustainable competitive advantage over the next decade. We’ll do so by increasing funding behind artists and songwriters, new skill sets, and tech, to help us deliver on our three strategic priorities,” which he says includes growing engagement with music, increasing the value of music and evolving how Warner’s teams work together.
Read Kyncl’s full note to staff below.
Hi everyone,
We just finished our first All Hands of 2024 from LA.
This is a pivotal moment in the evolution of this great company, so I wanted to make sure you heard about it directly from me. As I outlined in my note last month, 2024 is a year during which we will double down on our core business and move at an increased velocity to seize the incredible opportunities for music in the new world.
This week, our recording artists make up five of the top 10, and our songwriters have six of the Top 10, on the Billboard Hot 100. Today, we’re revealing our latest quarterly results: we grew 11% in normalized revenue. And with growing momentum in Recorded Music streaming and excellent results in Music Publishing, we hit our highest quarterly revenue ever. We’re in a position of strength, and that’s the smart time to change, innovate, and lead. Music is constantly morphing, so we need to morph with it.
Today, we’re announcing a plan to free up more funds to invest in music and accelerate our growth for the next decade. To do that, we have to make thoughtful choices about where we put our people, resources, and capital. So, as part of that plan, we’ll be realizing approximately $200 million in annualized cost savings by the end of September 2025. The majority of these savings will be reinvested, putting more money behind the music.
Our plan includes reducing our workforce by approximately 10%, or 600 people – the majority of which will relate to our Owned & Operated media properties, corporate and various support functions.
We’ve already begun to inform many of the impacted employees, and the vast majority will be notified by the end of September 2024. I recognize this is unsettling news. To the people who will be leaving us: you deserve a heartfelt thank you for your hard work and dedication. We’re fortunate that you’ve been part of the team. We’ll be moving as thoughtfully and respectfully as possible, so you have the critical information you need, and we’ll support you through this transition.
Earlier today, we began exiting our O&O media properties, as well as our in-house ad sales function. These are dynamic platforms, but they operate outside our core responsibilities to our roster. We’re in an exclusive process for the potential sale of the news & entertainment websites Uproxx and HipHopDX, with more to say on that soon. After a thorough exploration of alternatives, we’ve decided to wind down the podcasting brand Interval Presents and social media publisher IMGN. Maria and I continue to discuss the ongoing evolution of WMX, and how best to further improve our services to artists and labels, and she’ll update the team in the coming weeks.
As we carry out our plan, it’s important to bear in mind why we’re making these difficult choices. We’re getting on the front foot to create a sustainable competitive advantage over the next decade. We’ll do so by increasing funding behind artists and songwriters, new skill sets, and tech, to help us deliver on our three strategic priorities:
Grow the engagement with Music
Discovering and developing artists and songwriters is at the heart of everything we do. We’ll turbocharge our efforts and investments, with additional focus on high growth geographies and vibrant genres, as well as using our data and insights to help original talents cut through the increasing noise, and taking a holistic global approach to maximizing the potential of their catalogs.
Increase the value of Music
This is one of our industry’s largest and most complex opportunities and one that we’re working on diligently, whether it’s new DSP deal structures or building superfan experiences to help artists connect directly with their most passionate followers.
Evolve how we work together
In order to grow at an accelerated pace, we need to structure our organization so that we can grow efficiently and continue to invest more into music at the same time. That requires being intentional about where centralized shared functions make sense, versus where they are best fully dedicated. This will empower subject matter experts, while scaling our resources. We already made moves in this direction by centralizing our technology, finance and business development teams last year.
Above all, we’re positioning ourselves to be first, to be different, and to be exceptional. I – and the entire leadership team – will be keeping you updated as we make progress. In May, we’ll hold our next All Hands meeting, which we’ll devote to our best new music, as well as our most promising projects.
Thank you for your understanding, passion, and determination. We’re in an amazing industry, we’re partnered with many extraordinary artists and songwriters, and now is the time for us to pioneer the future.
Robert
Since Laura Gonzalez lost her job as a Spotify software engineer in December, when the streaming giant cut 1,500 employees in its third round of 2023 layoffs, she has struggled to reassert herself in a shifting music business.
As companies like Universal Music Group and BMG downsize for strategic purposes, Gonzalez has observed through job listings and interviews — that public-relations, media and streaming jobs are thinning out while the social-media and ticket-sales sectors remain more or less robust. “It is scary, I’m not going to lie,” says Gonzalez, a San Diego singer and guitarist who fronts shoegaze band Memory Leak. She adds that the “competition is insane,” noting she spent her one-year Spotify career building revenue streams for artists beyond royalties. “I found myself having to study and refresh on topics I had not thought of since I was in university — data structure and algorithms.”
From the point of view of music-business job-seekers, the employment landscape has taken a recent turn into the unknown. For the last several years, boosted by streaming growth and a spike in demand during COVID-19 home quarantine, labels, DSPs (digital service providers) and other streaming-focused companies were expanding and hiring. But UMG’s chairman, Lucian Grainge, has warned staff for months that the world’s biggest label is on the brink of severe cost-cutting.
For that reason, according to Pieter Wolter, founder of The Music Recruiters, an Amsterdam-based company that recruits people in the music business and connects them to job opportunities, job-seekers with music-business experience in human resources, finance or other transitional skills might consider recession-proof sectors such as health insurance. He expects music-business job growth in artificial intelligence, data analytics and the metaverse, but perhaps not imminently.
“It’s not like all these people who are laid off will be able to transition easily into those areas. This will depend on network and experience,” he says. “It’s clear the music industry is changing. There’s not a single area where I’m aware of super-strong hiring, like you could have seen in the past at digital distributors — or technology bursts you sometimes see.”
There are bright spots in the industry. Jon Loba, BMG’s new president of frontline recording, declared last month that he would immediately start beefing up his A&R team in Los Angeles. (In October, the Berlin-based label and publisher laid off 30 staffers as part of what CEO Thomas Coesfeld called “a strategy for future growth.”) And record-setting tours by Taylor Swift and Beyoncé have helped to create “lots of great growth opportunity for years to come” on the live side, Michael Rapino, president/CEO of Live Nation, told investors last August.
“Jobs will look different and there will be more competition, but I don’t think we need to completely freak out,” says Andreea Magdalina, Coachella’s community director and founder of shesaid.so, a music-business community of women and nonconforming gender people that hosts an online job portal. “What’s tough is people looking for jobs right now, because things are shifting really quickly. The market is going through a consolidation phase.”
For now, though, online recruiters are seeing bleakness in the business. (In addition to recent layoffs at DSPs and labels, music journalism has taken a devastating hit, with Conde Nast downsizing Pitchfork and newspapers such as the Los Angeles Times firing entertainment writers and editors.) Recent music-related opportunities on ZipRecruiter, according to Julia Pollak, the company’s chief economist, have been in teaching, therapy or junior-level positions.
“There’s not tremendous growth happening in these industries,” she says. “The sort of high-paying music-manager kind of roles that are the most attractive are in very short supply.”
Noticing the same trends over two months of unemployment, Gonzalez has broadened her job search: “I’m hopeful that I can find something where I can make an impact, whether it’s in the music industry or a different industry. It’s all a learning path.”
During an October earnings call, Universal Music Group CFO Boyd Muir told investors the company was conducting “a careful review” of its costs. In the world of public company statements, that was a hint that UMG expected to make cuts to its workforce of roughly 10,000 — specifically hundreds of jobs in the first quarter of the year, as Bloomberg later revealed.
UMG has plenty of company. Until late last year, the music business had mostly escaped the job-cutting that ravaged industries that depend more on advertising in 2022 and 2023. That was still the best of times for the industry, which had found double-digit revenue growth in streaming. Since 2020, 10 music companies have gone public to take advantage of investors’ enthusiasm for music, including labels and publishers (UMG, Warner Music Group, HYBE, Reservoir Media, Believe, Round Hill Music Royalty Fund), streaming services (Deezer, Anghami, Cloud Music) and live-entertainment firms (a spinoff of MSG Entertainment).
That changed during 2023. In March, WMG’s new CEO, Robert Kyncl, a former YouTube executive, laid off around 270 people — 4% of the company’s workforce — to focus more on technology initiatives and “new skills for artist and songwriter development,” as he wrote in a memo to staff at the time. Downtown Music Holdings — owner of CD Baby, FUGA, Songtrust and more — also thinned its payroll in May. BMG laid off about 30 people in October. Digital music companies fared even worse in 2023: Spotify cut about 23% of its workforce in two rounds of layoffs, TIDAL cut 10%, SoundCloud cut 8%, and Bandcamp chopped half its head count after being acquired by Songtradr.
But UMG? The company’s revenue in the first nine months of 2023 was up 9.4% on a constant currency basis, 6.8% as reported due to foreign currency fluctuations. More than two years after spinning off from former corporate parent Vivendi, UMG is a profitable, hit-making machine that controlled 29.4% of the U.S. recorded-music market in 2023, easily besting Sony Music’s 18.9% and WMG’s 15.6%. It has Taylor Swift, Morgan Wallen, Drake and many other big stars. Perhaps understandably, there has been talk that other labels could follow, with cuts of one size or another.
UMG’s decision may be the most dramatic example of just how profoundly the music business is changing — and how quickly. Lean is the new black. Bloat, or anything that evokes it, is out. The old ways of finding, developing and marketing artists no longer work the way they used to. How big a radio promotion department does a label need — how many radio promotion departments does its parent company need — at a time when radio no longer plays as important a part in breaking hits? Social media and data analysis might matter just as much. So could developing markets that once didn’t account for much revenue.
UMG’s next focus, chairman/CEO Lucian Grainge wrote in a memo to staff in early January, will be “creating the blueprint for the labels of the future” by building the technology to do more work in-house, expanding in developing markets and finding ways to better monetize superfans. That requires moving resources away from the “legacy business,” Muir said in the October earnings call, to “benefit from all of the opportunities that we see ahead.” What that will mean for how UMG reshuffles its organizational chart remains to be seen, but it is already building an artist services business with Virgin Music Group and making aggressive moves in developing markets with investments in TM Ventures in India and Chabaka in the United Arab Emirates.
Other music companies are also reassessing their priorities. BMG’s staffing changes were spurred by new CEO Thomas Coesfeld as a response to an international marketing structure that didn’t meet expectations and duplicated the efforts of local teams, he wrote in a memo to staff.
“Businesses are repositioning themselves slightly to become more competitive,” Downtown Music president Peter van Rijn says. “One must always be mindful to not get complacent,” he adds, noting that his company needed to stay nimble enough to respond to the marketplace. “What you do see, in general, is the music industry is maturing. The digital growth is still there, but it’s slowing down.”
The world is changing, too. Along with the major labels, companies like Believe and Reservoir Media are investing in Africa, the Middle East, Southeast Asia and other regions where music revenue is growing. And both new companies and the established majors are expanding their artist services businesses to court creators who can now choose from among an increasing number of alternatives to a traditional major-label deal. Sony acquired the artist services company AWAL in 2022, UMG is building up Virgin, and WMG’s Kyncl wrote in an early-January memo that he wants to augment services to the “middle class of artists” and scale up the company’s publishing administration business.
Public companies in the music industry face pressure from investors to constantly improve their bottom lines, especially as streaming growth levels off. “Two-and-a-half years ago, we started making cuts because we knew the market was no longer about just growth,” says Rob Ellin, CEO of music streaming company LiveOne, which is cutting up to 100 staffers in a restructuring. “You had to be profitable.”
The growth-over-profits era finally ended at Spotify, too. When the streaming giant announced it would cut 17% of its global workforce in December, CEO Daniel Ek explained that costs were too high, efficiency was too low and too few people “contribut[ed] to opportunities with real impact.” Cutting roughly 1,500 jobs and seeking a replacement for CFO Paul Vogel, Ek wrote in an open letter, were necessary to become “relentlessly resourceful.”
Record labels and music publishers have better margins than Spotify, which will rarely turn a profit — but investors also expect more of them. In the first half of 2021, UMG — then a subsidiary of Vivendi — had a margin of 21.5% in earnings before interest, taxes, depreciation and amortization and told investors in August it expected to reach the “mid-20s” soon. Two years later, revenue had increased 34% but its EBITDA margin was almost unchanged at 21.5% (or 14.9% after deducting 345 million euros of noncash, share-based compensation for senior management). With layoffs can come better margins. Restructuring saved Warner $19 million in the fiscal year ended Sept. 30, and Barclays analysts estimated UMG’s layoffs could save the company $70 million annually.
To those who remember the crisis caused by the death of the CD, this talk of restructuring might have a familiar ring. As piracy ravaged the music business, the majors scaled back their physical distribution businesses, sold their CD pressing plants and retooled for a digital world. That’s why Grainge reminded investors that UMG is no stranger to managing disruption. “We’ve got decades of experience in executing cost-cutting programs in the various cycles of the industry, right back to the piracy days,” he said during the October earnings call. And currently, “we’re seeing a change in the business.”
The layoffs plaguing the tech sector have hit YouTube. The streaming video platform will cut about 100 roles as part of a restructuring of its content teams. YouTube chief business officer Mary Ellen Coe announced the changes in a memo Wednesday, and a spokesperson for the platform confirmed them to The Hollywood Reporter. TubeFilter first reported the restructuring. As […]