It's been a scary week for Universal Music Group employees – many didn't know when they went into the office on Wednesday morning if they'd have work on Friday. The layoffs first hit department heads and then began to affect the rank and file.
Over the past year, more than a dozen companies across the music industry have experienced layoffs, eliminating thousands of jobs and leaving those who remain in limbo. In the past twelve months alone, Warner Music Group, Atlantic Music Group, SiriusXM, Amazon Music, TikTok Music, CAA, Discord, BMG, TIDAL, and Spotify have cut staff.
This week, Universal Music Group followed suit, introducing layoffs in search of about $270 million in annual savings. The process began on Wednesday and continued through Friday (March 1), affecting publicity departments, radio teams, A&R, marketing and more.
The cuts are part of a restructuring of UMG's label operations of which he is chairman/CEO Lucian Grainge announced in an internal memo on February 1. The change reorganized the company loosely into an East Coast-West Coast orientation, with Republic Records CEO Monte Lipman overseeing Republic, Def Jam, Island and Mercury and Interscope Geffen A&M President/CEO John Janick in charge of Interscope, Geffen , Capitol, Motown, Priority, Verve and Blue Note.
For UMG employees, the long corridor leading to the layoffs — first reported in October — combined with the company announcing Wednesday morning that it had earned more than $12 billion in revenue and 1.3 billion in net profits by 2023 , has caused frustration, anger and anxiety, even among those who kept their jobs. That the layoffs came right after the annual earnings report, sources say, led to more frustration.
Although the scenes described by workers are typical of any company undergoing large-scale layoffs—the slow flow of news about who got fired and colleagues crying as they pack up their offices, for example—UMG's layoffs had a huge impact on industry morale due to the company's position as a dominant market leader, its strong financial results and the extended period for which employees knew that the cuts were coming.
In an email to staff, Grange said that “by redesigning our global structure, we are creating a blueprint for a future where our labels are empowered with new capabilities and added flexibility, ensuring they can sign and support artists with improved access to the highest elements of UMG execution of internal teams and resources'. He added, “This organizational redesign represents a new paradigm for artist support and fan engagement.”
UMG first signaled its cuts during an earnings call with financial analysts in late October. “[We] we are currently conducting a careful review of our cost base, which we will complete over the coming months and will update you when appropriate on an anticipated cost savings program to begin in 2024,” he said. Boyd Muir, the company's executive vice president and chief financial officer. Grainge added that the company planned to “cut overhead to grow elsewhere.”
Earnings calls are, by their very nature, full of statistics and jargon like “adjusted EBITDA.” In January, the human cost of “cutting overhead” began to become clear: It would mean laying off hundreds of workers. In a statement at the time, UMG said “we are creating efficiencies in other areas of the business to remain nimble and responsive to the dynamic market while realizing the benefits of our scale.”
The October earnings call didn't make big headlines at the time. However, many employees saw the January reports that layoffs were coming. “Every day I wake up and think, is this the day I lose my job?” a UMG employee said in February.
“It's a special kind of torture to keep people guessing for a long time,” adds a music attorney who has artist clients signed to UMG labels. “Your job is your No. 1 source of security. You add to the psyche of already stressed people the uncertainty of whether they will have a job tomorrow or not and find out for months.”
A UMG spokesman declined to disclose any number of people in the cuts. Meanwhile, sources say executives and department heads have received some generous exit packages on their way out the door.
For others outside the labels that work with them on behalf of clients, the layoffs—at UMG, at Warner, where dozens were recently let go at Atlantic Records, and amid rumors that other labels will follow suit—have also made life difficult. With UMG in particular, a manager with an artist signed to a UMG label says the stress running through the labels has made it difficult to schedule a release for his act. And a second music attorney notes that it's been difficult to make record deals within the UMG system, knowing that the groups his artist is talking to may not exist until the deal is done.
Artist groups are also trying to understand how the cuts affect them. “The more I hear, the more stressed I get,” says another manager. There are “a lot of fires in different positions. Some people move into jobs they are completely unprepared for. And now some people are being asked to do what were previously three different jobs at once.”
More cuts are expected in a “second phase” of “strategic organizational redesign” next year, according to UMG's investor presentation this week, which said it set “a combination of further ex-U.S. headcount reductions and other operating results ». to begin in 2025. But not a single financial analyst fielded questions about the extent of the layoffs on Wednesday. Instead, they asked about UMG's battle with TikTok.
from our partners at https://www.billboard.com/pro/universal-music-layoffs-staff-artist-process/