LONDON — Less than three months after installing a new CEO, Utopia Music has yet again restructured its executives, appointing Michael Stabler to lead the Swiss-based company. Stebler, who represents the majority shareholder group behind Utopia Music, manages Alain Couttolencwho has been in the top spot since October.
Couttolenc moves to deputy managing director and chief commercial officer, while Drew Hillwho runs Utopia's UK physical distribution businesses Utopia Distribution Services and Proper Music Group, has also been appointed deputy managing director in addition to his continuing role as head of distribution.
Pedro Limaa former Swiss-based executive at global data and analytics company NielsenIQ, joins the company as chief operating officer.
All the appointments are effective immediately and were communicated to Utopia staff in an internal memo sent by the board on Thursday (January 11).
Speaking exclusively to Advertising signStebler says his extensive experience in the banking and finance industry will bring stability to the troubled company and help it steer towards growth.
“We believe the combination of Utopia's strategy, our network and our financial backing will take the company to the next level,” he says.
Stebler's appointment as CEO is his first executive position with Utopia, although he has maintained close ties with the company for several years through his role as managing director of Investment Advisors Zug AG, which acts on behalf of the majority shareholder group . Like Utopia Music, Investment Advisors Zug AG is based in the picturesque Swiss town of Zug, located near Zurich.
Financial details about the size of the investment or the identity of the investors are confidential, Stebler says, but he confirms that the investor group he leads recently raised its stake through a successful Series C funding round. Advertising sign understands that the group of investors led by Strebler covered between 40-60% of the first tranche. A second tranche of the C-round funding is underway.
The funds will be used to drive commercial growth, boost product development and strengthen the company's balance sheet, says the newly appointed CEO, who is stepping down from his role at Investment Advisors with immediate effect to focus on Utopia.
“We decided to invest more money in the company and we want to have control over the execution,” says Stebler, adding that the group conducted “intense due diligence” before increasing its investment.
“What we've seen is a really strong backbone, a strong product and service offering and a great USP with the UK distribution business,” he says. “Otherwise we would never have committed and taken an administrative position.”
FROM RAPID GROWTH TO SECRET DECLINE
Utopia's latest restructuring comes after an extremely turbulent few years for the technology company, which provides financial services for labels, publishers and distributors and made the first wave in the music industry by embarking on a frenzied buying spree of 15 companies between 2020 and 2022, including of Lyric Financial, a Nashville-based cash advance company. and Proper Music Group, the UK's leading independent physical music distributor.
Utopia's period of rapid hyper-growth was followed by an equally rapid downsizing, beginning with the elimination of approximately 230 jobs at the end of 2022. More layoffs followed soon after, along with multiple executive departures, office closings, legal actions over a stalled acquisition deal, delayed payments to staff and the offloading of three of its businesses — Absolute Label Services, US-based music database platform ROSTR and UK-based publisher Sentric.
As a result of these divestments and cost-cutting measures, the company's global workforce was reduced from approximately 1,200 people to approximately 440.
“Today, we're in a much better position,” says Utopia's co-founder and executive chairman Matthias Hjelmstedt. He says annual cash burn has been reduced by €84m as a result of the changes and calls the new injection of C-round funding into the business “paramount” to putting Utopia on a solid footing.
Going forward, Hjelmstedt and Stebler say there are no plans to sell any of Utopia's remaining businesses or make further layoffs, but say the company will continue to evolve and improve its offering to customers across the music industry.
“We believe we can grow with our own [current] crowdfunding and achieving profitability by mid to late 2025,” Stebler says. “From an investor perspective, we prefer to invest more in meaningful growth rather than cutting costs.”
One way Utopia will look to do this is by expanding its advance finance service, which provides music companies and clients with cash advances, in international markets including the US, continental Europe, Australia and New Zealand.
The company's executive team is also looking to develop its core technology offering to customers across the music business. These product services include cross-platform analytics, an AI-powered recommendation engine targeting DSPs and streaming services, and Utopia's royalty processing and payment system, TrackNClaim, which tracks music consumption across digital platforms and helps identify conflicts and unclaimed engineering rights.
THE ROAD TO PROFITABILITY
Utopia's other core businesses include its two UK-based physical music distribution entities: Proper Music Group, which provides distribution services for over 5,800 indie labels and service companies, and Utopia Distribution Services (formerly Cinram Novum), whose clients include Universal Music Group, Sony. Musical Entertainment and [PIAS].
According to its latest accounts, Proper Music Group recorded revenue of £30.1 million ($38 million) for the nine-month period ended December 31, up from £42 million ($53 million) in the previous 12-month accounting period and net loss of 1.9 million pounds ($2.4 million) in 2022. The company said lower sales and increased operating costs were behind the disappointing figures, while accounts for Utopia Distribution Services have yet to be filed in the U.K. Kingdom
Deputy managing director Drew Hill, a veteran of the UK physical distribution industry, says Proper is on track to return to profitability in 2024 as a result of the significant investment Utopia has made in the sector.
They include last year's opening of the UK's largest distribution warehouse for physical music and home entertainment – a 25,000 square meter facility in Bicester with the capacity to handle up to 250,000 units a day – as part of a £100m ($125m) deal. ) long-term agreement with the international logistics company DP World.
“With the new facility we were able to show all our labels and clients what Utopia can do,” says Hill. “From here, we can focus on selling Utopia's services and products to our existing customer base, which was always the plan, and use Utopia's Fit and Distribution Services as a pipeline to those people. We've shown what we can do, built some amazing relationships. Now people will see what the real Utopia product is.”
Right now, Proper and UDS generate most of Utopia's revenue, but Strebler is confident the structure is in place to help grow the company's other revenue streams to get closer to a 50/50 split. between physical distribution and technical/financial services.
He declines to discuss revenue, but confirms that Utopia's two biggest markets are the UK and the US (Last year, Hjelmstedt said Advertising sign the company generates over 100 million euros [$110 million] in global revenue annually, but that was before offloading Sentric and Absolute.) The company says it has focused on strengthening its balance sheet and is currently working to clear its outstanding debt and tax liabilities.
“We never set out to disrupt or take over the industry,” says Hjelmstedt. “It's always been about helping the industry get better and grow. And the more we've been able to talk to the different parts of the industry and the more they trust us now to solve these problems, the more likely we are to succeed in that mission.”
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