In January 1999, Universal Music Group laid off hundreds of employees during a wave of consolidation with PolyGram. “The biggest staff cuts were at Geffen and A&M, two Los Angeles-based labels that have joined Interscope Records … and Island Records, which has merged with Mercury.” Advertising sign he reported at the time, predicting that the cuts would affect label rosters, with “baby bands … expected to suffer the most casualties in the turmoil.” In an interview with The New York Timesone artist manager described the impact of the merger on his band as “a car [got] close in the middle”.
Some 25 years later, UMG is expected to cut hundreds of jobs to create “efficiencies in other areas of the business to remain nimble and respond to the dynamic market,” according to a company statement in January. Warner Music Group has announced more than 800 layoffs in two rounds over the past 12 months. On Monday, WMG's Atlantic Records label announced additional layoffs of about a dozen employees, mostly in the radio and video divisions. (Sony Music is also expected to cut staff, according to sources; a Sony spokesman declined to comment.)
These cuts herald a leaner approach to the major label business, and some talent and their representatives are concerned about how it affects their futures.
Artists “will be upset,” he says Mike Biggane, who was head of curation for Spotify, then worked at UMG as global director of music strategy and tactics until last year. “The groups that the artists were part of and were fighting with will all be gone. This will affect the managers and the remaining staff of the label, which is already stretched thin.”
“Unless you're a multi-platinum artist, good luck,” he says Allen Kovacsa longtime manager who had many operations in the UMG system during the 1999 consolidation.
A spokesman for UMG declined to comment. Speaking to financial analysts on Wednesday, UMG CEO Lucian Grainge said that “in terms of supporting their rosters, [labels] will have access to our highest performing in-house teams and resources to take young artists to even higher levels of success.”
And some executives were more optimistic about the impact of the upcoming staff cuts. Chris Anokute manages Taela, who he signed Michelle Jubelirer before recently leaving Capitol Music Group. “I'm very grateful to Michelle for signing it,” says Anokute. “There is now new management and I am excited to work with the new team to continue to develop it. I'm not worried for a second.”
Major labels have been established in-house for more than two decades. In 2004, Atlantic Records and Elektra Records merged as part of a shakeup of Warner Music Group that included 1,000 layoffs. “Warner has begun cutting money-losing and underperforming artists from the roster of the merged Atlantic-Elektra label and is preparing to let go of up to half of the label's 170 acts.” The Washington Post mentionted.
Later that year, BMG and Sony Music merged. “Difficult decisions will have to be made in each market regarding the composition of senior management, overall staff and artist rosters.” Advertising sign He wrote.
While layoffs have typically been followed by roster cuts in the past, history can only serve as a limited guide when evaluating the latest round of cuts. “The environment today looks very different from that of the late 1970s and early 1980s — the first time the industry saw a serious contraction — or the early 2000s,” he says. Adam White, a former Billboard editor who later served as UMG's vice president of international communications. “During both of these time periods, industry sales declined significantly and layoffs were widespread. That's not unlike the current environment, where revenues admittedly aren't growing at the double-digit rates they used to be — but are they still growing?''
However, with leaner staffs, “you either have to spread the rest of your staff more thinly or serve a smaller roster,” he says Peter Sinclairwho worked at UMG for five years before founding beatBread, an artist funding platform, in 2020.
Some major label executives argue that the personnel changes their companies are making will allow them to offer more resources to artists, not less. CEO of WMG Robert Kynclfor example, he told staff that cost savings from recent cuts will free up money that can go toward “increasing funding behind artists and songwriters,” while Atlantic Music Group president/CEO Julie Greenwald said the company will “offer new and additional social media skill sets [and] content creation' to 'help artists tell their stories'. In a memo to staff on Wednesday (February 28), Grainge wrote that “our long-term growth strategy, including this organizational redesign, represents a new paradigm for supporting artists.”
However, many acts believe that major label executives are already dangerously thin, and that the layoffs will only exacerbate artists' feelings of being underserved. “A lot of my clients complain about what labels don't do for them,” he says Todd Rubenstein, entertainment attorney. “Even if there's a whole plan they come up with, it's still not being served.”
“I'm not against the label. I think every artist we have is on a major label,” adds the Crush Management founder Jonathan Daniel. But “the reason I built my company the way I did” — Crush has its own marketing and radio promotion staff — “is because labels always have too many artists for how many people work there.”
Labels are already more willing to trim their rosters than in the past, and A&R executives say that may have intensified regardless of the recent layoff announcements, after a period of over-signing due to pressure to maintain market share and plenty of viral hits on social media. “I will [layoffs] speeding up the roster cut process?' asks entertainment lawyer Michael Shukin. “Sure, but labels need no excuse.”
That said, when employees are laid off or leave to take other jobs, some artists will lose their in-house supporters. Executives believe there are likely to be acts in the UMG system that won't have their options after the layoffs because no one inside the buildings will fight to keep them.
“Any artist who relies more on singles is a bigger risk to your balance sheet,” says one A&R executive turned manager. “They want artists who have solid fans who will be there and support them when they're not successful.”
All of this sounds terrifying to artists, who are, after all, the lifeblood of record companies. In reality, however, an artist who was a label's 40th most important act might not have been getting much help anyway – as a UMG executive he said The New York Times around the time of the Polygram merger, “for the [artists] we let them go, they've probably already been burned by a label that can't do the best job for them.” Nick Sternanother longtime artist manager is fond of saying “there's nothing better than being a top priority at a major label and nothing worse than being 20 to 50.”
And while artists who dropped from a major label in 1999 didn't have many ways to get their music heard around the world, that's not the case in today's digital industry. Creating, distributing and marketing songs is now much more affordable. “As the gatekeeper role of artisans shrinks, artists have more choice, more power, more control and more creative freedom,” says Sinclair. “If you're an artist and the majors are falling for you, I'd recommend taking it for what it is: an opportunity.”
When Biggane left UMG last year, he started Big Effect, a company that develops technology designed for smaller groups of artists to launch products and manage catalog efficiently. He foresees an “exhaust of talent from both sides – people working in the industry trying to provide services and artists looking for services”.
“They're all going to go out on the independent market,” says Biggane, “and try to find each other.”
Additional reporting by Kristin Robinson
from our partners at https://www.billboard.com/pro/record-label-layoffs-universal-warner-sony-artists-cut/
