According to Bloomberg News, the job cuts are expected to be executed in the first quarter of the financial year as a wave of layoffs sweeps tech, entertainment and music companies, including Spotify, Amazon and Google.
UMG has yet to state the exact number of jobs it will cut. The company’s global workforce stood at about 10 000 in 2022. UMG’s focus has been on building its direct-to-customer and e-commerce operations in the past few years.
On 9 January, UMG chairperson and CEO Sir Lucian Grainge wrote to staff about the need to “further evolve our organisational structure to create efficiencies” while continuing with investments in A&R and artist development.
Grainge has been championing UMG’s attempts to improve the economics of streaming and promoting responsible use of artificial intelligence.
“We continue to position UMG to accelerate its leadership in music’s most promising growth areas and drive its transformation to capitalise on them,” a UMG spokesperson was quoted as saying by Music Week. “Over the past several years, we have been investing in future growth – building our e-commerce and D2C [direct-to-consumer] operations, expanding geographically and leveraging new technologies.
“While we maintain our industry-leading investments in A&R and artist development, we are creating efficiencies in other areas of the business so we can remain nimble and responsive to the dynamic market, while realising the benefits of our scale.”
Experts believe UMG’s job cuts will not be as big as those at Spotify, which last month announced plans to reduce its staff headcount by 17%. Warner Music and BMG have both implemented job reductions but on a much lower scale.
UMG reported revenue growth of 10% in Q3, with Grainge calling for a reduction in overheads in order to create growth in other parts of the business. The company’s Q3 revenue was fuelled by US artist Taylor Swift’s popularity, growing about 3.3% year-on-year and nearly 10% in constant currency.
Although there have been industry concerns about a post-pandemic slowdown in the rate of expansion, markets including the UK and US performed well thanks to a surge in global streaming in 2023.
