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Universal Music Group to Cut Hundreds of Jobs in 2024 Amid Slowing Music Sales

Bloomberg — Universal Music Group NV, the record label behind Taylor Swift and Drake, plans to eliminate hundreds of jobs in the first three months of 2024, according to people familiar with the matter.

Its largest division, recorded music, will suffer the biggest impact, said these sources, who were not authorized to make public statements and asked not to be named. Universal Music, the largest record label in the world, had about ten thousand employees at the end of 2022, according to its records.

After years of double-digit growth thanks to the spread of paid streaming services, music sales have slowed. The company’s profits rose just 3% in the third quarter of last year, a fraction of what they had increased a year earlier, and are estimated to advance by the same amount for the fourth quarter.

“We have created efficiencies in other areas of activity to continue being flexible and able to respond to the dynamic nature of this market, while taking advantage of our size,” the company said in response to questions raised about the layoffs.

Universal has been investing in new growth initiatives, including geographic expansion and direct-to-consumer sales, while continuing to develop new artists, according to the statement.

Universal Music CEO Lucian Grainge has tried to boost business by tightening the terms of the company’s deals with major streaming services and urging them to eliminate fraudulent activity, such as AI-generated deepfakes or bots that siphon royalties from their artists. Executives have also pressured platforms to raise prices.

Those initiatives will take time to have an impact, and Grainge can satisfy shareholders in the interim by cutting costs. Management mentioned cost-cutting plans during an earnings call in October, saying they will provide an improvement in profit margins. “Shrink to grow” is what Grainge called the program.

“We will cut overhead so we can grow elsewhere,” he said on the call. “We have experience in managing the business, in managing the teams and companies that make up the group, and we have a plan.”

Universal Music’s cuts are part of a broader realignment in the entertainment media, communications and technology industries. Amazon.com Inc. (AMZN) announced hundreds of job cuts this week ranging from its television and film studio to its streaming service Twitch. Other companies that have initiated or plan layoffs include Comcast Corp.’s (CMCSA) NBC News, chat service Discord Inc. and Walt Disney Co’s (DIS) studio Pixar.

Universal Music’s competitors have also cut jobs in the last year. Warner Music Group Corp. (WMG) reduced its staff by about 4% last March to “take advantage of the opportunities ahead,” according to a memo sent by CEO Robert Kyncl at the time.

Warner and Universal have gone public in the past five years, increasing pressure on their leaders to achieve growth. Universal has had a string of successes with hits from Swift, The Weeknd, Billie Eilish and Olivia Rodrigo.

Read more at Bloomberg.com

©2024 Bloomberg L.P.

2024-01-12 22:57:09
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