Epidemic Sound lays off 19% of staff in ‘realignment’ of business


Production music firm Epidemic Sound is making 79 of its 419 staff redundant, although the company says that this is not the result of a drop in revenues.

The majority of the layoffs have come from its sales department, with the other redundancies coming from support roles including finance and training.

Staff were told about the redundancies yesterday. CEO Oscar Hoglund told Music Ally that while the Covid-19 pandemic played a role in the decision, it was a “realignment” rather than a sign that Epidemic Sound is struggling as a business.

“Covid-19 has just accelerated this transition into becoming a digital-first company, and supercharged it,” he said, stressing that the overall business is still growing.

Epidemic Sound will publish its financial results for 2019 in June. “We’ve hit our numbers and seen healthy growth last year, similar to how we’ve been growing in previous years,” said Hoglund. In 2018, the company’s revenues more than doubled, from SEK 113m in 2017 to SEK 234m.

“In 2020 we’ve seen similar growth [to 2019] and we’re on target to be where we want to be. This [the layoffs] is not a case of the revenue numbers dropping significantly. This is not a revenue-driven decision.”

So what is it? Epidemic Sound serves two distinct markets. First, broadcasters and businesses in the hospitality and airline industries whose relationship with the company has traditionally been focused on “feet on the ground” sales.

The second group includes the more-digital businesses (“the Twitches, the Netflixes, the digital publishers, the AI-driven companies”) as well as individual YouTubers, who tend to license music from Epidemic Sound online.

With more of the first group willing to work online too, and the growth of business from the second group, Hoglund suggested that “the trend has always been clear: moving in the direction of more digitally savvy [customers] and more scalable [licensing].”

He continued: “Covid-19 forced everybody to double down and increase that transition. It’s fair to say that the way we were structured previously – the online offering driven by data insights and products, and then feet on the ground – these two entities were to some extent competing with one another. What we’ve done now is made sure they complement one another.”

The argument is that given the long-term trends, even without a pandemic Epidemic Sound would have needed fewer sales ataff in the future – it’s just that the layoffs are coming sooner and more suddenly than they might otherwise have done.

That’s unlikely to be a great comfort to the people who have been made redundant in the midst of the Covid-19 crisis, and must now seek new jobs while many of the restrictions are still in place.

“The changes we’ve made have been an acceleration of a trend that already exists, and it’s the right thing to do, but the people we’re letting go, in my book they’re obviously rock stars. Any company they start working for will be lucky to have them,” said Hoglund.

“The changes we have decided to make are not a result of our top line collapsing [due to Covid-19]. It’s not like the airline industry. We looked at the structural trends and the changes in consumption and behaviour, and really took our time to understand it,” he added.

“The mix of our customer base is less analog and more digital, we’re seeing purchasing decisions being shifted online, and running a subscription business as we do, we have to take a long-term perspective… But unfortunately that means we’re parting company with people who have been instrumental in building our business.”

Written by: Stuart Dredge