The chill winds of economic uncertainty have been blowing hard for the technology industry recently, but they are spreading into the music business too: even for one of the companies that has been most aggressive with its headcount growth in recent times.
Utopia Music, through a mixture of energetic hiring and a flurry of acquisitions, currently has around 1,200 people working for it, but the company is laying some of those staff as it eyes its next phase of development.
“Like many growth companies in today’s macroeconomic environment, Utopia is making changes to its internal structure to optimise the business,” a spokesperson told MBW.
“We’ve grown rapidly in two years, organically and through 15 acquisitions. Now, we’re realising cost synergies across these acquisitions and focusing on sustainable growth.”
The news comes shortly after it was revealed that Utopia’s chief marketing office Ulf Zick was leaving the company to rejoin Universal Music Group, just six months after making the reverse move.
It’s a reflection of some of the uncertainty within the music industry, even during what might be considered boom times in some respects. Many of the industry’s key metrics are still growing well, from revenues for recorded music and publishing to funding for startups.
However, there have been some warning shots: questions about whether the catalogue-acquisitions train may screech to a halt, for example, and recent IFPI data hinting at a possible hit to subscriptions from the economic headwinds.
Especially for newer companies, it’s a situation where their ‘runway’ – how many months they can operate before they run out of money – becomes crucial.
Revenues are one part of that, and at least Utopia Music owns a bunch of businesses that are already contributing. Funding is the other part, and that can become tough during a downturn if investors’ confidence wobbles.
Earlier this year, Utopia was rumoured to be trying to raise €300m of Series C funding, following more than €100m raised since it was founded in 2016. Together with this week’s ‘cost synergies’, closing that round would help the company bed in for any upcoming economic crunch.
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