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We’ve been covering the various rounds of layoffs made by big technology companies in recent months, including Spotify, and wondering quietly when the chill winds behind those cuts might blow into the music industry itself.

Yesterday came a gust: Warner Music Group’s announcement that it is laying off 270 people: around 4% of its workforce.

As the newly-installed boss at WMG, Robert Kyncl was able to leave out the now-familiar ‘It’s my fault, we overexpanded’ tech-CEO mea culpa in his memo to staff. Instead, he framed the layoffs thus: “To take advantage of the opportunities ahead of us, we need to make some hard choices in order to evolve”.

Kyncl said that WMG is “reallocating resources towards new skills for artist and songwriter development and new tech initiatives” while also “reducing discretionary spending and open positions to provide us with additional flexibility for our future”, but he was keen to present the cuts as targeted rather than swingeing.

“I want to be clear that this is not a blanket cost-cutting exercise. Every decision has been made thoughtfully by our operators around the world, who considered the specific needs, skills, and priorities of each label, division, and territory, in order to set us up for long-term success.”

The announcement came on the same day that Electronic Arts – one of the games industry’s equivalents of our major labels – revealed that it was laying off 6% of its workforce: around 800 people.

It’s a little early to be shouting too loudly about Big Tech’s layoffs spilling over to Big Content as a trend, but a domino effect is possible: when one big company announces layoffs, it can be a green light for rivals who’ve been planning a similar move but didn’t want to be first.

It’s not a welcome prospect. However, with the tech companies’ layoffs, pretty much all of the CEOs’ apologies about past over-expansion came with the warning that they expect more tough economic times ahead.

If that’s the case, the bigger music companies (major labels and streaming services alike) can’t afford to bury their heads in the sand while chanting the industry’s latest revenue-growth figures. Some hard decisions are having to be made, and we don’t think WMG’s layoffs will be the last such announcement this year.

That said, Kyncl’s memo also showed that this isn’t just a time of reductions and cuts, but of shifting budgets and priorities, and accompanying shakeups in management. Something illustrated in his company’s UK operation yesterday, with the announcement that Warner Music UK has appointed Abbey Road Studios MD Isabel Garvey as its COO.

Alongside this, Parlophone Records has a new MD, Jennifer Ivory (currently SVP of Warner Records UK), with the label’s co-presidents Nick Burgess and Mark Mitchell, as well as general manager Jack Melhuish departing. As part of the change, Parlophone is being gathered into a ‘coalition’ of labels with  Warner Records UK, Roadrunner, FFRR and Elektra Entertainment. Each will still handle their A&R and marketing themselves, but will share other services.

Music Ally doesn’t cover job-move stories that often, except when they illustrate bigger industry trends. In this case, it’s partly just about reorganisation and new blood under a new CEO, which is hardly a new phenomenon in labels-world.

However, we sense that the current economic climate is not just going to spark layoffs in the music industry. It’s going to accelerate our biggest companies’ efforts to reshape themselves in response to other trends: the streaming economy; the rise of independent artists; and the various technologies jostling to be the first big ‘post-streaming’ disruption for music.

Music Ally’s next Learn Live webinar will help you understand what’s required for artists to thrive in new international markets!

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Stuart Dredge

Music Ally's Head of Insight

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