Warner Music announced plans to cut 10 percent of its staff, in an attempt to free up funds for more music investment over the coming decade. This decision will affect Uproxx, HipHopDX, IMGN as well as their in-house ad sales division.
Warner Music CEO Robert Kyncl says the move is part of a broader restructuring plan
Warner Music Group (WMG) announced that 600 employees, representing 10% of its staff, have been laid off as part of a restructuring plan to free up money for music investments over the coming decade. Warner Music plans on investing this savings back into their core recording and publishing units.
Warner Music reported in its Security and Exchange Commission filing that it expects to save at least $200 million annually through savings generated from own-and-operate media properties, its in-house ad sales team, as well as selling off some non-core businesses such as Uproxx and HipHopDX.
Robert Kyncl’s memo to employees underscored the necessity for hard choices as the music industry undergoes profound shifts. He specifically mentioned recent slowdown in profit growth for smaller artists following pandemic earnings growth as evidence of these transformations, while top charting bands continued their strong revenues growth compared to pandemic results. Furthermore, this move came as tech companies and the media sector continue to shed thousands of jobs annually.
The layoffs will impact the company’s owned-and-operated media properties
Even after an intense year in media, companies are continuing to cut staff in an attempt to save money and focus on core operations. Warner Music Group will become the latest company to implement such cuts by cutting 600 positions or 10% of its workforce; additionally it plans to wind down or sell some non-core subsidiaries like Uproxx HipHopDX Media as well as eliminate its in-house ad sales team to further cut costs.
These layoffs are intended to save $200 million annually in costs, with the company planning on channeling those savings towards new opportunities. Unfortunately, though, they come during an era when streaming competition is increasing while advertising spend decreases.
Losses within the media industry have become more frequent and drastic over time, yet this latest round is especially alarming. According to media experts, various causes may account for this dramatic restructuring – from ethical debates surrounding journalism and shifting cultural values, to layoffs.
The layoffs will impact in-house ad sales
Even though the company maintains that its layoffs are coming from a position of strength and will primarily be reinvested, many employees remain concerned. Since last spring when they laid off 270 people, CEO Robert Kyncl has pledged to implement further changes that “will accelerate our growth over the next decade”.
These cuts will affect not only Sony Music Entertainment’s music division but also its owned-and-operated media properties such as Uproxx, HipHopDX, IMGN, and Interval Presents – saving the company an estimated $200 million which should be reinvested back into core musical units.
These layoffs come as the streaming boom is slowing and companies adjust to its changing landscape. They follow an onslaught of layoffs across tech sectors including Alphabet-owned Alphabet, PayPal, Etsy Wayfair and Intel – leading some analysts to speculate that tech could be heading toward recession.
The layoffs will impact marketing
Over the past several months, a number of major brands have announced major layoffs, including Google, Amazon and Snap (SNAP).
Warner Music CEO Robert Kyncl made the announcement Wednesday, calling it an essential step in its evolution. Most of the cuts will impact its owned-and-operated media properties business such as Uproxx and HipHopDX websites and podcast networks.
This move is anticipated to save $200 million annually while also improving efficiency and lowering operating expenses worldwide. But the layoffs could have an adverse effect on marketing: studies have revealed that when companies announce mass layoffs, consumers tend to buy less from said company – one study conducted by coauthors Vardit Landsman and Stefan Stremersch found car brands associated with these announcements experienced sales drops an average of 8.7% below predicted levels; such falls can damage brand reputations and prevent marketers from creating customer loyalty.
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