Warner Music Group has announced a 10% cut in staffing to “free up more funds to invest in music”.
CEO Robert Kyncl informed staff of the plans as part of his strategy to “accelerate our growth for the next decade”.
The job reductions of approximately 10% (around 600 people) will see the major exiting its owned and operated media properties, including Uproxx, HipHopDX, IMGN and Interval Presents.
“Today, we’re announcing a plan to free up more funds to invest in music and accelerate our growth for the next decade,” wrote Kyncl in his memo to staff. “To do that, we have to make thoughtful choices about where we put our people, resources, and capital. So, as part of that plan, we’ll be realising approximately $200 million in annualised cost savings by the end of September 2025. The majority of these savings will be reinvested, putting more money behind the music.
“Our plan includes reducing our workforce by approximately 10%, or 600 people – the majority of which will relate to our owned & operated media properties, corporate and various support functions.”
The announcement came as Warner Music Group issued its latest financial results for the fiscal first quarter to end of December 31, 2023. Revenue of $1.748 billion was up 15.9% year-on-year in constant currency, or 10.6% once various one-off factors were taken into consideration.
Recorded music revenue was up 15.1% in constant currency, driven by growth in digital, licensing and physical revenue. Recorded music streaming revenue was up 11.4%, while physical revenue was up 13.2%.
Music publishing revenue increased 19.7% in constant currency, driven by growth in digital and performance revenue.
Major sellers for recorded music in the quarter included Zach Bryan, Ed Sheeran, Bruno Mars, and the Barbie soundtrack album.
“These results reflect the impact of our chart-topping artists, hit-making songwriters, iconic catalogue, and laser focus on execution by all our teams," said Robert Kyncl. "As we deliver our plan to accelerate our growth, we are becoming more efficient, increasing operating leverage, and freeing up more funds to invest in music and tech, which in turn will drive further sustainable growth.”
With the major in a “position of strength” following those results, Kyncl has taken steps to advance his strategy for the company a year into his appointment.
In his memo to staff, Kyncl described it as a “pivotal moment in the evolution of this great company”, and that that 2024 will be a year in which WMG will “double down on our core business and move at an increased velocity to seize the incredible opportunities for music in the new world.”
Warner Music recording artists make up five of the Top 10 in the US Hot 100 this week, while its songwriters have six of the Top 10.
We’re getting on the front foot to create a sustainable competitive advantage over the next decade
WMG has begun to inform many of the impact employees, a process which will run until September 2023.
The major has already started to exit its owned and operated media properties, as well as in-house ad sales function.
“These are dynamic platforms, but they operate outside our core responsibilities to our roster,” wrote Kyncl. “We’re in an exclusive process for the potential sale of the news & entertainment websites Uproxx and HipHopDX, with more to say on that soon. After a thorough exploration of alternatives, we’ve decided to wind down the podcasting brand Interval Presents and social media publisher IMGN. Maria [Weaver] and I continue to discuss the ongoing evolution of WMX, and how best to further improve our services to artists and labels, and she’ll update the team in the coming weeks.
“As we carry out our plan, it’s important to bear in mind why we’re making these difficult choices. We’re getting on the front foot to create a sustainable competitive advantage over the next decade.”
Warner Music will increase funding behind artists and songwriters, new skill sets and tech, to help deliver on three strategic priorities, which Kyncl set out in his memo to staff:
Grow the engagement with Music
Discovering and developing artists and songwriters is at the heart of everything we do. We’ll turbocharge our efforts and investments, with additional focus on high growth geographies and vibrant genres, as well as using our data and insights to help original talents cut through the increasing noise, and taking a holistic global approach to maximising the potential of their catalogues.
Increase the value of music
This is one of our industry’s largest and most complex opportunities and one that we’re working on diligently, whether it’s new DSP deal structures or building superfan experiences to help artists connect directly with their most passionate followers.
Evolve how we work together
In order to grow at an accelerated pace, we need to structure our organisation so that we can grow efficiently and continue to invest more into music at the same time. That requires being intentional about where centralised shared functions make sense, versus where they are best fully dedicated. This will empower subject matter experts, while scaling our resources. We already made moves in this direction by centralising our technology, finance and business development teams last year.
“We’re in an amazing industry, we’re partnered with many extraordinary artists and songwriters, and now is the time for us to pioneer the future,” concluded Kyncl.