Utopia Music has informed its staff that it is instigating another round of downsizing which will see about 15% of the workforce leave the business.
Co-founder and Executive Chairman Mattias Hjelmstedt said in a memo – published by Billboard – that “we’ve very carefully reviewed our organisation against our refocused product and commercial roadmaps, and specific needs, and must share the unfortunate news that, as part of this strategic shift, we need to say goodbye to around 15% of our Utopian colleagues”.
It’s the second round of downsizing at Utopia in six months. Following extensive growth through acquisition, Utopia announced in November last year that it was looking to reduce its workforce costs by about 20%. CEO Markku Mäkeläinen subsequently stepped down, with Hjelmstedt basically taking over that role as Executive Chairman.
More recently, the company has started selling some of the businesses it bought during that acquisition spree, most notably music publisher and rights administration firm Sentric Music, which was acquired by Believe last month. Roberto Neri – who headed up the Utopia division of which Sentric was part – then announced he was also joining Believe to help oversee its wider ambitions in music publishing.
Of all the companies Utopia acquired, Sentric was most relevant to its much-stated desire to ensure that artists and songwriters get “fair pay for every play”. Though Utopia has also been busy developing its own products in the rights and royalty management domain, beyond the companies it acquired.
It’s not always been entirely clear what those products were going to be, although its website does now talk about helping rights owners access unpaid royalties from user-generated content platforms and providing insights for those investing in music rights.
In his memo, Hjelmstedt alludes to disagreements internally about decisions made during that period of rapid growth. “It’s been very hard to see how Utopia was treated last year”, he writes, “and you already know how I feel about decisions taken that put us in a difficult situation”.
Noting the downsizing that is currently occurring at companies across the tech sector, he then says that Utopia faces similar challenges, and that that requires “active decisions” to be taken, “however hard they may be, to ensure we can deliver our vision to serve the music industry with technology for processing royalties, distributing music, and facilitating fair pay for every play while reducing complexity for our customers”.
“Adjusting to these changes has been a big, but necessary undertaking”, he adds. “We’ve sharpened our strategic focus these past three months through targeted sales – bringing in further capital as an additional benefit – and we appointed a new, mature leadership team that’s equipped to move Utopia towards profitability”.
Then referencing a recent report on Swedish business news site Breakit that said Utopia’s subsidiary in that country was facing demands for tax payments and that some employees had claimed they were owed wages, Hjelmstedt writes: “The legacy from last year is in the process of being cleaned up. All outstanding tax debts have been cleared, including our financial obligations in Sweden. We continue to actively work on this process to ensure that we never find ourselves in this position again”.
The job cuts won’t affect the distribution companies Utopia previously acquired, which include Proper Music and Absolute.