Warner Music has announced another round of significant downsizing with the aim of saving about $300 million a year in overall costs. $170 million of those savings will come from job cuts, or - in the words of boss man Robert Kyncl - “headcount rightsizing for agility and impact”. So yeah, lots of job cuts.
These latest cuts, Kyncl says in a memo to the major’s employees, are the final phase in his mission to “future-proof the company and unlock the next era of growth”. The Warner Music top team, the memo adds, have “spent a lot of time thinking about our future state and how to put us on the best path forward”. They seemingly concluded that the best path involves another round of redundancies.
Kyncl began his mission to “future-proof” Warner Music as soon as he joined the company in January 2023. The first round of job cuts came in March that year with the announcement that about 270 of the company’s 6200 employees worldwide would be made redundant. Then, last February, another 600 job losses were announced as part of a bid to reduce the major’s annual costs by $200 million.
The first round of ‘rightsizing’ seemed to be about Warner reducing headcount in some departments, especially more traditional marketing and PR roles, in order to boost teams in other areas, such as data and tech. Which is a trend we’ve seen at the other majors too. The 2024 cull particularly impacted on Warner’s media and content units, which had grown in preceding years through various acquisitions.
Then last summer there was a revamp of Warner’s recordings business, which saw certain labels and divisions merged and some very senior people in the US depart, including Max Lousada, Kevin Liles and Julie Greenwald. At the same time Elliot ‘son of Lucian’ Grainge was put in charge of a revamped Atlantic Music Group in the US.
By last summer it was thought that Warner’s headcount had been reduced by about 1000 people on Kyncl’s watch. Yesterday’s memo didn't say how many roles would be affected this time.
Nor did it really indicate where the latest cutbacks will occur - both geographically and in terms of labels and divisions - though with $170 million of savings needed from the redundancies, the impact will clearly be sizable. The other $130 million in savings will come from “administrative and real estate expenses”.
“I know that this news is tough and unsettling, and you will have many questions”, Kyncl’s memo continues. Affected staff will hear from their local leaders “as soon as possible”, he explains, adding, “it will be difficult to say goodbye to talented people and we’re committed to acting with empathy and integrity”.
For those remaining, Kyncl’s memo also sets out a brief “growth plan”. It bigs up the newly announced alliance with investment firm Bain Capital that provides $1.2 billion to spend on catalogue acquisitions.
Though, possibly keen to deflect any suggestion that Warner is becoming a catalogue focused rights management business, he also stresses that A&R will be a focus too. Although with “a more holistic and targeted approach to partnering with the world’s greatest musical talent”, whatever that means.
More “agile teams” with “local experts” and access to “a strengthened suite of services across marketing, distribution, catalogue, merchandising and direct-to-fan” will make it “easier for great artistry and ideas to shine through”, he then insists. Before bigging up the in-house tech that the major has been developing, returning to what has been a priority for the former YouTube exec ever since he joined the major.
“In an ever-changing industry, we must continue to supercharge our capabilities in long-term artist, songwriter and catalogue development”, he concludes. “That’s why this company was created in the first place, it’s what we’ve always been best at and it’s how we’ll differentiate ourselves in the future”.