Photo: Jennifer Maler / Retna
Last week, based on nothing but our ill-informed guesswork, we predicted that the music business as we know it today had six months to live — turns out that might’ve been optimistic! It gives us no joy to report that on Friday, there were some pretty big layoffs at Island/Def Jam records which apparently included executives Greg Thompson, Paul Pontius, Rob Stevenson, and everyone at Sarah “Ultragrrrl” Lewitinn’s emo sub-label Stolen Transmission (meaning she no longer gets to hang out with Jay-Z and she’ll have to update the address she was using to solicit free shit in the mail). Additionally, Sony-BMG is planning on shedding 40 to 70 “mid-level execs” before the end of this year, Lava and Roadrunner Records are merging their promo staffs, and commenters on record-industry message board Velvet Rope, typing in grave tones, speculate that similar “restructuring” will happen soon at Geffen and other labels under the Universal umbrella.
While it’s certainly a bummer, the firings probably shouldn’t come as a great surprise to anyone who’s been following the increasingly terrible news about the music industry. Warner Music’s stock hit an all-time low last week when they announced that quarterly profits were down 58 percent (hilariously, the numbers still beat Wall Street expectations). And Terra Firma, the London-based private-equity firm that bought EMI’s catalogs earlier this year, is already looking to dump its investment, shortly after it “increases EMI’s profits massively by cutting costs by £135 million annually and outgrowing the sluggish music market.” In other words, the layoffs aren’t just a cost-cutting maneuver anymore — they’re the recording industry’s entire business model! If the labels can’t wring a profit out of Blake Lewis or the new Jay-Z record (which they can’t, apparently), then they’ll do it by dumping a few high-salaried executives.
THIS IS STILL A STOLEN TRANSMISSION [Ultragrrrl]
Layoff Rumors Surround Sony BMG, Island Def Jam [Digital Music News]
Exec Layoffs Coming At Sony-BMG [Silicon Alley Insider via Idolator]
Thompson Exits Island Def Jam [Billboard]
Bullish Terra Firma close to deal on £250m EMI equity fundraising [London Times]