Downtown-owned CD Baby and Soundrop Lay Off Employees, Citing ‘Economic Conditions’

CD Baby and Soundrop have both laid off employees, citing “economic conditions” and “uncertain times,” according to a company-wide email written by Downtown’s new chief people officer Love Whelchel on Oct. 5. Whelchel started at Downtown just last month.

News of the layoffs was first published by Digital Music News. While the outlet reported that 30 employees were let go from the two companies, a spokesperson for CD Baby and Soundrop tells Billboard this figure is incorrect. It remains unclear how many people were laid off from the companies.

News of these layoffs arrives about a week after parent company Downtown announced that it would be combining multiple of its businesses to consolidate and streamline its B2B operations under the new monicker Downtown Music. This new one-stop-shop will absorb the operations of AdRev, Downtown Neighbouring Rights and FUGA, and the new Downtown Music will be led by former-FUGA head Pieter van Rijn. (CD Baby, Soundrop, AdRev, and DashGo were all formerly known as AVL Digital, a services company purchased by Downtown in 2019.)

CD Baby and Soundrop both act as B2C service and distribution companies. CD Baby specifically works with independent artists, offering a suite of tools to help them release and market music while Soundrop services social video creators, looking to upload fully licensed cover songs to sites like YouTube and TikTok. CD Baby in particular has been a longtime leader in the independent artist services space and has serviced over 1 million artists worldwide since its 1998 launch.

These companies are not the first to scale back their workforce in the recent months. BMI recently laid off “just under 10%” of its workforce days after the company stopped exploring the possibility of a sale. SoundCloud laid off “up to 20%” of its global labor force, citing the “challenging economic climate” and “financial market headwinds.” Though it has not laid off its existing workforce, Spotify said it would cut hiring by 25%, with CFO Paul Vogel noting the company is “clearly aware of the increasing uncertainty regarding the global economy.”

For a Sept. 15 Billboard story about these layoffs and overall recession-planning in the music business, founder and executive chairman of Downtown Music Holdings, Justin Kalifowitz, noted that some of the companies that had announced staff-cutting plans to date were also undergoing shifts in strategy.

“There are a lot of businesses where the fundamentals and the long-term growth prospects haven’t changed, but they’re conscious of what has happened in the public markets,” says Kalifowitz.