Utopia Music Sheds 15% of Global Workforce in Latest Round of Layoffs

LONDON — Swiss-based tech company Utopia Music is undertaking a fresh round of job cuts, eliminating around 15% of its global workforce, co-founder and interim chief executive Mattias Hjelmstedt said in a memo to staff on Monday.  

Hjelmstedt said the cost-trimming measures follow a review of the organization’s business and form part of an ongoing “strategic shift” towards a focus on delivering financial services for labels, publishers and distributors. Billboard understands that around 100 jobs are being cut.   

In the staff memo, which has been seen by Billboard, Hjelmstedt says that Utopia’s distribution companies are not affected by the staff cuts. They include Proper Music Group, the United Kingdom’s leading independent physical music distributor, which provides distribution services for 1,000-plus indie labels and service companies, and Cinram Novum, which provides warehouse, fulfilment and distribution services to a range of labels, including UMG, Sony Music Entertainment and [PIAS]. 

Monday’s announcement is the second round of layoffs to take place at Utopia in the past six months. 

In November, the Zug, Switzerland-based tech company cut its workforce by around 20%, representing about 230 jobs. That was followed by a restructuring of Utopia’s business into two separate divisions: Music Services and Royalty Platform in December and the exit of former CEO Markku Mäkeläinen in January. Earlier this month, U.K.-based Roberto Neri announced that he too was leaving his position as CEO of Utopia’s Music Services division to join French music company Believe.  

The start of this year has also seen Utopia, whose motto is “Fair pay for every play,” divest two of the 15 companies it acquired over the past two years during a frenetic buying spree. On Feb. 7, Utopia announced that it had sold U.S.-based music database platform ROSTR — which has a directory of artists, managers, booking agents and record labels — back to ROSTR’s founders for an undisclosed sum.  

Last month, French music company Believe acquired U.K.-based publisher Sentric, which represents more than four million songs and over 400,000 songwriters in more than 200 territories, from Utopia in a deal worth €47 million ($51 million). Utopia owned Liverpool-based Sentric Music Group — which also has offices in London, Hamburg, New York and Los Angeles – for just over a year before selling it to Believe.  

“Today’s market requires that companies that embarked on a hiring spree during ‘hyper growth’ now restructure,” wrote Hjelmstedt. “We are a company that is not afraid to adjust when necessary. That means we take active decisions, however hard they may be, to ensure we can deliver our vision to serve the music industry.”  

Hjelmstedt went on to say that adjusting to these strategic changes “has been a big, but necessary undertaking” that has optimized the company’s client offering “and already seen an uplift in customers.”  

Referencing recent reports by Scandinavian news outlet Breakit that some Utopia employees had not been paid and the company’s Swedish arm, Utopia R&D Tech, owes 8 million SEK ($770,000) to the Swedish tax authorities, the CEO said “all outstanding tax debts have been cleared” and legacy issues regarding staff payments were “in the process of being cleaned up.”     

“We continue to actively work on this process to ensure that we never find ourselves in this position again,” said Hjelmstedt, adding that the company – which had a workforce of around 1,000 employees internationally prior to sale of Sentric – will soon share information on “commercial initiatives, deals, and sales strategies” that will drive future revenue growth. 

Read the memo in full here:  

Dear Utopians, 

Since taking on additional responsibilities as your Executive Chairman, I’ve been committed to sharing the steps we must take for Utopia to become a profitable and sustainable business. The new leadership team and I have had to make some important, and sometimes very tough, decisions as part of this ongoing process. Today I need to share news of that nature.  

Together, we’ve very carefully reviewed our organization 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. Our distribution companies are not affected by this review.  

Thomas and I created Utopia by combining two of our great loves – music and technology – and we’ve built it together with you. That’s why this is the most difficult decision we’ve had to make so far, and I fully appreciate that after these past few months this will be hard to read. If you are one of the affected individuals: Please know that this is in no way based on your individual performance – we hired you because we value you and you are great at what you do – this is about doing what is necessary to secure the future of the company. We’re truly sorry to see you go and feel both humbled and grateful for all the amazing work you have done for Utopia. 

It’s been very hard to see how Utopia was treated last year and you already know how I feel about decisions taken that put us in a difficult situation. Additionally,  like the rest of the tech industry, we’re facing challenges brought on by changed market conditions. We’ve seen several waves of redundancies from companies large and small – Meta, for example, recently announced its “year of efficiency” to cater to its long-term vision. Today’s market requires that companies that embarked on a hiring spree during “hyper growth” now restructure. The likes of Spotify, Microsoft, and PayPal (and so many others) now need to adapt to the new reality of focused sustainable growth – just like we have to at Utopia. We are a company that is not afraid to adjust when necessary. That means we take active decisions, 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. We’ve sharpened our strategic focus these past three months through targeted sales (ROSTR and Sentric) – bringing in further capital as an additional benefit – and we  appointed a new, mature leadership team that’s equipped to move Utopia towards profitability. We have optimized our offering and already seen an uplift in customers – we have strong products on the market that we will continue to improve, a top-of-the-line platform, a world-class distribution arm that represents 98% of UK labels (including all majors), and a plan to first break even and then grow even further, sustainably. 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. We’re humbled and grateful to all of you who stepped up to support this large, strategic shift, and have shown patience while we do so.  

Soon we will share more information on commercial initiatives, deals, and sales strategies that will drive Utopia’s revenue growth. But for now, let’s allow ourselves time to reflect and give the great people that will unfortunately have to leave us a proper goodbye. Some colleagues will receive difficult news and some will lose teammates and friends, so please be there for them.  

I want to express my sincere apologies to everyone affected. Utopia was built to be a high-impact company and we have attracted extremely talented people who we truly appreciate and respect. That’s why this decision is so hard to make. I know you will have a lot of questions, please know that more information on next steps will be provided by the P&C team shortly.  

Take care of yourselves and each other, 

Mattias