Utopia Music has made another round of layoffs, this one affecting 5% of the company’s 474 employees, as the Switzerland-headquartered music company works to consolidate its R&D operations.
In a memo sent to staff on Friday (July 21) and obtained by MBW, Utopia founder and CEO Mattias Hjelmstedt said the company would be shutting down its R&D operations in the UK and Finland. The company’s R&D department in Stockholm will continue to be the main hub of its research and development efforts.
“We have been shifting focus from hyper-growth to sustainable growth and profitability. We have taken the necessary, and sometimes difficult, decisions to get there,” Hjelmstedt said in the memo.
“While we see the fruits of our actions taken so far – with more products on the market and increased sales traction – we need to further consolidate our research and development (R&D) organization.”
The latest job cuts follow the announcement of widespread layoffs at Utopia last November, in which it’s believed around 20% of the company’s workforce left their positions. Another round of job cuts this past April resulted in another 15% of the company’s staff departing.
With the latest job cuts, the company’s final staff count will be between 430 and 440 people, a Utopia spokesperson told MBW. That’s down from an estimated 1,200 staff at the company’s peak.
“Utopia is currently streamlining its organization to increase efficiency,” the spokesperson said in an email. “As a result, we are consolidating our R&D offices to further sharpen our focus. We continue to run R&D from our main tech hub, Utopia R&D Stockholm in Sweden, where our core engineers and platform technology originate from.”
The added: “As part of this consolidation, we will close down two R&D entities, Utopia UK (R&D) Ltd, and Utopia R&D Tech Finland Oy. There are no changes to our other 10 (employing) entities, and we will continue to develop our current product offering, with more services being launched. Physical distribution remains a priority area and we will continue to deliver world-class services to our large music industry customer base.”
Utopia has been pursuing a number of different activities within the music business, including developing a Big Data platform with the idea of becoming a one-stop shop for music consumption measurement.
It has also sought to establish itself as a music services and royalty collection platform, working under the motto “fair pay for every play.” And it has moved into the physical music media space, with the acquisition of UK-based distributor Proper Music in 2022, giving the company a foothold in physical and digital music distribution.
“We have been shifting focus from hyper-growth to sustainable growth and profitability. We have taken the necessary, and sometimes difficult, decisions to get there.”
Mattias Hjelmstedt, Utopia
Among the many acquisitions during its “hyper-growth” phase were Quincy Jones-backed AI company Musimap; Nashville-based music financing firm Lyric Financial; music industry directory ROSTR; Liverpool-based music publisher and publishing administrator Sentric Music Group; Absolute Label Services, a distributor and service provider to indie artists and labels; and Cinram Novum, a UK-based warehouse, fulfillment and distribution company.
In August of 2022, the company’s Series C funding round raised €300 million, giving the company an implicit value of €2.5 billion – making it a double unicorn, and one of the biggest success stories in the music business over the past decade.
“I want to express my sincere apologies to those affected and would like to thank every one of you for your hard work – you have greatly contributed to our mission.”
Mattias Hjelmstedt, Utopia
Since then – amid reports of financial problems at Utopia, including unpaid tax bills in Sweden and employees going without pay – the company has divested some of its acquisitions.
It sold its music industry directory and data platform ROSTR back to the company’s founders, following that up with a sale of music publisher Sentric to France-headquartered Believe.
Last week, Utopia divested yet again, with Absolute Label Services’ original leadership team regaining ownership of the company, just 18 months after their business was acquired by Utopia Music.
The company saw a series of CEO departures, resulting in Hjelmstedt’s return to the role earlier this year.
“Our product offering and promise to deliver world class services to our customers also remains,” Hjelmstedt said in his memo Friday. “However, we sadly have to say farewell to some very appreciated colleagues, who have greatly contributed to our mission through their hard work, as a result.”
He added: “I want to express my sincere apologies to those affected and would like to thank every one of you for your hard work – you have greatly contributed to our mission. I trust you to bid the employees who are leaving a heartfelt farewell – they deserve all the respect and support we can give. All impacted employees will of course be considered for any future openings.”
You can read his memo in full below:
Dear colleagues,
2023 has been a year of transformation, optimization, and delivery. We have been shifting focus from hyper-growth to sustainable growth and profitability. We have taken the necessary, and sometimes difficult, decisions to get there. While we see the fruits of our actions taken so far – with more products on the market and increased sales traction – we need to further consolidate our research and development (R&D) organization. The main purpose for this consolidation is streamlining our operations to increase focus on delivering our market-ready products to the music industry.
Moving forward, Utopia R&D Stockholm will continue to be our main R&D hub. Through this concentration we will be able to build on the successes delivered through this entity with a leaner and more efficient setup. As part of this consolidation, we will close down two R&D entities, Utopia UK (R&D) Ltd, and Utopia R&D Tech Finland Oy. This will not impact our other 10 employing entities. Our Finnish and UK R&D offices represent a relatively small footprint in Utopia’s overall R&D teams and we have a very strong R&D office in Stockholm that will continue developing, maintaining, and improving our core products.
Our product offering and promise to deliver world class services to our customers also remains. However, we sadly have to say farewell to some very appreciated colleagues, who have greatly contributed to our mission through their hard work, as a result. I want to express my sincere apologies to those affected and would like to thank every one of you for your hard work – you have greatly contributed to our mission. I trust you to bid the employees who are leaving a heartfelt farewell – they deserve all the respect and support we can give. All impacted employees will of course be considered for any future openings.
I’m extremely proud of all the hard work you have put in so far, and continue to deliver. The output from this last six-week cycle was truly amazing – you keep showing impressive dedication, competence, and passion. I’m convinced that we are fully equipped to continue delivering superior services to the music industry through our current customer offerings; Distribution, Radio Monitoring, TrackNClaim, Enhance & Discover, HeartBeat, and Accelerate. While not taken lightly, consolidating our R&D entities is a necessary step to realize our long-term vision of Fair Pay for Every Play as it will enable us to more efficiently deliver new products and improve our existing services.
Mattias Music Business Worldwide
