In a move that will surely please stockholders, sources have the Warner Music Group beginning staggered layoffs of 400 employees spread across the company. This is the second major round of cutbacks for the label group in two years and closely follows wholesale layoffs at EMI and ongoing cut backs at Sony BMG.
COMMENTARY: Is the end of the major labels near?
With CD sales dropping another 15-25% and digital not yet taking up the slack, major label cutbacks were inevitable. Warner claims that it will actually increase spending in digital staffing, but the earthquake striking the entire label sector goes far beyond a shift from CD's to downloads.
As another 400 industry pros loose there jobs it's worth remembering that...
- major labels are no longer controlled by people who care about music. They are owned by stockholders who care about profits.
- l abels can no longer control what gets played on the radio. Thanks to Eliot Spitzer and the FCC payola isn't what it use to be.
- with the internet offering unlimited media sources radio no longer has the clout that it used to anyway.
- free file sharing has forever devalued music.
single songs downloads have killed the album purchase and thus gutted the profits labels saw from them.- digital delivery is eroding the labels' gatekeeper status in distribution.
- consumers have more diverse competition for their entertainment $'s and time than ever before
The cumulative effect has been devastating for the major labels and their options for survival are limited. Continuing to monetize their vasts catalogs is a natural survival strategy and the increasingly rare occasion when big money can help create a big star leaves another escape route open.
But the days of major labels as we remember them aren't just numbered; they're over. Too many people's job just hinge on not admitting it yet.
