Music recording company BMG has reportedly laid off an estimated 40 employees, following the restructuring of its theatrical and international departments.
According to a report from Music Business Worldwide, chief executive Thomas Coesfeld shared the news via a memo distributed across the company. The note addressed BMG’s consolidation of its New York and Canada-based recorded music operations into its Los Angeles office.
The move also sees the closure of the firm’s New York-based theatrical productions initiative, the closure of BMG’s Modern Recordings label in Berlin and an end to the commissioning of new films.
The report added that BMG began cutting down its activity with Warner Music Group’s ADA earlier this year, opting for direct management of its digital distribution. Instead, BMG confirmed a partnership with Universal Music Group (UMG)’s commercial services division to distribute physical formats of BMG’s music, such as vinyl and CDs.
In the memo, Coesfeld wrote: “These are tough but necessary decisions. Much like our distribution alliance with Warner Music/ADA struck in 2016, our previous international set-up – established around the same time – was the right decision back then
“It allowed us to grow and was the ideal structure for the time. Our recordings business is now three times the size it was then and it’s overwhelmingly streaming-based. It is no surprise that the way we manage our business also has to change.
“Our talented team have done a great job, driving international campaigns for artists including Lenny Kravitz, Kylie Minogue, and Louis Tomlinson, but unfortunately on a business level, expectations from this novel structure were not met and it created duplication of functions with local teams.”
Coesfeld added: “I would like to extend my thanks to the team members involved on behalf of everyone at BMG. They have done us proud. They were given the news only today, and I understand it has been a shock. We are in close contact with them and in Germany with our Workers Council to ensure everything is handled in a respectful way.”
In a statement to Music Business Worldwide, BMG clarified: “Just as we have insourced our digital distribution because we had outgrown the old set-up, so we are changing the way we do international to reflect the scale we have now achieved.
“A centralised international department made sense when our local repertoire teams were not as strong as we are now. We’ve addressed that and a centralised function is no longer needed. As the only global player outside the three majors, international continues to lie at the heart of what we do. We’ll just do it differently.”