Universal Music, the world's largest music group, announced 1,350 job losses yesterday as the industry continues to struggle with the consequences of rampant piracy.
Universal said it would reduce its 12,200-strong workforce by 11% in the face of seemingly uncontrollable demand for illicit internet downloads and counterfeit CDs.
Doug Morris, chairman of Universal Music, said the cut-backs were "evidence that what people are doing is not a victimless crime". Universal, whose artists include U2, Beck and Eminem, said it had already cut about 550 jobs this year and would axe a further 800 by the start of 2004.
Universal's non-US labels, which include Island and Polydor, will be streamlined in a process which is expected to produce savings of $200m (£120m). A spokesperson for the group's London-based international arm said the job losses would be across Universal's operations in 71 countries; there were no plans to shed artists.
The need to cut costs is particularly urgent in Universal's case because it does not have the option of merging with a rival record group to bolster its balance sheet. A global market share of 25.9% which produced revenues of €6.27bn last year precludes it from teaming up with the others of the "big five": EMI, Warner Music, BMG and Sony.
EMI last year found itself in the position of cutting 1,900 jobs and terminating the contracts of 400 artists as it tried to align a bloated cost base with plummeting revenues. Earlier this year, Sony said that it would reduce staff numbers by 1,000, while Warner and Bertelsmann-owned BMG have trimmed their workforces.
Time Warner is considering selling its music business to EMI to create a group controlling 23.9% of the music market, while BMG has admitted holding discussions with the main groups except Universal.
The Universal spokesperson said a merger between any of its rivals would create a far stronger competitor but denied the prospect of industry consolidation influenced the cost-cutting move. Universal has not been slow to react in the face of declining global CD sales, which fell 10.9% to $12.7bn in the first half of the year.
Last month, the group surprised its rivals by announcing plans to slash the price of new release CDs in the US by nearly a third in an attempt to revive sales.
Universal Music slipped into a loss of €42m for the first half of the year, with revenues falling 24.5% to $2.2bn. It blamed the revenue slide on the continued depression in the global record market and a weak release schedule.
Universal Music is owned by Vivendi Universal, the French media group which acquired the record business as part of the $34bn merger with Seagram's Universal film, music and theme park businesses three years ago.
The unit looks increasingly isolated within the Vivendi portfolio following the merger of group's US entertainment assets - including the Universal studio - with the NBC TV network this month. Jean-René Fourtou, chief executive of Vivendi Universal, has reaffirmed his commitment to the music business, despite the lack of obvious synergies with its remaining pay-TV and telecoms assets.
Universal said it would reduce its 12,200-strong workforce by 11% in the face of seemingly uncontrollable demand for illicit internet downloads and counterfeit CDs.
Doug Morris, chairman of Universal Music, said the cut-backs were "evidence that what people are doing is not a victimless crime". Universal, whose artists include U2, Beck and Eminem, said it had already cut about 550 jobs this year and would axe a further 800 by the start of 2004.
Universal's non-US labels, which include Island and Polydor, will be streamlined in a process which is expected to produce savings of $200m (£120m). A spokesperson for the group's London-based international arm said the job losses would be across Universal's operations in 71 countries; there were no plans to shed artists.
The need to cut costs is particularly urgent in Universal's case because it does not have the option of merging with a rival record group to bolster its balance sheet. A global market share of 25.9% which produced revenues of €6.27bn last year precludes it from teaming up with the others of the "big five": EMI, Warner Music, BMG and Sony.
EMI last year found itself in the position of cutting 1,900 jobs and terminating the contracts of 400 artists as it tried to align a bloated cost base with plummeting revenues. Earlier this year, Sony said that it would reduce staff numbers by 1,000, while Warner and Bertelsmann-owned BMG have trimmed their workforces.
Time Warner is considering selling its music business to EMI to create a group controlling 23.9% of the music market, while BMG has admitted holding discussions with the main groups except Universal.
The Universal spokesperson said a merger between any of its rivals would create a far stronger competitor but denied the prospect of industry consolidation influenced the cost-cutting move. Universal has not been slow to react in the face of declining global CD sales, which fell 10.9% to $12.7bn in the first half of the year.
Last month, the group surprised its rivals by announcing plans to slash the price of new release CDs in the US by nearly a third in an attempt to revive sales.
Universal Music slipped into a loss of €42m for the first half of the year, with revenues falling 24.5% to $2.2bn. It blamed the revenue slide on the continued depression in the global record market and a weak release schedule.
Universal Music is owned by Vivendi Universal, the French media group which acquired the record business as part of the $34bn merger with Seagram's Universal film, music and theme park businesses three years ago.
The unit looks increasingly isolated within the Vivendi portfolio following the merger of group's US entertainment assets - including the Universal studio - with the NBC TV network this month. Jean-René Fourtou, chief executive of Vivendi Universal, has reaffirmed his commitment to the music business, despite the lack of obvious synergies with its remaining pay-TV and telecoms assets.
3287.99
1275.09
