January 21, 1999 - www.wallofsound.com

MUSIC INDUSTRY PREPARES FOR MASSIVE LAYOFFS

January 21, 1999 - www.wallofsound.com

The music industry is bracing itself for Black Thursday, when the Universal Music Group (UMG) is expected to inform employees and artists who will stay and who will go in the new world order that was formed when the Seagrams Co. bought PolyGram for $10.4 billion last year. The massive layoffs will likely bump 500 employees from their jobs and 200 bands and performers from their recording contracts on UMG's 14 labels, which includes such giants as Interscope, A&M, Island, Mercury, MCA, Motown, Geffen, and Def Jam. The MCA Records Group—Seagrams' original acquisition in the music industry—is expected to remain unscathed, as is producer Scott Litt's Outpost label, which includes acts such as Days of the New and Whiskeytown. But the numbers at other labels are certainly alarming:

At A&M, only 20 of 65 acts are expected to remain, and just 30 of 200 employees. According to Billboard, Sheryl Crow, Bryan Adams, Jonny Lang, Monster Magnet, Tonic, MXPX, Patty Griffin, and Chris Cornell will stay on.
At Geffen, 25 of 70 acts will remain along with 30 of 145 employees. Beck, Rob Zombie, Hole, Counting Crows, and Remy Zero have been named as those not receiving pink slips.
Interscope, whose staff is expected to remain largely intact, will still lose about 20 of its 70 acts.
Motown's staff will be trimmed from 75 to 7, while most of its artists will be folded under the Universal banner, effectively neutering the legendary label.
Mercury Records will lose about 110 of its 140 acts and 60 of its 150 employees.
Island is expected to lose 25 of its 70 acts and 40 of its 100 employees.

Reliable sellers such as Beck, Hole, Garbage, Jay-Z, Bryan Adams, Jonny Lang, Kiss, and others are expected to be safe within the new conglomeration, while acts such as Peter Wolf, Primus, Girls Against Boys, Buffalo Tom, Orbit, and others are sweating.

The consolidation has sent some superstar acts scurrying, however. Sting, who has been recording for A&M since 1979, is said to be eyeing other companies, while the Irish group U2 reportedly wants to switch from Island to Interscope.

Eventually, UMG is expected to trim its employment rolls by a whopping 3,000 people. The pink-slipped employees will be terminated immediately, while the acts will be released gradually throughout the year. The move is expected to cost UMG about $150 million in severance packages and result in savings of more than $300 million annually. Universal's combined companies now account for a 25 percent share of worldwide music sales.

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