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Layoffs hit Universal Music Group

January 14, 2010 |  5:50 pm

Lady_gaga_lat
Universal Music Group went into 2009 much the same way it did 2008, boasting an industry market share of more than 30%, according to Nielsen SoundScan, making it the largest of the four major labels. Yet the continued dominance of the company hasn't made it immune to the year-after-year sales declines afflicting the music industry, and today the company further streamlined its label and distribution divisions.

UMG cut about 50 staffers today, according to label sources who spoke on the condition of anonymity, less than 1% of the company's worldwide workforce of 8,000. Cuts were made across multiple labels as well as UMG's distribution arm, Universal Music Group Distribution, which is headquartered in Universal City. Labels affected included Verve and Interscope.

An UMG spokesman confirmed the cuts but declined to answer questions or comment on specifics.

The label is "continuing to transform our organization to better serve our artists and business partners," the company said in a statement. "Given the current economic climate, we have to be as agile and efficient as possible. Unfortunately, these ongoing efforts have resulted in some redundancy. However, UMG will now be even better positioned to compete in the growing global, digital marketplace."

Universal had breakout success in 2009 with Lady Gaga, whose "The Fame" was the fourth-best-selling album of the year with more than 2.2 million copies sold, according to SoundScan. The company's distribution arm handles releases for such top-selling labels as Big Machine and Disney. Big Machine's Taylor Swift had the bestselling album of 2009 with "Fearless," a release that sold 3.2 million copies last year alone. 

Overall album sales in 2009 stood at 373.9 million, a nearly 13% sales decline from 2008. Digital sales continue to increase, but not at a rate that's making up for the loss in CD revenue. Digital track sales stood at 1.16 billion in 2009, an 8.3% increase from 2008. 

UMG ended 2009 by investing in a new business model. In early December, the label made a splash with the launch of Vevo, an online video destination that serves as a sort of music video equivalent of Hulu. The site was unveiled at a party in New York, with U2's Bono boasting that the launch marked "the passing of the old model that was the music business." The label partnered with Sony Music Entertainment on the video site, which embeds short ads at the front of music clips. 

-- Todd Martens

Photo: Lady Gaga. Credit: Carolyn Cole / Los Angeles Times

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