Swiss-based tech company Utopia Music is undertaking a fresh round of job cuts. In a memo to staff on Friday (July 20), co-founder/interim CEO Mattias Hjelmstedt said the company is closing its research and development offices in the United Kingdom and Finland, resulting in the loss of around 5% of its global workforce.
The closures come less than a week after distribution and music services company Absolute Label Services was reacquired from Utopia by its original owners. Billboard understands that around 25 jobs are being lost as a result of London-based Utopia UK (R&D) Ltd and Helsinki-based Utopia R&D Tech Finland Oy being shuttered.
In the staff memo, Hjelmstedt says the cuts are being made in line with the company’s “shifting focus from hyper-growth to sustainable growth and profitability.” Moving forward, writes Hjelmstedt, Utopia’s office in the Swedish capital city Stockholm — where the majority of its engineers are based — will remain the firm’s main research and development hub as part of “a leaner and more efficient setup.”
Utopia’s 10 other employing divisions or companies are not affected by the cost-cutting measures. They include Proper Music Group, the United Kingdom’s leading independent physical music distributor which provides distribution services for 1,000-plus indie labels and service companies. Also unaffected is Utopia Distribution Services, which in September 2022 acquired the assets of Cinram Novum, one of the United Kingdom’s leading physical home entertainment suppliers that provides warehouse, fulfillment and distribution services to a range of labels, including Universal Music Group, Sony Music Entertainment and [PIAS].
“While not taken lightly, consolidating our R&D entities is a necessary step,” Hjelmstedt writes, “as it will enable us to more efficiently deliver new products and improve our existing services.” He adds that all impacted employees will be considered for any future openings.
Friday’s announcement marks the third round of layoffs to take place at Utopia in just under nine months. In November, around 230 posts were cut (then representing 20% of the company’s global workforce), followed by a further 100 redundancies in April. High-profile exits in 2023 have included former CEO Markku Mäkeläinen and Roberto Neri, the United Kingdom-based former CEO of Utopia’s Music Services division.
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Twelve months ago, when Utopia was still turning heads throughout the industry on the back of a frenetic buying spree that saw it rapidly acquire 15 companies, the firm’s global workforce numbered around 1,200. Sources tell Billboard that following the closure of the London and Helsinki tech divisions – and the exit of a number of staff who were already in the process of leaving – the number of employees will be around 440.
Alongside job cuts, Utopia has offloaded three companies this year, the most recent being Absolute, which it acquired in early 2022. Other divestments in 2023 include U.S.-based music database platform ROSTR and United Kingdom-based publisher Sentric, which in April was sold to French music company Believe in a deal worth €47 million ($51 million).
In February, the Zug, Switzerland-based tech company was hit with a lawsuit from U.S. music technology company SourceAudio over a stalled acquisition deal. According to a complaint filed Feb. 13 in Delaware court, lawyers for California-based SourceAudio claim that Utopia owes the tech company over $37 million for failing to complete an agreed acquisition deal. (Utopia estimates that this will be settled in the next coming weeks.)
Following Friday’s announcement of more job losses, a spokesperson for Utopia said the company was “streamlining its organization to increase efficiency.” Despite the consolidation, Utopia will continue to develop its product offering, said the spokesperson, and its physical distribution business “remains a priority area.”
Read the memo in full below.
Dear colleagues,
2023 has been a year of transformation, optimization, and delivery. We have been shifting focus from hyper-growth to sustainable growth and profitability. We have taken the necessary, and sometimes difficult, decisions to get there. While we see the fruits of our actions taken so far – with more products on the market and increased sales traction – we need to further consolidate our research and development (R&D) organization. The main purpose for this consolidation is streamlining our operations to increase focus on delivering our market-ready products to the music industry.
Moving forward, Utopia R&D Stockholm will continue to be our main R&D hub. Through this concentration we will be able to build on the successes delivered through this entity with a leaner and more efficient setup. As part of this consolidation, we will close down two R&D entities, Utopia UK (R&D) Ltd, and Utopia R&D Tech Finland Oy. This will not impact our other 11 employing entities. Our Finnish and UK R&D offices represent a relatively small footprint in Utopia’s overall R&D teams and we have a very strong R&D office in Stockholm that will continue developing, maintaining, and improving our core products.
Our product offering and promise to deliver world class services to our customers also remains. However, we sadly have to say farewell to some very appreciated colleagues, who have greatly contributed to our mission through their hard work, as a result. I want to express my sincere apologies to those affected and would like to thank every one of you for your hard work – you have greatly contributed to our mission. I trust you to bid the employees who are leaving a heartfelt farewell – they deserve all the respect and support we can give. All impacted employees will of course be considered for any future openings.
I’m extremely proud of all the hard work you have put in so far, and continue to deliver. The output from this last six-week cycle was truly amazing – you keep showing impressive dedication, competence, and passion. I’m convinced that we are fully equipped to continue delivering superior services to the music industry through our current customer offerings; Distribution, Radio Monitoring, TrackNClaim, Enhance & Discover, HeartBeat, and Accelerate. While not taken lightly, consolidating our R&D entities is a necessary step to realize our long-term vision of Fair Pay for Every Play as it will enable us to more efficiently deliver new products and improve our existing services.
Mattias
