In September, the Warner Music Group disclosed that its restructuring plan implemented over the course of this past year was expected to cost $135 million in non-recurring charges in its current fiscal year ended Sept. 30, with the goal of achieving about $200 million in annualized savings moving forward. As part of that restructure, the company continued to lay off employees, most recently in the elimination of 150-175 jobs at the Atlantic Music Group.
When all is said and done, the company’s restructuring will leave its staff with 750 fewer employees. While its current year employee total has not yet been disclosed — WMG reports staffing levels in its annual 10-K filing with the SEC, and that is expected to be filed some time after Nov. 20, if recent years prove any guide — a look at staffing levels through the years shows that the major music company, like its competitor Universal Music Group, has continually become more efficient, at least since 2015.
At the end of 2023, WMG’s staff consisted of about 5,900 employees. With revenue totaling $6.037 billion at the end of its fiscal year on Sept. 30, 2023, that means Warner’s average revenue figure per employee was $1.023 million. Put another way, Warner employed 0.98 people for every $1 million in revenue the company generated.
WMG’s performance in 2023 was an improvement from the previous year, when revenue was lower, at $5.919 billion, and staffing was higher, at 6,200 employees. In that year, the ratio was 1.05 employees per $1 million, with average revenue per employee at $955,000.
While the financial world looks at revenue per employee, the music industry has long informally measured productivity by the number of employees per $1 million. At the record label level, a longstanding rule of thumb has been that efficiency is defined as one employee per million dollars in revenue, although in the days when physical was the dominant format, wholesalers, not labels, generally aimed to have a ratio of three employees per $1 million.
Since 2015, WMG has consistently improved efficiency — which is expected, because as revenue grows, staffing does, too, and companies generally benefit from economies of scale. At the end of its fiscal year of Sept. 30, 2015, WMG’s revenue was $2.966 billion and staffing stood at 4,211 employees, representing an average revenue per employee of $704,000, or 1.42 employees per $1 million. In each subsequent year after, WMG achieved efficiencies. (See chart above.)
Meanwhile, the Universal Music Group, which reports its revenue in euros, is even more efficient than the Warner Music Group. In its most recent fiscal year ended Dec. 31, 2023, UMG generated 11.108 billion euros while employing 10,900 people. That breaks out to average revenue of 1.019 million euros per employee, or a ratio of .093 employees per 1 million euros. That’s down from 2015, when UMG had revenue of 5.267 billion euros and 7,547 employees, which works out to, like WMG in that year, nearly one and half employees (1.48) per million euros. Similar to Warner, Universal has become more efficient as it became larger.
In order to get an apples-to-apples comparison, Billboard converted UMG’s euro revenue to dollars. (Depending on the year, the metric used was the average exchange rate for the two currencies as provided by the MacroTrends website, or as quoted by Vivendi in its annual reports, or as supplied by UMG.) Last year, UMG was more efficient than WMG in dollars, with annual revenue per employee at $1.173 million, or 0.85 employees per $1 million. That, too, is expected, because UMG’s revenue is twice as large as that of WMG, meaning it benefits even more from the economy of scale.
In 2015 in dollars, UMG stood at 1.32 employees per $1 million in revenue, while each employee produced an average of $755,000 in revenue that year. (Comparing UMG and WMG is not an exact science, as since 2019 WMG has rounded its employee counts, whereas UMG’s count is more accurate.)
Back in 2015, of course, the music industry was in a very different place, at the low point of a 15-year decline. U.S. revenue totaled $7.016 billion that year, according to the RIAA, of which streaming was $2.417 billion, or 34.3%; while downloads were $2.382 billion, or 34%; and physical was nearly $2.024 billion, or 28.8%. In other words, the majors had to support three different formats back then, each about one-third of revenue. Today, with streaming now the dominant format — representing 84% of U.S. revenue in 2023 — it plays to the efficiency of the majors.
In any event, thanks to the combination of a growing revenue base and format concentration, the two majors are now much more efficient than they were in the past, and still growing productivity, too. WMG and UMG both declined to comment for this story. The Sony Corp. doesn’t break out staffing levels at the corporate level, let alone at the business unit level, so Sony Music Group could not be measured.
