BMG, following ‘more efficient and more effective’ strategy under new CEO Thomas Coesfeld, reorganizes structure; around 40 staff cut
Thomas Coesfeld, CEO of BMG since July, has made another major move at the Bertelsmann-owned company.
MBW revealed in September that, under Coesfeld, BMG was taking the digital distribution of its music in-house – bringing its longstanding distribution deal with Warner Music Group/ADA to an end. (BMG has since confirmed that, while keeping digital distribution in-house, it’s inked a deal with Universal Music Group to handle its physical distribution business.)
Now, Coesfeld is enacting another set of significant changes at BMG, which posted an operating EBITDA of €90 million ($97m), up 22.6% YoY, in the first six months of 2023.
Berlin-based Coesfeld this week confirmed to staff that BMG is reorganizing its global structure in pursuit of his strategic goal for the company to become “more efficient and more effective”.
The biggest change under that plan will see BMG discontinue its centralized international marketing department for recordings, which to date has been led by the company’s EVP Global Repertoire, Fred Casimir.
In an internal note, issued to staff on Thursday (October 26) and obtained by MBW, Coesfeld said: “The international marketing team was set up five years ago in response to the needs of the company at the time.
“Our talented team have done a great job, driving international campaigns for artists including Lenny Kravitz, Kylie Minogue, and Louis Tomlinson, but unfortunately on a business level, expectations from this novel structure were not met and it created duplication of functions with local teams.”
Thomas Coesfeld, BMG
“Our talented team have done a great job, driving international campaigns for artists including Lenny Kravitz, Kylie Minogue, and Louis Tomlinson, but unfortunately on a business level, expectations from this novel structure were not met and it created duplication of functions with local teams.
“The clear business decision is to instead give artists a single contact point with their local repertoire teams.”
In addition, Coesfeld has green-lit four other significant alterations to BMG’s structure: (i) The discontinuation of BMG’s Modern Recordings label based in Berlin; (ii) The closure of the firm’s New York-based theatrical productions initiative; (iii) No more active commissioning of new films to take place at BMG; and (iv) The consolidation of BMG’s New York and Canada-based recorded music operations into its Los Angeles office.
In total, MBW has confirmed, these changes – including the international marketing function closure – will affect 3% of BMG’s global staff, equating to around 40 employees. Fred Casimir will be leaving the company later this year as part of the move.
“These are tough but necessary decisions,” said Coesfeld in the Thursday internal note to BMG staff. “I would like to extend my thanks to the team members involved on behalf of everyone at BMG. They have done us proud. They were given the news only today, and I understand it has been a shock. We are in close contact with them and in Germany with our Workers Council to ensure everything is handled in a respectful way.”
Elsewhere in the internal memo, BMG confirmed that it is “on target” to begin distributing its own recorded music to streaming services such as Spotify from Wednesday next week (November 1).
In addition to becoming a “more efficient and more effective” business, Coesfeld’s comments in the memo outlined three other core strategies that form part of his “four-point plan” for the company this year.
The other points in this plan include “better engaging with our clients and partners”, “renewing BMG’s culture”, and “investing money wisely”.
Referencing the latter point, the internal BMG memo said that the company recently introduced “a new deal-modelling tool and new deal-approval routines to create more rigor in the system”.
As a result of the closure of BMG’s international marketing function, the company’s artists will no longer have two marketing contact points (domestic and international).
Their sole contact point for marketing going forward will be the repertoire team to which they are signed.
“Much like our distribution alliance with Warner Music/ADA struck in 2016, our previous international set-up – established around the same time – was the right decision back then,” said Coesfeld in Thursday’s memo.
“It allowed us to grow and was the ideal structure for the time. Our record-ings business is now three times the size it was then and it’s overwhelmingly streaming-based. It is no surprise that the way we manage our business also has to change.
“While the logic of this move is clear, however, we should not underestimate the impact on our colleagues. Our best wishes are with them and BMG will do what we can as a company to help them at this time.”
When contacted by MBW, a BMG spokesperson said today (October 28): “Just as we have insourced our digital distribution because we had outgrown the old set-up, so we are changing the way we do international to reflect the scale we have now achieved.
“A centralised international department made sense when our local repertoire teams were not as strong as we are now. We’ve addressed that and a centralised function is no longer needed. As the only global player outside the three majors, international continues to lie at the heart of what we do. We’ll just do it differently.
“It’s far better to make changes like these from a position of strength when you’re performing well, rather than leaving it too late”
“Obviously these are tough decisions to make, but there’s better ways to invest this money to improve our service to clients and you can expect further announcements on improvements to our service offering imminently.
“97% of the BMG team are unaffected by these changes.”
Music Business Worldwide