Switzerland-headquartered Utopia Music has entered into a “long-term” £100 million-plus ($125m) contract with DP World, a multinational UAE-headquartered logistics company, to provide warehousing and logistics for physical music in the UK.
As part of the deal, DP World is fitting out a new warehouse in Bicester, in the UK for Utopia’s distribution unit, Utopia Distribution Services (UDS).
According to a press release, the new 25,000 sq meter site will showcase “technologically advanced solutions” such as high-density storage and robotic transfer of product, “to enable smooth and efficient distribution of over 30 million units a year across the UK and export markets”.
The press release adds that the “£100m+ contract marks a significant milestone, as Utopia doubles down on its commitment to physical music and video, ensuring a future-facing home” for Utopia Distribution Services.
Utopia says that stock will be moving from UDS’ current warehouse in Aylesbury, UK (which it says it “inherited” from UK warehouse, fulfillment and distribution firm Cinram Novum, whose assets Utopia acquired in 2022,.)
The company says that “all jobs have been secured” at the current warehouse, with Utopia planning to run a shuttle from Aylesbury to the new site, 15 miles away.
Utopia acquired Cinram Novum in September 2022 through its UK-based Utopia Distribution Services unit. Utopia said at the time that the deal saved the UK company from insolvency and secured 300 jobs.
At the time of its acquisition, Cinram provided warehouse, fulfillment, distribution and business services to independent and major record labels including Universal Music Group and Sony Music Entertainment.
It also counted Cargo Records, PIAS, Elevation Sales, 88 Films, Sony Pictures, 101 Films, Fractured Visions, Screenbound, Trinity Creative Partnership, Morrisons and Sparkling Pine, as well as large retailers, and artists among its clients.
Utopia expanded into physical and digital music distribution in January last year when it acquired UK-based distributor Proper Music Group.
(Utopia also acquired another UK-based distribution and services provider for independent artists and record labels, Absolute Label Services, in February 2022).
The new facility being built as part of the deal with DP World joins Utopia’s other warehouses in Dartford, UK, operated by Proper Music Group.
Utopia’s deal with DP World follows the news in April that Utopia was laying off around 15% of its global workforce, totaling around 100 jobs.
That news arrived less than six months after a previous round of layoffs at the company in November, which saw 20% of its headcount – or around 230 positions – axed.
Also in April, MBW reported that the company was aiming to raise EUR €65 million ($72m) via a new shareholder option program.
In a letter issued to Utopia shareholders on Friday, April 21, obtained by MBW, the company said that the new capital would fund its operations until it becomes profitable, which it projects to be in June 2024.
In the letter, Utopia founder and Executive Chairman, Mattias Hjelmsted told shareholders that in recent years, Utopia has “deployed a ‘hyper growth’ scaling strategy intended to make use of the then lucrative market that strongly rewarded growth, without focus on immediate profitability”.
That so-called “hyper-growth scaling strategy” saw the company go on a hiring and acquisition spree in 2021 and the beginning of 2022.
Amongst the companies it bought during that time were Nashville-based financial services company, Lyric Financial and Quincy Jones-backed emotional data enrichment company Musimap.
Utopia’s acquisition of Cinram Novum; Proper Music Group; and Absolute Label Services, also formed part of that acquisition spree.
In December 2021, Utopia acquired US-based music industry directory ROSTR and Austria-based music data analytics platform, ForTunes. In February last year, Utopia acquired Liverpool-based music publisher and publishing administration company Sentric Music Group.
Those latter two companies have since been divested by Utopia.
Believe bought Sentric from Utopia in March, just a year after Utopia itself acquired the firm, while Utopia sold music industry directory and data platform, ROSTR, back to its founders in February.
Meanwhile, Utopia is reportedly being sued by US music technology company SourceAudio, which is accusing Utopia of reneging on an agreed acquisition deal.
“With physical music showing its resilience over and over again in recent times, we are delighted to be doubling down on our commitment to the sector with this £100m+ commitment.”
Drew Hill, Utopia Music
Drew Hill, VP of Distribution Services, Utopia Music, said: “With physical music showing its resilience over and over again in recent times, we are delighted to be doubling down on our commitment to the sector with this £100m+ commitment.
“With state-of-the-art facilities, robotics and increased capacity at the new warehouse, we can’t wait to capitalise on this expansion for both our clients and customers.”
“This contract is a significant step in our journey as we expand our logistics offerings in the UK, and we are excited about working with Utopia in a fast-growing industry.”
Rashid Abdulla, DP World
Rashid Abdulla, CEO and MD Europe, DP World, added: “This contract is a significant step in our journey as we expand our logistics offerings in the UK, and we are excited about working with Utopia in a fast-growing industry.
“We see this as a great opportunity to realise our investment in the best technological innovations to build agile, streamlined, and sustainable supply chain solutions that can respond to ever-changing challenges whilst minimising costs and reducing environmental impact.”
“Such a massive move is never without risk, but we will be working closely with all sides to attempt to minimise any teething problems.”
Kim Bayley, ERA
Kim Bayley, CEO of digital entertainment and retail association ERA, which represents more than 3,000 physical entertainment stores and home delivery retailers int he UK, said: “Despite the growth of streaming, physical formats are still an essential element if you want to have a hit album or video. We welcome this substantial vote of confidence in entertainment’s physical future.
“Utopia have proven themselves to be collaborative partners. Such a massive move is never without risk, but we will be working closely with all sides to attempt to minimise any teething problems.”
“We wish every success to this new endeavour, and the boost it will give to music consumption, jobs and exports.”
Sophie Jones, BPI
Sophie Jones, Chief Strategy Officer and Interim CEO of UK recorded music body BPI, said: “This landmark announcement, and the strong vote of confidence in British recorded music that it represents, also reminds us that music on physical format continues to thrive and remains an important part of how music is made, distributed and enjoyed alongside streaming.
“We wish every success to this new endeavour, and the boost it will give to music consumption, jobs and exports.”
BPI reports that 17.3m physical albums were sold in the UK in 2022 – 67.1% of which were CDs.
According to BPI, overall trade revenues from the consumption of music on physical formats in the UK fell 10.5% to £215.7 million in 2022, with revenue of £119.5 million from the purchase of albums on vinyl, up 3.1%.
BPI reports that this rise in vinyl trade revenues to offset a 23.7% drop in CD revenue to £89.5 million.
Vinyl now accounts for more than half (55%) of the revenue derived from music on physical formats in the UK. The BPI confirmed that in 2022, vinyl generated more trade revenue than CD for the first time since 1987.Music Business Worldwide
