Warner Music's WEA Offering Buyouts Amid CD Sales Decline

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Ed Sheeran performs onstage during the Citi Concert Series on TODAY Presents Ed Sheeran at Rockefeller Plaza on July 6, 2017 in New York City. 

In a move to recalibrate the functionality of the company, WEA, the global distribution, marketing, sales and research arm of Warner Music Group, has sent buyout letters to about 130 employees dealing with physical product. The move appears to be in reaction to the declining CD sales in the U.S. in 2017 and in anticipation of a similar decline in the current year.

Sources say that WMG didn't specify its targeted reduction goals, but it's likely aligned with the 19.6 percent reduction in CD sales, as counted by Nielsen Music, for 2017, and also taking into account a similar anticipated decline for the current year. With the savings generated by the move, WMG is expected to redeploy the funding to the growing streaming business model. According to sources, employees have about 45 days to make their decision.

Even with the move, WMG is expected to continue to issue and service physical product to retailers as the company manages the decline of the CD format, which is progressing unevenly throughout the globe.

In the U.S. in 2017, Ed Sheeran's Divide and Bruno Mars' 24K Magic were WEA's top selling titles in the CD format with 450,000 units and 426,000 unit scanned, respectively, according to Nielsen Music.

A followup letter, obtained by Billboard, to all WEA employees from WEA president Tony Harlow stated. "WEA has always been at the forefront of evolution in the industry, and the current shift towards digital and streaming is no exception. As our business continues to evolve, and in order to maximize our artists' impact globally, we are realigning resources within WEA."

Harlow continued that the focus on the effort toward those working with physical music carriers in the product and sales, and operations segments of the WEA work force is to allow those "valued colleagues in those areas of WEA the opportunity to make choices of their own," which is why the company presented those staffers with a voluntary resignation program.