Spotify cuts 200 jobs as it restructures its podcast division

Credit: TT / Alamy / Lars Pehrson
Spotify Co-Founder and CEO Daniel Ek.

Music streaming giant Spotify has launched another round of layoffs, this one affecting its podcast division, which will be undergoing a restructuring.

In a statement released Monday (June 5), Sahar Elhabashi, VP, Head of Podcast Business, said Spotify would be reducing headcount in its podcast division by 200, representing about 2% of the company’s total workforce.

“We are expanding our partnership efforts with leading podcasters from across the globe with a tailored approach optimized for each show and creator,” Elhabashi said in the statement.

Elhabashi said the layoffs were part of a broader effort to move to “the next phase of our podcast strategy,” which “begins with maximizing consumption from the massive audience we’ve established through format innovation and ensuring that more creators in more places achieve success” and includes “the introduction of more business models to help more creators make meaningful money from their work.”

“This fundamental pivot from a more uniform proposition will allow us to support the creator community better. However, doing so requires adapting; over the past few months, our senior leadership team has worked closely with HR to determine the optimal organization for this next chapter,” the statement continued, adding that the staff reductions were a “difficult but necessary decision.”

The affected staffers will be supported “with generous severance packages, including extended healthcare coverage and immediate access to outplacement support,” Elhabashi said in the statement.

As part of the reorg, Spotify will merge two of its podcast studios, Parcast and Gimlet, into “a renewed Spotify Studios operation that will continue to produce a wide range of high-impact originals, including Stolen, The Journal, Science Vs, Heavyweight, Serial Killers, and Conspiracy Theories.”

Another studio, the Ringer, will continue operating separately.

“Both studios will greenlight new shows with an increased focus on always-on programming that drives strong, loyal audiences and attracts advertisers,” Elhabashi said.

Stockholm-headquartered Spotify expanded aggressively into the podcast space starting in 2019, attracting major names to the platform such Meghan Markle, Duchess of Sussex, and Joe Rogan, the sometimes controversial podcaster who has one of the largest prime-time US audiences in any medium.

The latest round of layoffs follows an announcement by Spotify in January that it would be cutting more than 500 jobs, a decision that CEO Daniel Ek indicated came as a result of overly aggressive expansion at the company.

“To offer some perspective on why we are making this decision, in 2022, the growth of Spotify’s OPEX outpaced our revenue growth by 2X. That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap,” Ek said in a letter to staff at the time.

In April, Spotify shut down its live audio app, Spotify Live, about two years after launching it. The company didn’t specify any particular number of job cuts associated with the move. However, some of the live shows on the app continued as pre-recorded shows on the main Spotify app.

“This fundamental pivot from a more uniform proposition will allow us to support the creator community better.”

Sahar Elhabashi, Spotify

The latest round of layoffs comes despite overall strong numbers at Spotify in recent quarters. The company’s latest earnings report, for Q1 2023, showed stronger-than-forecast subscriber growth, with a net addition of 5 million paid subscribers, bringing the worldwide total to 210 million.

Its total monthly active users – which includes paid subscriptions and advertiser-supported listeners, amounted to 515 million, up by 26 million from the previous quarter and significantly overshooting guidance for the quarter by 15 million.

The company generated €3.04 billion in revenue for the quarter, up 13% YoY on a constant currency basis, and posted an operating loss of €156 million.

In the statement Monday, Elhabashi stressed the podcast division’s successes, noting that it “is now the most-used audio podcast platform in most corners of the world and is also the No. 1 podcast publisher in the US.”

Podcast consumption on Spotify experienced 1,400% growth against its 2019 baseline, and ad revenue “experienced high double-digit growth from 2021 to 2022.”

Spotify isn’t the only DSP cutting back on staff amid a broad slowdown in capital flow to tech companies.

SoundCloud announced in August 2022, that it would be slashing 20% of its workforce, a move CEO Michael Weissman said was “necessary to ensure SoundCloud’s long-term success given the challenging economic climate and financial market headwinds.”

At the end of 2020, the Berlin-headquartered company reported having just under 400 employees, around 350 of them full-time.

SoundCloud followed that up with another round of layoffs in May of this year, affecting around 8% of its workforce.Music Business Worldwide

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