Tuesday, June 06, 2023
Music streaming giant Spotify Technology SA has revealed plans to lay off 200 workers in its podcast unit, marking the company's second round of layoffs as it undergoes a business restructuring following years of substantial investment.
This move affects approximately 2% of Spotify's workforce and aligns the company with others such as Meta Platforms and Roku, both of which have also implemented job cuts in response to an uncertain economic climate.
In early trading, shares of the Sweden-based company rose about 0.5%, outperforming the overall market, which displayed muted activity. Spotify had previously made aggressive investments to establish its podcast business, aiming to attract more advertisers through the higher engagement levels offered by the format.
However, this expansion strategy resulted in a significant increase in operating expenditure, growing twice as fast as its revenue last year. The combination of rising interest rates and high inflation has compelled businesses to reduce spending on advertisements.
Consequently, Spotify initiated a 6% reduction in its workforce earlier in 2023 and announced the departure of Dawn Ostroff, who played a pivotal role in shaping the podcast business and navigating through controversies, including the backlash surrounding Joe Rogan's show for allegedly spreading misinformation about COVID-19.
Sahar Elhabashi, the head of the podcast business at Spotify, explained on Monday that the company has made the "difficult but necessary decision to make a strategic realignment." Additionally, Spotify intends to merge its Parcast and Gimlet studios into a single division called Spotify Studios, which will focus on producing Spotify originals.
Elhabashi further elaborated that Spotify will adopt a tailored approach for each show and creator, moving away from the previously uniform approach. This shift in strategy aims to provide greater flexibility and customisation to meet the unique needs of individual content creators and their shows.
By implementing these measures, Spotify aims to streamline its operations and optimise resources to adapt to the evolving economic landscape. The company recognises the importance of addressing cost management and ensuring long-term sustainability while maintaining its position as a prominent player in the music streaming and podcast industry.
The layoffs in the podcast division are part of the broader efforts to restructure the business and maintain a competitive edge in the face of ongoing challenges.