Spotify Technology SA, the prominent music streaming platform, has announced its plans to lay off 200 employees in its podcast unit, marking the second round of layoffs as part of its ongoing business restructuring. This move, affecting approximately 2% of Spotify’s workforce, aligns the company with others in the industry, such as Meta Platforms and Roku, who have also implemented job cuts in response to the uncertain economic climate.
Despite the announcement, Spotify’s shares rose about 0.5% in early trading, outperforming the overall market. The company had previously made significant investments to establish its podcast business, aiming to attract more advertisers through the highly engaging format. However, this expansion strategy resulted in a substantial increase in operating expenditure, growing at twice the rate of its revenue last year.
The combination of rising interest rates and high inflation has led businesses to reduce spending on advertisements, prompting Spotify to initiate a 6% reduction in its workforce earlier in 2023. The departure of Dawn Ostroff, who played a key role in shaping the podcast business, was also announced. She navigated through controversies, including the backlash surrounding Joe Rogan’s show for alleged COVID-19 misinformation.
Sahar Elhabashi, the head of Spotify’s podcast business, explained that the company has made a “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 customization to meet the unique needs of individual content creators and their shows.
By implementing these measures, Spotify aims to streamline its operations, optimize resources, and adapt to the evolving economic landscape. The company recognizes 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 broader efforts to restructure the business and maintain a competitive edge in the face of ongoing challenges.