Spotify laid off 38 staff from its Gimlet Media and Parcast podcast studios in October. The music streaming giant has about 9,800 employees, according to its third-quarter earnings report. It also has an Irish operation, and bought Mark Little’s Kinzen in October last year.
“I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” chief executive Daniel Ek said in an email to staff published on Spotify’s website. “In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6 per cent across the company.”
Mr Ek cited Spotify’s operating expenditure growth as more than twice its revenue growth in 2022, as among the reasons for the cuts.
“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,” he said.
Tech companies added to their headcounts during the pandemic but were forced to make reductions in response to reduced advertising revenue and a shaky economic outlook. Amazon, Meta and Microsoft were among the biggest companies to announce staff reductions recently, while Google parent Alphabet said on Friday it will cut about 12,000 jobs, more than 6 per cent of its global workforce.
A Spotify spokesperson declined to comment on the upcoming cuts.
The company made a massive commitment to podcasting beginning in 2019. It spent over a billion dollars on acquiring podcast networks, creation software, a hosting service and the rights to popular shows like The Joe Rogan Experience and Armchair Expert.
Still, the investments have tested investors’ patience. Shares tumbled 66 per cent last year as investors questioned when they would begin seeing returns. Spotify executives said in June its podcast business would become profitable in the next one to two years. – Bloomberg