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The music streamer takes a step back from its major investments amid layoffs
Layoffs in the tech space have been rocking the industry for more than a year now. Almost every major company has recently announced a series of job cuts. Several companies are suffering a downturn after years of economic success and heavy hiring. But many companies see the state of the economy as uncertain, and workforces are feeling the squeeze.
Amazon (AMZN) - Get Free Report just confirmed that it plans to cut a record 18,000 jobs, affecting roles in Amazon Stores, PXT organization, and upper-management positions. In November, Meta Platforms (META) - Get Free Report eliminated 11,000 jobs -- its largest round of layoffs since going public in 2012. The company points to a drop in ad spending and the rising costs of its Reality Labs division as the cause of the cuts.
Microsoft (MSFT) - Get Free Report is also undertaking rounds of job cuts that will last result in the loss of 10,000 jobs. Google (GOOGL) - Get Free Report is also clocking in with the elimination of 12,000 jobs. Apple (AAPL) - Get Free Report has managed to stay out of the fray, but the company has frozen hiring.Â
It's no surprise that Spotify (SPOT) - Get Free Report announced a 600-job cut to its workforce. And some of those cuts could affect some of your favorite podcasts.
Getty Images/TheStreet
Between 2021 and 2022, the music streaming giant looked to the podcast market to boost profit. The company, hoping for a success similar to Apple Podcasts, has poured more than $1 billion into the medium, including buying the exclusive streaming rights for the controversial podcast "The Joe Rogan Experience." The company spent another several million to acquire podcast production houses Gimlet Media and The Ringer.Â
Notably, the layoffs come along with a major change in leadership at Spotify. Chief Content Officer Dawn Ostroff, who spearheaded the podcast initiative, will be leaving the company. Unfortunately, it looks like the big push to podcasts only resulted in 7% of total Spotify listening in Q1 of 2022. Additionally, the subscriber-only structure has made certain popular shows more exclusive, and a lack of users has caused major listenership drops.
The company recently froze its U.S. budget for new podcast content, and it chose not to renew its exclusive deal with writer and influencer Brené Brown. Spotify, it seems, missed the early-pandemic podcast boom, and the cost of trying to catch up will be felt by its listeners (and its staff).
According to the streamer’s Q3 earnings call, the company had been closely monitoring the domino effect working its way through tech’s global economy. 2022 was an intentional investment year, which hit the streamer’s gross revenue.
When questioned about expected improvements in revenue for the upcoming year, Chief Financial Officer Paul Vogel indicated that the company was reevaluating its podcast content.
"We've talked about particularly things like podcast that has been a drag, and that should turn into less of a drag and then eventually a benefit moving forward," he told shareholders during the call. "And nothing has changed at all in terms of our expectations there."
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