Spotify Announces Second Round of Layoffs

Spotify Technology has confirmed plans to cut 200 jobs from its podcast unit, marking its second round of layoffs as the company undergoes a significant restructuring process. This move comes after years of substantial investment in the podcast business, aiming to capitalize on higher engagement levels and attract more advertisers.

The reduction in workforce, which represents approximately 2% of Spotify’s employees, aligns the music-streaming giant with other industry players like Meta Platforms and Roku, who have also implemented job cuts due to economic uncertainties. Despite the news, shares of the Sweden-based company saw a modest increase of about 0.5% in early trading, outperforming the overall market.

Spotify’s aggressive investments in the podcast sector in recent years led to significant operating expenditure growth, surpassing the rate of revenue growth. However, with rising interest rates and high inflation, businesses have started to reduce spending on advertisements, creating a challenging environment for Spotify’s podcast business.

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Earlier in 2023, Spotify had already downsized its workforce by 6% and announced the departure of Dawn Ostroff, a key figure in shaping the company’s podcast business. Ostroff guided the business through controversies such as the backlash surrounding Joe Rogan’s show, which faced allegations of spreading misinformation about COVID-19.

Sahar Elhabashi, the current head of Spotify’s podcast business, stated on Monday that the company had made the “difficult but necessary decision to make a strategic realignment.” As part of the restructuring, Spotify will merge its Parcast and Gimlet studios into a single division called Spotify Studios, responsible for producing Spotify originals.

Elhabashi further emphasized that Spotify will adopt a tailored approach for each show and creator, departing from the previous uniform approach. This shift aims to optimize content creation and enhance the overall podcast experience for Spotify users.

The latest round of layoffs and the restructuring efforts demonstrate Spotify’s commitment to navigating the evolving podcast landscape while addressing the financial challenges faced by the company. As the Pakistani market eagerly follows these developments, the future of Spotify’s podcast business and its impact on the broader streaming industry remain subjects of great interest.