Audio streaming giant Spotify is announcing today strategic changes to its podcast business including the departure of 200 employees or 2% of its global workforce as this segment of the company is expected to enter a new stage of its development.
In a memo to employees, Sahar Elhabashi, Spotify’s VP and Head of Podcast Business, said that the “necessary” decision to cut staff comes as the company is pivoting to deliver more value for podcast creators.
This new wave of forced departures is taking place less than 5 months after the company trimmed its headcount by 6% alongside multiple other tech firms amid the latest changes in the macroeconomic environment, which include expectations of a global economic slowdown.
Affected employees have been offered severance packages with extended health benefits and career placement support. “These decisions are not something we take lightly”, Elhabashi emphasized. She further commented that the departed individuals have already received an invite for a 1:1 conversation today with a member of our HR team.
Podcasts Continue to be Central to Spotify’s Expansion Strategy
Since entering the podcast space in 2019, Spotify (SPOT) has transformed this content format after attracting 100 million listeners and supporting 5 million podcast shows within its platform.
Elhabashi said the restructuring stems from feedback that creators want improved discovery and more monetization options. The changes aim to maximize consumption, expand analytics tools, and broaden advertising and monetization models to help creators make more money out of their content.
Under the new strategy, Spotify plans to provide a more “tailored approach optimized for each show and creator”. To achieve this, the tech leader emphasized, it is crucial that the firm realigns its “global podcast vertical and other functions” to make room for these organizational changes.
Despite the cuts, Spotify will continue to produce and license original shows through its Spotify Studios and The Ringer podcast operations. Elhabashi said Spotify Studios will combine Gimlet and Parcast under “a renewed Spotify Studios operation” that will broaden programming.
Julie McNamara will continue leading Spotify Studios along with Liliana Kim and Liz Gateley, while Bill Simmons will continue to be the head of The Ringer and of the Podcast Innovation and Monetization department. Spotify also plans to expand teams that partner with podcast creators.
Elhabashi said the organizational changes will allow Spotify to “accelerate into the next chapter for podcasts” with stronger discovery and monetization for both creators and users. However, she acknowledged that “saying goodbye to close colleagues and friends” is always a difficult experience.
Spotify Has Been Busy Making Changes and Battling AI-Generated Content in 2023
Spotify has been making significant changes to its platform and business this year including the launch of a new AI-powered feature called DJ that provides users with a selection of songs every day based on their listening preferences and overall perceived mood.
In addition, the company redesigned its mobile interface to embrace a more social-media-like look that includes the possibility of sharing stories and other content formats that artists can use to further engage with their audiences and followers.
In late April, the company surpassed 500 million monthly active users, the majority of which were ad-supported accounts. Premium subscribers as a percentage of the total user base have been on a downtrend, moving from 43.1% in Q1 2022 to 41.9% during the first three months of this year.
Ad-supported accounts account for only a small fraction of Spotify’s total revenues, meaning that this downtrend could be a cause for concern. In addition, the firm has been battling with AI-generated songs and “artificial streamers”, which are bots created to boost a track, artist, or album’s listening statistics.
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