Following its October headcount reduction, Swedish streaming giant Spotify looks to another layoff round to remain profitable.
According to reports, music streaming giant Spotify (NYSE: SPOT) is planning a staff layoff this week. The latest Spotify layoff comes amid the sustained economic slowdown and follows last October’s headcount reduction. At a 2022 investors’ presentation, Spotify chief financial officer Paul Vogel admitted that times are hard. According to him: the Stockholm-based company is “clearly aware of the increasing uncertainty regarding the global economy.”
Although the company cut 38 employees in October 2022, it did not specify how many workers it would fire this time. Nonetheless, as last reported, Spotify had a staff force of roughly 9,800.
Spotify was also among tech companies seeking austerity measures to remain competitive and profitable. In October last year, the Swedish audio streaming and media services provider sacked 38 employees from its Gimlet Media and Parcast podcast studio. In addition, Spotify also shut down 11 original podcasts from its in-house studios to further lower costs. Some canceled podcasts include ‘How to Save a Planet,’ ‘Crime Show,’ and ‘Medical Murders’. Furthermore, affected staff of these discontinued podcast shows who were not fired, got reassigned to new shows.
Spotify Layoff Comes despite Expansive Investments in Podcast Businesses
Having invested heavily in acquiring podcast networks across the last three years, Spotify hit a rough patch last year. The company previously spent $1 billion in strategic business acquisitions of numerous audio broadcasting platforms. However, although Spotify had rights to shows like ‘Armchair Expert’ and ‘The Joe Rogan Experience,’ its shares dropped 66% in 2022. In addition, the Swedish music-streaming giant has reportedly failed to provide its investors returns. Nonetheless, Spotify’s board administration expects a profitable podcast business within the next one to two years.
In 2022, Spotify had a monthly active user base of more than 433 million.
Spotify, like many tech companies, onboarded several new employees during the pandemic. These hires were to handle the increased operational scale and service demand. However, since that pandemic era, the capital market, particularly tech stocks, has been in a tailspin. Throughout much of last year, investors shirked tech stocks and crypto assets in favor of more stable, safe-haven securities. These tech selloffs resulted in several industry players, including Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Meta (NASDAQ: META), employing cost-cutting measures. In addition to conducting mass layoffs, some measures also entailed shutting down ‘non-essential’ or ‘non-profitable’ operational activities.
On Friday, Google parent Alphabet Inc (NASDAQ: GOOGL) announced that it was laying off around 12,000 employees. According to the multinational tech conglomerate, this downsizing cuts across its global operations. Furthermore, Alphabet CEO Sundar Pichai also explained that the mammoth layoff represents approximately 6% of the company’s workforce. Pichai also said despite the global scale of the retrenchment, its impact would be immediate in the United States.
However, the Alphabet chief executive remains optimistic about the company’s artificial intelligence (AI) investments.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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