Spotify Technology SA (NYSE: SPOT) shares experienced a 3.03% increase following an announcement by the streaming media platform regarding job cuts. Spotify revealed that it would be reducing its workforce by 200 employees, which accounts for approximately 2% of its total staff. This move comes as Spotify undergoes significant changes in its podcast business.
The decision to cut jobs in the podcast unit marks the second round of layoffs for the company. It comes as Spotify strives to restructure its operations after years of substantial investment. Spotify joins other major companies like Meta Platforms and Roku, which have also implemented job cuts in response to economic uncertainties.
In recent years, Spotify had made significant investments in its podcast business. The goal was to attract more advertisers by capitalizing on the higher engagement levels associated with the podcast format. However, this aggressive expansion resulted in a surge in operating expenditure, outpacing revenue growth last year. The combination of rising interest rates and high inflation has also prompted businesses to scale back their ad spending.
In response to these challenges, Spotify had previously reduced its workforce by 6% earlier in 2023. In addition, Dawn Ostroff, a key figure in shaping Spotify’s podcast business, departed from the company. She played a crucial role in navigating controversies such as the backlash surrounding Joe Rogan’s show and alleged COVID-19 misinformation.
In response to these challenges, Spotify previously cut 6% of its workforce earlier in 2023 and announced the departure of Dawn Ostroff, a key figure in shaping the company’s podcast business. Ostroff navigated the company through controversies, including backlash surrounding Joe Rogan’s show for alleged COVID-19 misinformation.
Sahar Elhabashi, the current head of Spotify’s podcast business, explained that the company had made a “difficult but necessary decision to make a strategic realignment.”
In addition, Spotify announced the merger of its Parcast and Gimlet studios. The two will now operate as a single entity called Spotify Studios, with a primary focus on producing Spotify originals.
Elhabashi emphasized that the company will now adopt a tailored approach for each show and creator, moving away from the uniform approach previously employed.