17% of Spotify employees face the music in latest cost-cutting shuffle
- Reference: 1701710108
- News link: https://www.theregister.co.uk/2023/12/04/spotify_layoffs/
- Source link:
CEO Daniel Ek made the announcement in a [1]letter to staff today. As mentioned, [2]Q3 2023 was Spotify's first profitable quarter in a while, with the company attributing its €65 million ($70 million) net income largely to reduced operating expenses following layoffs in [3]January and [4]June , and a subscription [5]price hike in July.
January's layoffs affected teams across the company, while June's round eliminated 200 jobs from the podcasting team.
[6]
"I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance," Ek said in today's letter to staff. Around 1,500 will be laid off based on Spotify's reported Q3 headcount of 9,241 people.
[7]
[8]
It's unclear from where in the company staff will be culled – we asked, but Spotify only confirmed that approximately 1,500 jobs were being cut "across markets and functions."
Ek further justified the layoffs by saying there was still a gap "between our financial goal state and our current operational costs," which he further attributed to Spotify's bloated headcount in the wake of mass pandemic hiring, [9]much like other tech companies have done through multiple waves of layoffs this year.
[10]
"In 2020 and 2021, we took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals," Ek said. "These investments generally worked," the Spotify CEO added, but "our cost structure for where we need to be is still too big."
[11]Still got a job at the end of this week? You're lucky, as more layoffs hit the tech industry
[12]LinkedIn lays off nearly 700 staff, engineers to suffer the most
[13]Spotify now using AI to clone podcaster's voice into Spanish
[14]Profits just keep rolling in at T-Mobile US. So only thing to do is axe 5,000 workers
Ek admitted that much of Spotify's increased output is "linked to having more resources," i.e. humans doing the work, though at the same time he claimed redundant work is still going on.
"We still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact," Ek said. "We have to become relentlessly resourceful."
In other words, we really got ahead of ourselves with all that hiring, and even though we've got costs under control and much of our growth is thanks to all of you, it's still not enough, so bye.
Of course, for those Spotify employees remaining, it may mean a larger workload. "A reduction of this size will make it necessary to change the way we work, and we will share much more about what this will mean in the days and weeks ahead," Ek said in closing.
[15]
The company plans to hold a meeting Wednesday to further discuss its plans with remaining employees.
Spotify staff caught up in this cut will receive an average of five months' severance pay, plus healthcare coverage for their entire severance period.
But why now, when the holiday season is in full swing? "We've taken this action from a position of financial strength, on the best timeline for our organization, while ensuring that the impacted employees were treated respectfully and supported," a Spotify spokesperson told us. ®
Get our [16]Tech Resources
[1] https://newsroom.spotify.com/2023-12-04/an-update-on-december-2023-organizational-changes/
[2] https://investors.spotify.com/financials/default.aspx#quarterly-results
[3] https://www.theregister.com/2023/01/23/spotify_layoffs/
[4] https://newsroom.spotify.com/2023-06-05/an-update-on-changes-to-spotifys-podcast-business-june-2023/
[5] https://www.cnbc.com/2023/07/24/spotify-increases-prices-for-its-premium-subscription-plans.html
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZW5aGUqbFW7CAMqLeDPpKAAAAJQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZW5aGUqbFW7CAMqLeDPpKAAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZW5aGUqbFW7CAMqLeDPpKAAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[9] https://www.theregister.com/2023/11/10/amazon_google_snap_zillow_layoffs/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZW5aGUqbFW7CAMqLeDPpKAAAAJQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://www.theregister.com/2023/10/21/register_kettle_layoffs/
[12] https://www.theregister.com/2023/10/16/linkedin_layoffs/
[13] https://www.theregister.com/2023/09/27/spotify_now_using_ai_to/
[14] https://www.theregister.com/2023/08/25/t_mobile_layoffs_5000/
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZW5aGUqbFW7CAMqLeDPpKAAAAJQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[16] https://whitepapers.theregister.com/
What do all the staff do?
I'm not a spotify user, is it something more than just a subscription based music player app?
No obligation on artists to make their content available to Spotify, if they believe they're being ripped off.
In the digital music industry, artists face a systemic issue that extends beyond just Spotify. While Spotify is one of the largest and most visible players, many other digital music platforms also exist, each with their own payment structures and terms. The reality is that the digital music marketplace, as a whole, tends to offer compensation that independent artists find insufficient and this space is in a desperate need of regulation.
Or you are one of those types who could live without art?
Or you are one of those types who could live without art?
Congratulations on your pithy little ad hominem, makes you feel superior does it?
The reality is that the digital music marketplace, as a whole, tends to offer compensation that independent artists find insufficient
As has always been the case. Absent a large enough audience they'll have to keep themselves afloat until they hit the big time, or give up. It's not anybody's fault that independent and emerging artists don't have a viable business model.
and this space is in a desperate need of regulation
You think lawmakers should set a price for music so that people who aren't good enough to make it in the mass market should be subsidised so they can live from their hobby, funded by somebody else?
makes you feel superior does it?
Au contraire. It's fascinating that some people can live without it.
Absent a large enough audience they'll have to keep themselves afloat until they hit the big time, or give up. It's not anybody's fault that independent and emerging artists don't have a viable business model.
You could say it about any profession. Surgeons should be able to support themselves until they fix the patient big time. Warehouse workers should keep themselves afloat until they put their 1000th OLED TV on the shelf without breaking. It's not anybody's fault bricklayers don't have viable business model (if there was such a thing as Spotify for Bricklayers).
As has always been the case
Appeal to tradition. Remember that at some point one could have said that to someone saying slavery is wrong. "We always had slaves".
You think lawmakers should set a price for music so that people who aren't good enough to make it in the mass market should be subsidised so they can live from their hobby, funded by somebody else?
We already have laws, but institutions who are supposed to enforce them may need a nudge. Workers are entitled to a minimum wage for their time, at very least if they work at a for profit business.
Au contraire. It's fascinating that some people can live without it.
I don't understand? Spotify not paying what you consider 'fair' won't make musicians stop writing music, or artists stop, erm... arting?? It never has, and it never will, as generally artistic people express themselves regardless.
You could say it about any profession.
Yes, in general that's how it works isn't it?
Surgeons should be able to support themselves until they fix the patient big time.
That's how it works... yes... Often higher skilled professions will incur a much greater 'no decent income' time at the start too. That's why students work in bars or restaurants.
Warehouse workers should keep themselves afloat until they put their 1000th OLED TV on the shelf without breaking.
That doesn't make sense, but warehouse workers should be paid for their work, yes. That pay will keep them afloat.
It's not anybody's fault bricklayers don't have viable business model (if there was such a thing as Spotify for Bricklayers).
Most bricklayers lay bricks. That's been a fairly viable business model for a good while now.
Appeal to tradition. Remember that at some point one could have said that to someone saying slavery is wrong. "We always had slaves".
???? And people are being forced into writing music? I'm not sure comparing a badly paid (in general) profession someone enters by choice to human trafficking and enslavement is helpful, or accurate.
Workers are entitled to a minimum wage for their time, at very least if they work at a for profit business.
And any musician can go and work for a 'for profit' business and get paid that minimum wage. However if you work for yourself you need to convince enough people as to the merits of your output, be that a lovely tune or a fine oak table, to pay for it.
The problem isn't really Spotify, it's people.
Throughout history artistic people have been exploited by business people. It's a weird symbiotic relationship that I'm not sure you can ever really fix. How many now famous painters were poor in their lifetime? There'll always be someone with a mythical pot of gold, and there'll always be someone talented but naive to fall for that.
Just once
I'd love to see a CEO get up and say that they are going to be among the redundancies, and without their massively bloated salary they were able to keep 10-20 additional regular staffers employed.
If they can lay off this percentage of the staff without doing harm to the business it makes you wonder why they were all there in the first place. The comment about doing work around the work might be a clue. It sounds like they were all doing busy work showing each other PowerPoints of their spreadsheets which analysed stuff to no possibly useful level of detail.
Don't forget the tradition in all large organisations is to grow and grow, then announce sizeable cutbacks based on precisely zero planning or analysis, and then two quarters later they're hiring because they cut back to much, and/or lost people with difficult to replace skills.
In terms of what all those people are doing, it'll be the usual: 10% of all staff will be doing Powerpoint presentations that change nothing - experience tells me these people will all be staying. The others who will see cuts will be doing stuff like coding, IT architects and planners, R&D, people who do commercial agreements with IP rights holders, market research, sales and marketing, finance (accounts payable and receivable don't sort themselves out, anywhere, nor management accounting, statutory reporting, tax accounting), legal (we might hold them in low regard, still an evil necessity). HR is widely despised, but a corporate necessity too. Then there will be people tallying and reporting emissions, people doing corporate responsibility stuff, procurement teams to buy the stuff Spotify uses, facilities managers etc etc. For any sizeable corporation there's a shed-load of unglamorous but essential activities that keep the wheels turning. And many of those functions have to be done at a jurisdiction/country level.
I forget what show it was, but there was some radio show where they started off just trying to answer some seemingly simple question about 1D UPC barcodes. And it turned into this huge rabbit hole about how there's literally an agency in charge of doling those things out, and then the radio show decided they would put together a quick comic book to explain everything. That got them into how comic books generally have to be a certain length, and specific size, because that's how printing companies are set up to deal with it. Trying to add like one extra page would increase the costs significantly. Then trying to book an artist to actually draw the frames was a challenge. Every single seemingly simple step ended up involving all kinds of hidden complexities.
If you think about a company like Spotify and figure all the people you know they need (programmers, a couple system admins, and so on) there is probably 2-3 support people who are needed to facilitate those people being able to do their jobs. At most companies, getting approval for a headcount can often be the product of months, even years, of fights to justify the expense with the beancounters. It's generally not like companies just start hiring people willy-nilly.
Who says it won't do harm to the business? It just means that the staff remaining now get to do their job plus the job of 1-2 of their former colleagues... all for the same salary. Eventually those people will become bitter husks of a human or just stop giving a shit, assuming they don't leave for another job.
What on earth are 10,000 people doing there anyway?
Trying to help the company meet its performance targets. Let me offer a comparison:
Sky has 29,000 employees serving 23m customers (or less, the 23m is "customer relationships so may be products), with revenue of about £14bn across the UK and Ireland. They're essentially a two country pay TV middleman.
Spotify has c10,000, serving 220m+ paying customers in 184 countries with revenue of about £9bn. And they're essentially a many, many country audio streaming middleman.
So comparing the two, seems Spotify are surprisingly lean.
Mindset
You have to have a certain mindset to work for a company that is ripping off artists.
No sympathy there.