Spotify reduces staff by 2% and provides severance deal to 200 employees.
The music streaming platform, Spotify Technology SA (NYSE: SPOT), has announced plans to reduce its workforce by 2%, which will result in up to 200 employees losing their jobs.
According to the company’s announcement, this reduction in workforce is part of an effort to diversify the way Spotify handles global partnerships with podcasters. This move is specifically targeted at the podcast division of the company and comes after a round of layoffs in January.
Sahar Elhabashi, the Vice President of Spotify, announced the news in a memo to all staff. He believes that this move will help the organization channel appropriate support towards the creator community.
The firm consulted with its HR team on optimizing the organization and made the difficult decision to make a strategic realignment of the group and reduce the global podcast vertical and other functions by approximately 200 people, which represents 2% of Spotify’s workforce.
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Support for the Affected Spotify Employees
Affected individuals will receive a severance package, including extended healthcare coverage and immediate access to outplacement support. As of 2020, the digital music streaming giant had a workforce of 8,359 people, with 4,332 of them based in the United States, according to a Securities and Exchange Commission (SEC) filing.
However, in October 2022, the company decided that the services of 38 employees from its Gimlet Media and Parcast podcast studio were no longer required, leading to a headcount reduction. Again in January 2023, Spotify hinted at another layoff round, but this time around, Spotify had a workforce of around 9,800.
The current layoff is attributed to a sustained economic slowdown. A statement by Paul Vogel, the Chief Financial Officer of Spotify, suggested that the Stockholm-based company is “clearly aware of the increasing uncertainty regarding the global economy.”
In addition to the series of layoffs, Spotify was forced to cancel 11 original podcasts from its in-house studios, including ‘How to Save a Planet’, ‘Crime Show’, and ‘Medical Murders’.
Parcast and Gimlet will be combined into a new Spotify Studios operation.
Spotify Spends a Fortune on Podcast Unit
Spotify’s market expansion drive over the year has been outstanding. The company attempted to diversify and increase its earnings from music streaming via aggressive expansion to other revenue-generating formats like podcasts.
It is worth noting that Spotify has made significant efforts to expand its podcast unit, including signing sponsorship deals with many top entities like Meghan Markle, the Duchess of Sussex, her husband Prince Harry, and Joe Rogan, the online personality.
At one time, the firm inked a podcast deal with renowned TV personality Kim Kardashian, and this caused its shares to jump significantly. The music streaming firm has spent over $1 billion in strategic business acquisitions of numerous audio broadcasting platforms.