Spotify will cut 200 jobs from its podcast business as streaming giant reels from spending binge with £18m splurged on Harry and Meghan deal and £160m on Joe Rogan
- Swedish firm is reorganising and slimming down its internal podcast operation
- Spotify has spent big on Meghan and Joe Rogan deals to build up podcast unit
Spotify has announced it will cut 200 jobs from its podcasts business after major investment on shows featuring celebrities such as Meghan Markle and Joe Rogan.
The Swedish streaming giant said it was reorganising and slimming down its internal podcast operations, with redundancies equating to 2 per cent of its total workforce.
But it comes only five months after the company laid off 600 jobs and announced the exit of Dawn Ostroff, the executive who helped shape its podcast business.
Spotify had spent aggressively to build up its podcast unit in recent years, hoping the higher engagement levels offered by the format would bring in more advertisers.
But that led to a surge in its operating expenditure, which grew at twice the speed of its revenue last year. The company has also been affected by rising interest rates and high inflation which have results in businesses reducing spending on advertising.
Meghan launched her Archetypes podcast in August 2022 and has so far released 12 episodes
Spotify also signed up US broadcaster Joe Rogan in a deal worth an estimated £160million
Prince Harry and Meghan signed a lucrative deal with the streaming giant to host and produce podcasts, estimated to be worth around £18million, in late 2020.
READ MORE Judge rebukes Prince Harry’s barrister after the duke was ‘unavailable’ on the first day of his phone hacking trial against Mirror’s publisher because he was celebrating daughter Lilibet’s birthday
Meghan launched her Archetypes podcast in August last year which aims to ‘explore and subvert the labels that try to hold women back’, speaking to the likes of Serena Williams, Mariah Carey and Mindy Kaling.
But she has so far put out only 12 episodes – the last of which was in November. A second season of Archetypes is expected but a release date has not yet been given.
Spotify also signed up US broadcaster Joe Rogan in a deal worth an estimated £160million, but that faced claims it was spreading misinformation about Covid-19.
Sahar Elhabashi, vice president of Spotify’s podcast business, said in a memo that impacted staff would receive severance packages including extended health care coverage.
Ms Elhabashi also said yesterday that the company would be combining podcast networks Parcast and Gimlet – which it bought in 2019 – into its Spotify Studios operation as it reduces the focus on original programmes.
‘With these changes, we will accelerate into the next chapter for podcasts on Spotify with strong discovery and podcast habits for users, thriving monetisation and audience growth for creators, and a valuable, high-margin business for Spotify,’ Ms Elhabashi said.
Spotify also said it recently ’embarked on the next phase of our podcast strategy,’ and was moving to a ‘tailored approach optimised for each show and creator’.
‘Doing so requires adapting; over the past few months, our senior leadership team has worked closely with HR to determine the optimal organization for this next chapter,’ the company said in a statement.
People outside the Spotify headquarters building in Manhattan, New York, in January this year
‘As a result, we have made the difficult but necessary decision to make a strategic realignment of our group and reduce our global podcast vertical and other functions by approximately 200 people,’ it added, noting that it represented about 2 per cent of Spotify’s global workforce.
Spotify chief executive Daniel Ek (pictured) said that he got a ‘little carried away’ after a splurge of expensive podcast deals
The streaming giant, which is listed on the New York stock exchange, said in April it had passed 500million monthly active users with 210million paying subscribers.
The company also posted a first quarter operating loss of €156million (£134million), compared to an operating loss of €6million (£5million) a year earlier.
The widened loss was, according to the company, attributed to a higher headcount compared to a year earlier and changes in social charges.
In January, following similar moves by other technology industry giants, the streaming giant announced it was cutting around 600 jobs.
The platform has only occasionally posted a quarterly profit since its launch and has regularly posted annual losses, despite strong subscriber growth and having had a head start on its rivals such as Apple Music and Amazon Music.
Spotify has also invested more than €1billion (£900million) into podcasting in recent years, but analysts say the company has yet to prove the investment is bearing fruit.
Its chief executive Daniel Ek said in January that he got a ‘little carried away’ after a splurge of expensive podcast deals drove the company to the huge loss.
Source: Read Full Article