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Spotify confirms restructuring and downsizing of its podcasting business
By Chris Cooke | Published on Tuesday 6 June 2023
Spotify yesterday announced a restructuring and downsizing of its podcasting operations, with about 200 jobs set to be cut, which constitutes about 2% of the company’s total workforce.
The streaming firm really started ramping up its podcasting activities back in 2019, acquiring a number of podcasting platforms and production firms along the way, and entering into partnerships and exclusivity deals with some of the most successful podcasters in the business.
It was part of a bid to make Spotify the home of audio, rather than just music. The ultimate plan being to boost the company’s long-term profit margins, based on the assumption that, with podcasts – unlike music – it wouldn’t have to hand over 65-70% of its revenue every month to its licensing partners.
However, that plan to boost long-term profit margins was very expensive in the short term and further delayed the prospect of the streaming giant becoming properly profitable. And while the big splash in podcasting secured Spotify decent market share in terms of audience and listening figures, growth of the podcast business in terms of revenue has been much slower.
This meant that when Spotify started to look to cut its overheads late last year, reductions on the podcasting side of the business were inevitable. And when that search for cost savings resulted in a round of downsizing in January, the most senior exec to leave the business was Chief Content & Advertising Business Officer Dawn Ostroff, who had overseen the big push into podcasting.
In a statement yesterday, the firm’s Head Of Podcast Business Sahar Elhabashi bigged up Spotify’s achievements in the podcasting space, outlined a restructure that is “focused on delivering even more value for creators”, and then confirmed: “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”.
As part of the restructure, two of the podcast production companies Spotify bought back in 2019 will be combined “into a renewed Spotify Studios operation”. A third, The Ringer, will continue to operate as its own unit. Both Spotify Studios and The Ringer – Elhabashi added – “will greenlight new shows with an increased focus on always-on programming that drives strong, loyal audiences and attracts advertisers”.
As for the job cuts, Elhabashi went on: “We know news like this is never easy, especially for those impacted. These decisions are not something we take lightly. I want to express my appreciation for everything those leaving have done for podcasting and Spotify”.
“Those impacted by this change have already received an invite for a one-to-one conversation today with a member of our HR team”, she explained, “and we are focused on ensuring that each step in this process is taken with the utmost empathy and respect. The company will support these individuals with generous severance packages, including extended healthcare coverage and immediate access to outplacement support”.
Elhabashi’s statement then concluded: “Our continued success in growing the podcast ecosystem is predicated on the necessity that the Spotify machine is always in motion”.
“And with these changes”, she reckoned, “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. I want to thank everyone for your continued understanding and collaboration. I firmly believe in this team and that this next phase brings opportunities beyond anything we’ve seen”.
The formal announcement of cutbacks at Spotify’s podcasting business follows reports that the company is also ending an exclusivity deal with one of its high profile podcast partners, sports journalist Jemele Hill and her Unbothered Network.
