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Spotify fails to turn tide, fires 17% of its workforce

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Summary

Spotify, the music streaming giant, is laying off 17% of its employees, about 1,500 people, due to rising costs. CEO Daniel Ek argued that it was a choice between smaller layoffs each time in 2025 or a major restructuring now. Previous layoffs of 600 and 200 earlier this year weren't enough to turn the tide. Spotify was also spending too much on podcast deals such as those with Barack and Michelle Obama and Prince Harry and Meghan Markle, which reportedly cost $25 million for just 12 episodes. Ek said that the company needed to become "relentlessly resourceful" in order to meet its financial goals.

Q&As

How many employees is Spotify laying off?
Spotify is laying off 1,500 employees.

What was Spotify's financial situation prior to the layoffs?
Prior to the layoffs, Spotify posted a quarterly profit of €65 million.

How did Spotify try to increase its user base?
Spotify tried to increase its user base by banning password sharing, following Netflix's lead.

What did ValueAct warn about in February?
ValueAct warned about Spotify's rising costs in February.

What expensive podcast deals has Spotify reportedly made?
Spotify has reportedly made expensive podcast deals with Barack and Michelle Obama and Prince Harry and Meghan Markle, reportedly costing $25 million for just 12 episodes.

AI Comments

👍 Spotify's decision to take financial action now instead of smaller layoffs in the future is a smart move to help the company reach its goals. CEO Daniel Ek's transparency and honesty in the internal e-mail is also commendable.

👎 Spotify's recent decision to layoff 17% of its employees and restructure is a sign that the company has been making poor financial decisions and its expensive podcast deals with the Obamas and Markles have not been very beneficial for the company.

AI Discussion

Me: It's about Spotify's decision to lay off 17% of its employees. The CEO, Daniel Ek, said that the company was unable to sustain its costs and that he had to make the difficult decision to restructure the organization.

Friend: Wow, that's a lot of people losing their jobs. I wonder what this means for the future of the company.

Me: It could mean a lot of things. Firstly, it could mean that the company is restructuring to become more efficient. It could also mean that the company is struggling to stay profitable and needs to cut costs. Lastly, it could mean that the company is making strategic missteps, such as spending too much money on podcast deals. It's hard to say what the future of the company will be, but it's definitely a difficult time for Spotify and its employees.

Action items

Research other streaming services and their strategies to identify potential areas of improvement for Spotify.
Analyze the cost of podcast deals and develop a plan to reduce costs while still maintaining quality content.
Develop a plan to increase efficiency and productivity while reducing costs.

Technical terms

Layoffs: A layoff is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees for business reasons, such as personnel management or downsizing an organization.
Quarterly Profit: A quarterly profit is the amount of money a company earns in a three-month period.
Password Sharing: Password sharing is the practice of sharing passwords with other people to access online services.
ValueAct: ValueAct is an activist investment firm that takes large stakes in companies and then works to influence their strategy and operations.
Subscribers: A subscriber is a person who pays to receive a service, such as a magazine or newspaper, or access to a website or other online content.
Audiobooks: Audiobooks are recordings of books that are read aloud, usually by a professional narrator.
Podcasts: A podcast is an audio or video file that is available for download over the internet.
Resourceful: Resourceful means having the ability to find creative solutions to problems.