Sun. Dec 22nd, 2024
alert-–-breaking:-spotify-will-slash-17%-of-its-workforce-in-the-second-round-of-cuts-this-year-after-a-series-of-high-profile-investments-including-joe-rogan,-call-her-daddy-and-harry-and-meghan-costing-almost-$300millionAlert – Breaking: Spotify will slash 17% of its workforce in the second round of cuts this year after a series of high profile investments including Joe Rogan, Call Her Daddy and Harry and Meghan costing almost $300million

Spotify has become the latest tech giant to announce major layoffs with the streaming giant’s CEO Daniel Ek announcing that around 1,500 staff are being cut due to its growth slowing ‘dramatically’ following years of heavy investment in podcasting. 

The Swedish company currently has a staff of around 9,000 with Ek saying in a memo that cuts will ‘rightsize our costs’ while conceding that it would be ‘incredibly painful for our team.’ 

‘I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented and hard-working people will be departing us,’ Ek said.

In October, Microsoft laid off nearly 700 people from its social media site LinkedIn, bringing the total layoffs this year to nearly 11,000 for the company. 

Since August 2022, there have been mass layoffs at Twitter, where 7,500 jobs were shed as part of Elon Musk’s takeover, another 11,000 people were axed at Facebook while Google let go 12,000 people and Amazon meanwhile served notice to around 18,000 workers. Around 225,000 tech jobs were lost in total in 2023 so far. 

Last January, Spotify cut around six percent of its workforce, Monday’s announcement dwarfs that. Ek said the company hired more in 2020 and 2021 due to the lower cost of capital and while its output has increased, much of it was linked to having more resources.

Spotify CEO Daniel Ek, shown here, said that he understood that the cuts would be 'incredibly painful' for the company

Spotify CEO Daniel Ek, shown here, said that he understood that the cuts would be ‘incredibly painful’ for the company

This follows the company axing six percent of its workforce earlier this year

This follows the company axing six percent of its workforce earlier this year

According to the Financial Times, Spotify execs have been trying to cut costs since the company’s ‘expensive push into podcasting’ which ‘tried investors’ patience.’ 

Spotify’s investments

Since 2018, Spotify has been investing heavily in podcasting, signing some of the biggest names in the industry to exclusive deals. 

Joe Budden

Former rapper Joe Budden’s music podcast was the first major show to sign exclusively with Spotify in 2018. 

Though the amount the company paid for exclusivity, he announced in 2023 that he walked away from a $20 million offer to extend the agreement. 

 Harry and Meghan

The former royal couple signed a $20 million deal to develop audio content with Spotify in 2020.

The Wall Street Journal reported that after the deal was signed, executives soon became frustrated with how long it was taking to develop projects.

The two parties quietly walked away from the deal in the summer of 2023. 

The Ringer

In 2020, former ESPN scribe Bill Simmons sold his Ringer network of podcasts to Spotify for a purported $200 million. 

As part of the deal, Simmons joined the streaming giant’s board of directors. 

The Joe Rogan Experience

In May 2020, Spotify spent $100 million to secure the rights for former Fear Factor host Joe Rogan’s massively successful podcast.

This led to a cadre of artists, most notably Neil Young, asking for their music to be removed from the platform, alleging that Rogan spread misinformation about Covid-19.

Megaphone

In November 2020, Spotify bought the Megaphone podcast from The Slate Group for $235 million. 

Call Her Daddy

Another massively successful podcast joined the Spotify stable in June 2021, Call Her Daddy, was purchased from Barstool Sports for a cool $60 million. 

 

In July, Harry and Meghan announced that they had parted away from Spotify after they signed a $20 million exclusive podcast deal in 2020. 

The ending of the deal came just a year after the debut of Markle’s show, Archetypes, which boasted Serena Williams as its first guest. 

It topped Spotify charts in seven countries, including the U.S. and the U.K., and it won the top podcast award at the People’s Choice awards last year.

‘I loved digging my hands into the process, sitting up late at night in bed, working on the writing and creative. And I loved digging deep into meaningful conversation with my diverse and inspiring guests, laughing and learning with them, and with each of you listening,’ Meghan, the Duchess of Sussex, said at the time.

The show also had as guests Mariah Carey, Trevor Noah, Mindy Kaling and Paris Hilton.

In January, Spotify said that it would be combining podcast networks Parcast and Gimlet into its Spotify Studios operation 

Other major investments saw the company buy podcasts such as The Joe Rogan Experience, which created controversy as many artists, including Neil Young, demanded their music be removed from the platform over allegations that Rogan spread Covid-19 misinformation. 

In the third quarter the company swung to a profit, aided by price hikes in its streaming services and growth in subscribers in all regions, and the company forecast that its number of monthly listeners would reach 601 million in the holiday quarter.

On Monday, he said a reduction of this size will feel large given the recent positive earnings report and its performance.

‘By most metrics, we were more productive but less efficient. We need to be both,’ Ek said.

‘I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance.. We debated making smaller reductions throughout 2024 and 2025,’ Ek said. 

‘Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives.’

According to Business Insider, artists make around $.003 and $.005 per stream, though Spotify itself does not pay per stream. 

Instead, they pay per ‘streamshare,’ a figure that is determined by adding up how many times music owned or controlled by a particular rights holder is streamed, divided by the total number of streams in the market it is streamed in each month.

Last month, Spotify announced a new policy regarding royalty payments, eliminating payment for songs with less than 1,000 annual streams starting in 2024.

This news comes as many Spotify users enjoy their Spotify Wrapped annual breakdown of what they listened to over the last year. 

In a message to fans who streamed him regularly, comedian Weird Al Yankovic joked: ‘It’s my understanding that I had over 80 million streams on Spotify this year. So, if I’m doing the math right that means I earned $12.’ 

Experts believe that the company is attempting to recoup losses made from an expensive foray into podcasting which saw Spotify ink a deal with Joe Rogan as well as Harry and Meghan

Experts believe that the company is attempting to recoup losses made from an expensive foray into podcasting which saw Spotify ink a deal with Joe Rogan as well as Harry and Meghan

Tech job cuts – including mass layoffs at Meta and Twitter – are accelerating 

In recent months, several tech companies have announced cost-cutting measures, with Amazon, Apple and Google-parent Alphabet all announcing hiring slowdowns or freezes.

For the tech sector, the pandemic boom has turned to a post-pandemic bust, as increasing interest rates rock share prices and inflation cuts into profits.

The sector shed 9,587 jobs in October, the largest monthly total since November 2020, according to data from consulting firm Challenger, Gray & Christmas cited by Bloomberg. 

Total job cuts announced by US-based employers jumped 13% to 33,843 in October, the highest since February 2021, a report said.   

PayPal 

PayPal has announced it will cut back around 7% of its total workforce, or about 2,000 full-time workers, as the digital payments company contends with what it calls ‘the challenging macro-economic environment’. 

PayPal said it will make the cuts over several weeks, with some of its organizations affected more than others. 

The company did not further specify. PayPal is the parent of Venmo, Xoom and Honey, among other brands. The company is based in San Jose, California. 

‘Over the past year, we made significant progress in strengthening and reshaping our company to address the challenging macro-economic environment while continuing to invest to meet our customers’ needs,’ PayPal President and CEO Dan Schulman said Tuesday in a statement.

‘While we have made substantial progress in right-sizing our cost structure, and focused our resources on our core strategic priorities, we have more work to do.’

Dataminr

News gathering app Dataminr announced the axing of 20 percent of its staff in November 2023 thanks mainly due to advancements in its artificial intelligence platform. 

Alphabet

Google’s parent company Alphabet is axing 12,000 jobs in the latest round of white collar layoffs sweeping across the tech sector.

Sundar Pichai, Alphabet’s CEO, said the losses affect teams across the company including recruiting and some corporate functions, as well as some engineering and products teams.

Pichai said in the note: ‘I am confident about the huge opportunity in front of us thanks to the strength of our mission, the value of our products and services, and our early investments in AI.

‘To fully capture it, we’ll need to make tough choices. So, we’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we’re eliminating reflect the outcome of that review. They cut across Alphabet, product areas, functions, levels and regions.’

Meta 

The Facebook-parent said in November it would cut 13% of its workforce, or more than 11,000 employees, in one of the biggest tech layoffs this year as it grapples with a weak advertising market and mounting costs.

Like its peers, Meta aggressively hired during the pandemic to meet a surge in social media usage by stuck-at-home consumers. 

But the pandemic boom-times have petered out as advertisers and consumers halt spending in the face of rising costs and rapidly increasing interest rates.

After plunging billions into CEO Mark Zuckerberg’s Metaverse vision with little to show for it, Meta has been faced with rising costs and shrinking profits.

Meta, once worth more than $1 trillion, is now valued at $256 billion after losing more than 70% of its value last year alone. 

‘Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,’ Zuckerberg said in a message to employees, according to Reuters.

‘I got this wrong, and I take responsibility for that.’

On a short call, a red-eyed Zuckerberg addressed employees but took no questions. 

He stuck to a script that closely followed the wording in the morning’s blogpost and called the increased investments in e-commerce a ‘big mistake in planning.’

Twitter

Twitter laid off half its workforce across teams ranging from communications and content curation to product and engineering following Elon Musk’s $44 billion takeover.

The cutbacks affected around 3,700 employees, who learned their fate by email last week. 

However, Bloomberg reported Twitter was reaching out to dozens of employees who lost their jobs, asking them to return.

Dropbox

In April, Dropbox made 16 percent of its staff, around 500 people, unemployed. 

Roku

Streaming giant Roku ditched 10 percent of its workforce in September.  

Salesforce

In January, cloud-based software company Salesforce announced it will lay off 10% of its employees or about 8,000 workers.

CEO Marc Benioff cited a rough period for the tech sector as well as over-hiring during the coronavirus pandemic leading to the decision. 

Several weeks ago, it quietly laid off hundreds of employees.

‘Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition,’ a Salesforce spokesperson told CNBC in a statement in November.

Salesforce had 73,541 employees at the start of last year – it is the largest employer in the San Francisco area. 

Salesforce said in an August filing that headcount rose 36% in the past year ‘to meet the higher demand for services from our customers’. 

Amazon

Amazon said it would lay off 18,000 corporate and technology jobs in what will be the largest job cuts in the company’s history. 

Amazon reportedly lost $1trillion over the year after its stock plummeted from a high during the pandemic. 

The move comes after the company put a hiring freeze in place, affecting major teams including Prime Video, Alexa and Amazon Fresh.

‘We’re facing an unusual macroeconomic environment, and want to balance our hiring and investments with being thoughtful about this economy,’ Beth Galetti, senior vice president of people experience and technology at Amazon, wrote in a memo, seen by the Wall Street Journal.

Intel

Intel Corp’s CEO Pat Gelsinger told Reuters ‘people actions’ would be part of a cost-reduction plan. 

The chipmaker said recently it would lower costs by $3 billion in 2023, before ramping that up to $10 billion by 2025.

The adjustments would start in the fourth quarter, Gelsinger said, but did not specify how many employees would be affected.

Some Intel divisions, including the sales and marketing group, could be reduced by up to 20%, Bloomberg News reported last month, citing people with knowledge of the situation.

Intel had 113,700 employees as of July, when it slashed its annual sales forecast by $11 billion after missing estimates for second-quarter results.

Intel, based in Santa Clara, California, declined to comment on the job cuts when reached by DailyMail.com in October. 

Intel has been stung by shifting market trends, including the decline of traditional personal computers as smartphones and tablets rise in popularity.

Last quarter, global PC shipments, including desktops and laptops, declined another 15% from a year ago, according to IDC. 

Microsoft

Microsoft in January initiated layoffs of 10,000 employees, citing slowing customer demand and a negative economic environment.

‘We’re also seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one,’ CEO Satya Nadella said in a company memo.

The layoffs affected nearly 5% of Microsoft’s global workforce. 

Microsoft previously laid off under 1,000 employees across several divisions last year, according to Axios.

In a statement, Microsoft executives said: ‘Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly.

‘We will continue to invest in our business and hire in key growth areas in the year ahead.’

Microsoft executives previously announced in July that it was laying off less than 1% of its workforce and significantly slow hiring, as its revenue fell short of investor expectations.

The company recorded only $51.9 billion in revenue during the second quarter of the year, but was expected to rake in $52.4 billion.

It had previously recorded blockbuster growth during the COVID pandemic, when consumers and businesses turned to its products as they shifted to a work-from-home model.

Lyft

Ride-hailing firm Lyft said it would lay off 13% of its workforce, or about 683 employees, after it already cut 60 jobs earlier this year and froze hiring in September.

Lyft said in a regulatory filing it would likely incur $27 to $32 million in restructuring charges related to the layoffs. 

‘We are not immune to the realities of inflation and a slowing economy,’ Lyft’s founders wrote in the memo to staffers. 

The company’s share price has dropped 76% since the start of the year and currently stands at around $10, compared to nearly $45 in January.

Announcing the job cuts in a memo seen by the Wall Street Journal, Lyft founders John Zimmer and Logan Green told staff: ‘There are several challenges playing out across the economy.

‘We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up.

‘We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives.

‘Still, Lyft has to become leaner, which requires us to part with incredible team members.’

Lyft has around 4,000 employees, not including its drivers.

Spotify

The music streaming service said on January 22 it plans to cut 6% of its workforce, an estimated 588 employees from its 9,800 full time staff. 

Spotify said it will incur about $38million in severance-related charges.

The company, whose CEO is Daniel Ek, said its chief content and advertising business officer Dawn Ostroff will also depart.

Apple 

Though Apple has not yet announced any major layoffs, CEO Tim Cook told CBS Mornings that it is slowing some hiring as well.

‘What we’re doing as a consequence of being in this period, is we’re being very deliberate in our hiring,’ he said. 

‘That means we’re continuing to hire, but not everywhere in the company are we hiring.’

At the same time, though, Cook said ‘we don’t believe you can save your way to prosperity’.  

‘We think you invest your way to it,’ he said.

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