Just a few months after announcing a significant wave of layoffs, Spotify plans to conduct another round of layoffs. This time, the job cuts will affect the podcast division as part of a corporate reorganization. In particular, the company plans to merge Parcast and Gimlet Studios.
In an internal memo, Sahar Elhabashi, Spotify’s head of the podcast division, announced that the company was making changes that would lead to a workforce reduction of 2%. This change will affect around 200 jobs and those who are impacted have already received an invitation to talk with someone from the HR department.
“We are expanding our partnership efforts with leading podcasters from across the globe with a tailored approach optimized for each show and creator. This fundamental pivot from a more uniform proposition will allow us to support the creator community better,” Elhabashi wrote.
“However, 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. 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, or 2% of Spotify’s workforce,” she continued.
Spotify promises that employees who are affected by the layoffs will get “generous severance packages, including extended Healthcare coverage and immediate access to outplacement support.”
In 2019, Spotify made a big bet on podcasts, and on exclusive content in particular. The company acquired some popular podcast networks, such as Parcast and Gimlet Media. This move into first-party content was an expensive one as the company spent around $200 million for Gimlet Media and $56 million for Parcast.
But the company is now scaling back this original content strategy. Evidence of this lies in the combination of Parcast and Gimlet into Spotify Studios. In her memo, Sahar Elhabashi names some of the podcasts that are still actively developed, such as ‘Stolen’, ‘The Journal’, ‘Science Vs’, ‘Heavyweight’, ‘Serial Killers’, and ‘Conspiracy Theories’.
And if you’re wondering about The Ringer, another content company that was acquired by Spotify, it will remain a separate business unit from Spotify Studios. The Ringer has been primarily focused on sports coverage, but it also covers pop culture and more.
As part of this announcement, Spotify shared some metrics about its podcast business. The company says that there are now 100 million podcast listeners on Spotify across 5 million shows. Podcast ad revenue has also experienced “high double-digit growth” from 2021 to 2022.
“Given these learnings and our leadership position, we recently embarked on the next phase of our podcast strategy, which is focused on delivering even more value for creators (and users!),” Elhabashi wrote in her memo. “This begins with maximizing consumption from the massive audience we’ve established through format innovation and ensuring that more creators in more places achieve success.”
Last year, Spotify canceled 11 original podcasts and laid off some of its podcast staff. The company most likely chose to cancel underperforming shows in order to focus on hits and make room for some new shows. Today’s move is more significant and it could lead to important changes in Spotify’s original content strategy in the coming months.