Spotify To Cut 200 Positions As It Slims Down Podcast Operations

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In music streaming, Spotify has gotten plenty of criticism for not adequately compensating musicians. But the company says it’s taking a step to address that. The Swedish-based company will cut some 200 positions, equalling about two percent of its workforce, as it slims down its internal podcast operations. In a blog post, the company said it had recently “embarked on the next phase of our podcast strategy,” shifting away from a one-size-fits-all approach to a “tailored approach optimized for each show and creator.”

That means some employees will leave the company, while others will be moved into different roles or offered new opportunities. The company also announced it would reduce its focus on producing original podcasts and shift more resources to ad technology. In this area, Spotify has seen strong growth and could be a significant driver of future profitability.

The move comes just a few months after Spotify made a splash by snapping Gimlet Media and Anchor, two of the most popular podcast networks and producers in the business. The company’s aggressive moves into the podcasting space signaled that it was ready to compete with Apple, which has dominated the industry for decades.

During its annual investor event, Spotify shared details about its plans to invest more in podcasting and ad tech, which are the two areas where it can see significant operating leverage. In addition, the company’s upcoming launch of audiobooks marks a new frontier for Spotify that can be just as profitable as its music offerings.

Spotify is betting that investing in podcasts can boost revenue, even as the market for recorded music shrinks. That’s a risky bet, especially given how much Spotify loses to record labels and music publishers in royalties for each song streamed.

The company is spending millions to become a dominant force in the podcasting world, but it’s not clear that it can find enough listeners to offset those royalty costs. In addition, adding podcasting to its platform may also be more expensive than its traditional music offerings.

As part of its podcasting push, Spotify has already locked up high-profile exclusives with Rogan and comedians Sarah Tiana and Rob Riggle, and polarizing personalities like Jemele Hill. The exclusives can bring in a bigger audience and help Spotify build an image as the premier podcast home for the content, but they can also raise the bar for other podcasters. That might mean more podcasters will demand exclusivity and, in turn, make higher production budgets that could eat into Spotify’s margins.

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