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Businesses

Spotify Cuts 17% Jobs Amid Rising Capital Costs (techcrunch.com) 45

Posted by msmash from the closer-look dept.
Spotify is eliminating about 1,500 jobs, or about 17% of its workforce, in its third round of layoffs this year as the music streaming giant looks to become "both productive and efficient." From a report: In a note to employees Monday, Spotify founder and chief executive Daniel Ek said right-sizing the workforce is crucial for the company to face the "challenges ahead." He cited the slow economic growth and rising capital costs among reasons for the job cuts, saying the firm took advantage of lower-cost capital in 2020 and 2021 to invest significantly in the business. "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," he wrote in the note, which the company later published on the blog.
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Spotify Cuts 17% Jobs Amid Rising Capital Costs

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  • That leaves out... (Score:5, Funny)

    by clickety6 ( 141178 ) on Monday December 04, 2023 @11:32AM (#64053123)
    "To be blunt, many smart, talented and hard-working people will be departing us"

    So no cuts to the top management this time, then?

    • The LLM isn't yet allowed to get a top management job. But soon...

    • To be blunt, many smart, talented and hard-working people will be departing us

      Why would you want to layoff smart, talented, and hard-working people? Maybe let them work on some new initiatives and projects that will grow your business for the future?

      So many businesses are so poorly managed...and yet people continue to worship these moronic CEOs...

      • Why would you want to layoff smart, talented, and hard-working people?

        So the CEO can make his quarterly numbers for the next meeting.

        Maybe let them work on some new initiatives and projects that will grow your business for the future?

        Their business is streaming music. What initiative or project is needed to do that?

  • What slow economic growth? (Score:4, Insightful)

    by Anonymous Coward on Monday December 04, 2023 @11:34AM (#64053129)

    Economic growth, in the US anyway, was a staggering 5.4% in the last reporting quarter.

    Spotify has paid Danny Elk approximately $2.4B in compensation since the beginning... and there are a dozen+ executives making in the tens of millions in compensation, so perhaps they should be looking there for cuts rather than putting struggling middle-class employees out on the street.

    • Re:What slow economic growth? (Score:5, Funny)

      by gosso920 ( 6330142 ) on Monday December 04, 2023 @11:40AM (#64053143)
      Hookers and cocaine don't come cheap. Sacrifices have to be made.

    • He means that money isn't cheap to borrow anymore. Spotify doesn't care what the GDP rate is.

    • The wages of sin pay ohh soo well.

    • Economic growth, in the US anyway, was a staggering 5.4% in the last reporting quarter.

      One, that's a single quarter, so at minimum, it's an anomaly as preceding quarters have been around 2% [apnews.com].
      Two, it may be a case of Lies, Damned Lies, and Statistics as every other metric is sluggish.
      Three, the very same bureau that came up with that number still predicts a long, sluggish trend in the economy, with average growth rates under 2% [bls.gov].

      So there's still a case for companies to get leaner in the coming years.

    • Economic growth, in the US anyway, was a staggering 5.4% in the last reporting quarter.

      Not to be playing devil's advocate, but economic growth hasn't been uniform. And it is not clear to me if economic growth has translated into increased Spotify membership or revenue. And capital costs have increased, and it could be that it's been a slow economic growth for services like Spotify.

      Just saying... and obviously, exec pay ain't gonna get affected. Golden parachutes never are.

    • Spotify has paid Danny Elk approximately $2.4B in compensation

      They've done no such thing. His *net worth* is $2.4B, a significant portion of which is in stocks which do not cost Spotify anything. His cash remuneration is very low compared to other CEOs. You'll find no savings there as investors are typically tolerant of stock used for CEO remuneration, but show little tolerance of using stocks to pay depts in a loss-making venture.

      making in the tens of millions in compensation

      Oh phew, you've solved the $500million net loss problem! /s

      Please don't ever go into business, you clearly have no clue.

  • 1500 == 17% ?!?! (Score:5, Insightful)

    by dbrueck ( 1872018 ) on Monday December 04, 2023 @11:39AM (#64053135)

    What's amazing is that Spotify has about 9000 employees.

    More amazing still is that they have that many employees and yet they can't - even after over a decade of pleading by their customers - implement basic features like remembering your spot in a playlist.

    • Re:1500 == 17% ?!?! (Score:4, Interesting)

      by EmagGeek ( 574360 ) on Monday December 04, 2023 @12:44PM (#64053315) Journal

      That's what happens when you have 9000 executives, presidents, vice presidents, directors, and managers, but no developers.

      • Also hairdressers and telephone sanitizers

      • There are still developers, but they have 5 layers of middle management and other idiots above them that need to approve any work that has to get done. Good luck getting that lot of useless sacks of shit to sign off on anything that didn't originate from on high.

        If you want a new feature, don't submit requests or try to go through customer support. You're better off complaining directly to the CEO on Twitter or some other social media platform because that's who can actually drive any action. Anyone else

    • Well, they did manage to break "Ctrl + A" in a playlist to select all songs in one of the most recent versions, so they must be working hard!

    • Re: (Score:2)

      by Craefter ( 71540 )

      Or actually make suggestions I actually like instead of pushed local music (to which I never listen to) just because my credit card is from that country.

  • Weird Al yankovic (Score:5, Interesting)

    by rsilvergun ( 571051 ) on Monday December 04, 2023 @12:00PM (#64053199)
    Recently made the point that 80 million Spotify listings netted him enough royalties to buy an okay sandwich.

    My favorite recent statistic about the economy is that Huggies raised the price of diapers by 7% while admitting in their SEC filings that their costs dropped $75 million dollars.

    Whether it's price gouging driving inflation or layoffs or anything else that screws you over as a consumer and an employee there is no amount of money that is ever going to be enough and no company is ever going to leave so much as a penny on the table.

    This is why the government needs to be more involved. It's like the referee in a sports game. Try to imagine what it would be like if a football game didn't have a referee. The game wouldn't be fun and it certainly wouldn't be fair

    • Re: (Score:3)

      by dpille ( 547949 )
      You need look no further than the citation of "capital costs" as a reason for the layoffs. You'd be forgiven for thinking that a "capital cost" is the cost of capital goods- you know, the physical assets a company uses to produce goods and services for consumers. Do they archive a separate copy on a hard drive every time they stream me a song? Are each one of their 9,000 employees working from a separate company-owned mansion? Do they replace their entire computer infrastructure every day?

      They're a $39
      • it's an unpleasant mix of record companies and venture capital that got together to use those "capital costs" as a form of "Hollywood accounting" to avoid paying the artists a dime. That's why I brought up Weird Al's comment.

        Their capital costs aren't actually that high. It's all smoke and mirrors to avoid paying the artists.

        As for the SEC doing anything about that, they're a Supreme Court case that is set to severely restrict their ability to enforce law. On paper it's somebody demanding a jury tri
        • True. Just because they're HQ'd in Sweden doesn't mean they're all ABBA and equality. Spotify is a corporation motivated solely by profits. You don't get to the top of that 9000 person stack by being nice and advocating for artists.
      • Yeah, the summary seems to imply that he is misusing the term "capital costs". The later statements in the summary seem to indicate that he means the cost of borrowing not the expenditures on capital goods. I'm with you that this relabeling is not just disingenuous but illegal. But the supreme court appears on the cusp of deciding that the SEC has no enforcement powers, so maybe he's already betting on that.

      • You need look no further than the citation of "capital costs" as a reason for the layoffs..

        You're not citing the source Daniel Ek blog post https://newsroom.spotify.com/2... [spotify.com]
        You're citing the techcrunch article https://techcrunch.com/2023/12... [techcrunch.com]

    • Re: (Score:2)

      by tlhIngan ( 30335 )

      Whether it's price gouging driving inflation or layoffs or anything else that screws you over as a consumer and an employee there is no amount of money that is ever going to be enough and no company is ever going to leave so much as a penny on the table.

      It's basically why unions are seeing an uprising in support and interest from the general public. It's not just UPS/Teamsters, or UAW, or SAG and WGA, it seems everyone is starting to see through the smoke and mirrors.

      Yes, inflation is high, but why are pro

    • Huggies is not a charity. Therefore, they are supposed to maximize profit. The prices they charge are related to supply and demand. They have competitors. If, for example, the high tech stuff they use in their diapers has restricted supply and they can't get enough to sell as many diapers as people want to buy, then they raise prices to maintain their profit, even if their costs went down because they couldn't get enough raw materials.

    • Am willing to bet that if it were 80 million times any of his songs were broadcasted over standard radio, Weird Al would have made more money.

      This is not the first time artists have complained that streaming only yields them a minute fraction of revenues of what they'd get over more traditional media.

      (I'll be over-simplifying the following, but bear with me) Think about the disconnect: traditional radio is free, the only price you pay is time spent listening to adverts. Comparatively, you have to pay actual

    • You're assuming that the government would be a fair referee. Looking at the current government where all decisions are politically based is not encouraging. Rewarding political allies and punishing others are the way all decisions are made. Government already has an outsized influence on business today by passing laws to favor lobbyists. Yes, let's let that cancer spread by giving government total control over all business decisions.

      Can we think of other governments which also control their country's bus

      • With the alternative being to allow businesses to make political decisions, I cannot say what would be worse.

    • Kids can play football with no ref without many issues. It's when adults are involved that everything goes to crap.

    • Recently made the point that 80 million Spotify listings netted him enough royalties to buy an okay sandwich.

      Sounded more like a joke than a point [yahoo.com].

      Using the figure of $0.003/stream 80,000,000*0.003 = $240,000

      It might be less than you'd expect for 80 million streams, but I don't know where you eat, but that's a very nice sandwich.

      My favorite recent statistic about the economy is that Huggies raised the price of diapers by 7% while admitting in their SEC filings that their costs dropped $75 million dollars.

      Did their costs drop or their expenditures drop? That's a big difference.

      My suspicion is the cost of their materials went up so they raised prices and slashed a bunch of expenses elsewhere (R&D).

      Diapers are hardly a monopoly.

      This is why the government needs to be more involved. It's like the referee in a sports game. Try to imagine what it would be like if a football game didn't have a referee. The game wouldn't be fun and it certainly wouldn't be fair

      If there's collusion or a monopoly sure.

      But Amazon Unlimited

    • Recently made the point that 80 million Spotify listings netted him enough royalties to buy an okay sandwich.

      That's a nice misdirect, but the reality is Spotify made a net *loss* of $500m last year. Now you can make the case that there are many cuts to be made int he business, but it's hard to make the case that artists should be paid more by magic non-existent money from a loss making company.

    • Re: (Score:2)

      by Sloppy ( 14984 )

      Yankovic is as food-oriented as my dog! For all I know, an "okay" sandwich to him might be ten feet long and wrapped in gold foil.

  • Time to go back to the European Commission and demand more "justice".

    • It’s weird when Americans see laws actually enforced against corporations.

      • Re: (Score:1)

        by Ossifer ( 703813 )

        No, what's weird is when other countries write laws that only adversely affect American companies, excepting their own. It's outright protectionism, and the US should retaliate in kind, or take this to the WTO.

  • The wages of those at the bottom?
    The royalties paid to the performers?

    Or the bonuses and salaries of the execs?

    • the costs of adding ever more frequent ads to the free tier.. mixed in with dead air for fun... it all costs more and more!

    • Translations: Those peons we employ here want compensation for the inflation we caused, so we kick some of them out to get the rest to fall in line and stop asking for ridiculous things like a living wage.

  • It's a bit shocking that 1500 employees isn't 5000% of them.

    Anyone know what these employees worked on?

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