Spotify announced on Monday that it will cut about 200 jobs from primarily its podcast division. The company said that the layoffs are part of their plan to grow "partnership efforts with leading podcasters." The Yahoo Finance team discuss what this move will mean for Spotify’s listeners and its relationships with A-list celebrities.
AKIKO FUJITA: All right. Next up, we've got Spotify planning to lay off 2% of its workforce, specifically from podcasts. And you know, Allie, I'm curious to get your take on this, because I was looking through the numbers here. Since 2020, Spotify has spent $526 million on podcasts. This was a huge bet. So the fact that they are laying off a portion of that workforce, are they back to where they were before? Or is this about something a little bigger where we keep hearing that, you know, podcasts, yes, they're still popular, but the momentum that we saw over the last few years isn't necessarily there?
ALLIE GARFINKLE: I think Spotify is still betting on podcasts. They're just changing up their strategy a little bit. They're not going to focus on every single podcast out there. They're going to be a little more strategic. And we've heard Daniel Ek, who's the CEO of Spotify, really stress efficiency. And Spotify has said that 2022 is a peak investment year. And starting in 2023 and heading into 2024, they really want to optimize, and they really want to operate efficiently. And unfortunately, that does include layoffs, and that does include pulling back on spending.
Over the past four years, Spotify has spent more than $1 billion on podcasts. There was a reported $200 million deal with Joe Rogan, Kim Kardashian. She ain't cheap. She was signed on to the platform as well. So you can't have these big names and throw out all this money and expect not to have to make cuts down the line.
SEANA SMITH: Yeah. And I was going to say, just in terms of the relationships that they do still have with some of these A-listers, they're still paying top dollar. I wonder if we're going to see more and more of a pullback here from Spotify as those initial deals do expire if they aren't getting that return on investment. But you've got a question, I guess, just in terms of how they find that balance, right? How they do still maintain that edge when it does come to podcasts relevant have the star power that they need in order to get the listeners while also saving and making sure that the business is very efficient.
JOSH SCHAFER: It just seems like you can take a top-down approach to some extent, right? You can still pay Rogan close to $200 million if you have to, because who has the most listened to podcast in the world? Joe Rogan. And then you pay Alex Cooper for "Call Her Daddy" and some of those really, really popular podcasts that they have, and maybe you just don't need the, quote unquote, "Podcast Network" that we were talking about a couple of years ago, right, where you have a million different podcasts when you just need a few.
AKIKO FUJITA: I go back to your point, though, because I think it's interesting about how, you know, is it going to just be about the big names? Because when you think about podcasts, the discoverability has been, at least for me, is what's made it so attractive. You already know what Joe Rogan is going to say. You know Kim Kardashian. But it's the other ones that have come on board. Obviously, they don't cost as much. But sometimes, they cost a little more to produce. And maybe Spotify says that's not really where we want to put our bets anymore.
ALLIE GARFINKLE: And it was just reported late last week that Jemele Hill, she's exiting her Spotify contract at the end of the summer. And she's been on the platform since 2019. So that's, you know, something that I think we're going to see more and more of like, to your point, just more of these bigger names exiting Spotify, seeking other types of platforms. But it does hinder the overall consumer experience.