Spotify, known for its hyper-personalized user experience in the audio streaming industry through the use of artificial intelligence and a substantial team of 9,800 employees by the end of 2022, has recently undergone significant restructuring.
With three rounds of layoffs, totaling 590 positions in January, 200 in June, and an additional 1,500 recently, Spotify’s shift in strategy, particularly in its podcasting and audiobook divisions, is evident. Despite the workforce reduction, Wall Street appears confident that Spotify’s increased investments in AI will enhance margins and prove successful.
“Spotify is leveraging AI across its platform, launching AI DJ, simulating a traditional radio experience, in 50 additional markets and rolling out AI Voice Translation for podcasts,” noted Justin Patterson, an equity research analyst at KeyBanc Capital Markets. He added, “Coupled with audiobooks rolling out to Premium Subscribers, we believe Spotify has several opportunities to drive engagement and eventually stronger monetization.” the audio streaming
Shares of parent company Spotify Technology SA are up more than 30% over the last six months and up more than 135% year to date.
The company joins other tech firms in retrenching as pandemic-era demand has dried up. It also has to make up for the more than $1 billion it spent on podcasting, much of which went toward deals with celebrities to make podcasts that never materialized and acquiring podcast studios that it later shuttered.
“Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities,” Ek wrote in a letter to staff posted to the company’s website.