## Level Up or Level Down? Spotify’s Podcast Purge Shakes the Gamer Audio World
Gamers, rejoice! That new podcast featuring your favorite streamer finally dropped, right? Well, hold onto your controllers, because the audio landscape just got a whole lot different. Spotify, the music streaming giant that’s been aggressively expanding into the podcasting realm, has just made a big move: layoffs affecting 5% of staff across The Ringer and Podcast Studios.
Analytics and Monetization
Spotify is set to broaden its analytics capabilities, expand Spotify For Podcasters, and introduce more business models to help creators make meaningful money from their work. This strategic pivot is expected to deliver even more value for creators and users alike, maximizing consumption from the massive audience established through format innovation and ensuring that more creators in more places achieve success.
In collaboration with the podcasting community, Spotify is leveling up its advertising offerings and introducing more business models to help creators monetize their work. This renewed focus on creators is likely to have a significant impact on the podcasting landscape, as Spotify seeks to support the creator community better.
Competitive Landscape
SiriusXM’s Rise
SiriusXM is becoming a major competitor in the podcasting space, signing multi-year deals with popular creators like Alex Cooper and Jason Bateman. The satellite radio giant has signed a multi-year deal for her Call Her Daddy podcast and network of shows, giving SiriusXM the exclusive right to sell ads on the audio and video versions of her show, as well as bonus content and events. The agreement is worth $100 million for more than three years.
SiriusXM has also signed a deal with Jason Bateman, Sean Hayes, and Will Arnett for their podcast SmartLess, paying $100 million for the exclusive rights to the show. This isn’t SiriusXM’s first time structuring a deal like this, and the company is looking to leverage the advertising rights of popular shows across multiple platforms.
Spotify’s Shift
Spotify is adapting its strategy, moving away from exclusive deals and focusing on delivering value to creators and users through format innovation and analytics capabilities. The audio streamer has reversed course on its podcasting strategy, laying off 200 people from its podcast unit as its podcast bet continued to weigh on the company’s bottom line.
In a memo to employees, Sahar Elhabashi, Spotify’s VP, head of podcast business, announced the job cuts, stating that the company is expanding its 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 Spotify to support the creator community better.
Industry Implications
Analysis and Implications
Spotify’s podcast strategy has been a money-loser, generating nearly €200 million in revenue in 2021 with a negative gross margin of -57%. The podcast losses will be even higher this year, peaking in 2022. However, Spotify projects the podcast business to turn a profit with gross margins of 40%-50%, higher than its core music-streaming business.
The audio streamer has laid off about 200 staffers, or 2% of its global workforce, in a “strategic realignment” of its podcast division. The layoffs are part of Spotify’s efforts to adapt its strategy, moving away from exclusive deals and towards delivering value to creators and users.
Practical Aspects
The practical aspects of Spotify’s new approach include the expansion of Spotify For Podcasters and the introduction of more business models for creators. This renewed focus on creators is likely to have a significant impact on the podcasting landscape, as Spotify seeks to support the creator community better.
In addition, Spotify will continue to expand its teams that support podcast creator partnerships under Bryan Thoensen, head of content partnerships, as the company increases its focus on the millions of creators building audiences and businesses on its platform.
Conclusion
Spotify’s decision to lay off 5% of its staff across The Ringer and Podcast Studios resonates as a stark reminder of the evolving landscape in the audio entertainment industry. As the company shifts its focus towards profitability and core competencies, the cuts highlight the challenges even industry giants face in navigating a competitive market saturated with content. While Spotify continues to invest heavily in its core music streaming service, the layoffs suggest a recalibration of its strategy concerning podcasts.
This move raises crucial questions about the future of podcasting. Will we see consolidation within the industry, with larger platforms like Spotify acquiring smaller studios to streamline operations? Or will independent creators find new avenues for distribution and monetization, perhaps through platforms specifically designed for audio content? The impacts of this layoff extend beyond Spotify’s immediate workforce; they ripple through the entire podcasting ecosystem, prompting both creators and listeners to consider the long-term sustainability and evolution of this dynamic medium. One thing is certain: the audio landscape is in flux, and the coming months will be crucial in determining the shape of the industry to come.
