Audio giant Spotify has allegedly spent less than 10% of its $100 million Creator Equity fund since it launched one year ago, according to a report by Bloomberg.
In February 2022, Spotify CEO Daniek Ek pledged that he will be committing to a $100 million investment for “the licensing, development, and marketing of music (artists and songwriters) and audio content from historically marginalised groups” in a statement to his staff. This was part of an effort by the CEO to combat the backlash that Spotify faced for signing a $200 million multi-year exclusivity contract with podcaster Joe Rogan despite the fact that he used racist language in previous episodes - which have since been removed.
Reporter Ashley Carman obtained a memo that lists the projects that Spotify had commissioned under the equity fund, including global music program GLOW for LGBTQ+ creators, the Africa Podcast Fund, and new seasons of shows like We Said What We Said, all of which allegedly amounted to less than 10% of the total budget. A spokesperson told PodPod that Spotify has in fact invested more than 10% of the budget, but was unable to clarify how much has been spent.
“The Spotify Creator Equity Fund is dedicated to a variety of initiatives that help elevate and support an inclusive and diverse portfolio of artists and creators on the platform,” a Spotify spokesperson told PodPod. “By investing in programs like GLOW, Frequency, NextGen and AMPLIFIKA, we are able to empower and uplift underrepresented voices around the world.”
Carman spoke to sources that are familiar with the company but chose to stay anonymous, who said that Spotify’s diversity fund is supposed to operate across a three-year timeline but a Spotify spokesperson told her that there was no specific time range and that it was a “multi-year” investment.
Additionally, the sources said that the investment faced a slow start with no clear structures, and suffered from shifting priorities which affected its spending. The Spotify 2023 budget was also reportedly still being finalised at the start of the year and the company was still determining its priority projects.
This report follows a recent story in which union members of true-crime podcast network Parcast called out Spotify in a statement on Twitter to clarify and follow through on its promise to support the network’s diversity, equality, inclusion, and accessibility (DEIA) goals. According to the union members, Spotify has only approved projects worth 5% of the $100,000 budget it promised to Parcast - which amounted to $5,000 - despite continued efforts from the union to propose new initiatives.
On 1 March, six days after the statement was released, Parcast Union tweeted a follow-up stating that they had received no response from Spotify management, none of their mandatory quarterly meetings had been scheduled despite rapidly approaching the end of Q1, and none of the budget has been spent this year.
Spotify reported a significant operating loss at the end of 2022 which amounted to £200 million, blamed by the audio giant on heavy podcast investments it made over the past year with exclusive content creator partnerships with names like Emma Chamberlain, Meghan Markle, and Kim Kardashian, as well as acquisitions of podcast platforms such as podcast analytics platforms Podsights and Chartable.
The operating loss led to budget cuts within the company which once again meant more lay-offs, most recently totaling 6% of its employees. Prior to that, Spotify laid off “at least” 38 of its employees across podcast studios that it acquired, Gimlet and Parcast, as well as cancelling 11 original shows due to low performance. The unions of both companies said in a joint statement that Spotify’s decision to make shows exclusive led to a drop in listeners but “the company did little or nothing to staunch the bleeding”.
Despite the budget cuts, the company continued to make further investments with the latest partnerships announced at its annual Stream On event including ones with Patreon and NPR, as well as content creator Markiplier to produce video podcast episodes of his popular podcasts Distractible and Go! My Favourite Sports Team.
In recent news, Maximum Fun founder Jesse Thorn stated that his podcast company will be turning into a 100% employee-owned co-operative which allowed him to back off from the responsibilities of being the sole owner yet still protected his employees from being laid-off under new ownership the same way that Parcast and Gimlet employees had under Spotify ownership.
“It feels incredibly important that we are taking this next step now, at a time when the podcasting industry is chaotic, and frankly scary,” the Maximum Fun website said. “The last several years have seen an influx of investment into podcasting — literally billions of dollars. The last several months have seen the natural consequence of those speculative investments, when the market turned and prospects for a financial return faded: show cancellations, and layoffs.”