Spotify lays off 2% of workforce amid podcast division downsizing

Parcast and Gimlet to be combined into one entity in next phase of podcast strategy

Audio giant Spotify has announced a new round of layoffs affecting 2% of its global workforce, as part of the next phase of its podcast strategy. 

The announcement was made in an internal memo from Spotify vice president and head of podcast business Sahar Elhabashi, updating staff on changes to Spotify’s podcast business, later adapted and posted on the company’s website. The changes in strategy include focusing on creating more partnerships with podcasters and maximising podcast consumption among Spotify’s users. 

“We are expanding our partnership efforts with leading podcasters from across the globe with a tailored approach optimised for each show and creator,” Elhabashi said in the memo. "This fundamental pivot from a more uniform proposition will allow us to support the creator community better. However, doing so requires adapting.”

“As a result, we have made the difficult but necessary decision to make a strategic realignment of our group and reduce our global podcast vertical and other functions by approximately 200 people, or 2% of Spotify’s workforce.” 

According to the memo, all individuals affected by the layoffs will be supported by Spotify with “generous” severance packages which include extended healthcare coverage and immediate access to outplacement support. 

This follows a previous round of layoffs from the company in January which reduced its global workforce by 6% in an effort to reduce its Q4 2022 operating loss of €224 million (£198m), which it blamed on heavy podcast acquisitions and investments. The platform has since reduced its operating loss by 32% as of Q1 2023.

“Our continued success in growing the podcast ecosystem is predicated on the necessity that the Spotify Machine is always in motion,” Elhabashi said. “And with these changes, we will accelerate into the next chapter for podcasts on Spotify with strong discovery and podcast habits for users, thriving monetisation and audience growth for creators, and a valuable, high-margin business for Spotify.”

As part of the restructuring, creator partnerships will now be overseen by Spotify’s new head of content partnerships Bryan Thoensen, after Parcast founder Max Cutler announced his departure from the company in February this year in order to launch his own start-up venture. The Spotify Studios organisation will be overseen by vice president and head of global podcast studios Julie McNamara, alongside The Ringer managing director and head of podcast innovation and monetisation Bill Simmons. Current content for Spotify Studios will be the responsibility of Parcast managing director Liliana Kim and head of development Liz Gateley. 

Other additional changes to Spotify’s podcasting business include combining podcast studios Gimlet and Parcast, both of which the platform acquired in 2019, into the preexisting Spotify Studios organisation. As part of this, the division will continue producing original always-on programming as well as existing popular titles such as Stolen, The Journal,Science Vs, Heavyweight, Serial Killers, and Conspiracy Theories. The Ringer, another podcast studio that Spotify acquired in 2020, will also continue to produce original programming across Sports, Culture, and Tech under its existing brand. 

Staff members from Parcast and Gimlet studios were among those affected by the layoffs, and many have been involved in the Writers Guild of America strikes which required members of the union to stop working on scripted podcast projects.

A statement from WGA East’s Gimlet and Parcast union was released following the update from Spotify - which marked the first time employees heard about the decision to merge the studios - stating that the members are “heartbroken again” for the loss of their colleagues and “frustrated” at Spotify’s alleged mismanagement.

“When Spotify purchased Gimlet and Parcast for nearly $300 million, they acquired an incredible group of talented people with specific and marketable skills,” the statement said. “Then, they wasted that opportunity: cancelling shows with dedicated audiences, leaving half-finished projects to die on the vine, and giving teams little direction as to what they actually wanted to see produced.”

“...Our final months were plagued by a lack of direction and transparency, confusion, and announcements that were backtracked hours or days after being made.” 

A joint statement from the Gimlet and Parcast unions previously called out Spotify for its lack of support following its cancellation of 11 original podcasts due to low performance and layoffs of “at least” 38 employees across these studios in October 2022. The unions blamed the low performance numbers due to the company’s decision to make the shows exclusive to the platform, causing a “steep drop” in listener numbers which were reportedly as high as three-quarters for some shows. 

Spotify has since announced in April 2023 that it was dropping exclusivity for some of its Gimlet shows in order to grow its ad sales and broaden its audience, including Science Vs. A Spotify spokesperson confirmed to PodPod that with the new integration, more shows from both studios will be distributed more widely.

The new statement from the Parcast and Gimlet unions also highlighted that Spotify has “refused to fund Parcast’s DEI Committee as stipulated in their union contract.” This follows a previous statement from Parcast Union in February this year which called on the Spotify management to follow through on its DEIA commitments after it revealed that the audio giant had only approved 5% of the budget from the $100,000 annual fund to Parcast’s DEI committee that it promised in April 2022.

Spotify told PodPod at the time that the company was having “active conversations” with Parcast’s DEIA committee regarding the fund and that it will continue to work towards allocating them for the right goals. However, the union tweeted a follow up six days after the statement was released saying that they have received no response from management. 

It was later reported by Bloomberg in March this year that Spotify had only spent 10% of the $100 million Creator Equity fund that the company’s CEO Daniel Ek pledged the year before. Spotify’s response was that the platform has already invested in some of these initiatives to “empower and uplift” underrepresented voices such as GLOW, Frequency, NextGen and AMPLIFIKA, but hasn’t announced whether its spend has increased since then.