They didn't hire "for the sake of hiring" -- they hired specifically to build up their podcasting and audiobook efforts, which were totally new products within the app. Which they thought were essential to staying competitive -- e.g. what if people start moving over to Amazon instead with its Music+Wondery+Audible, or other competitors?
Now it's turned out those bets haven't been as successful as they wanted, so they're keeping them but massively scaling back on future investment. Which means they don't need those employees anymore.
Honestly, what do you expect Spotify to do? Not try to stay competitive, and risk a competitor taking their place, and then go the way of Pandora? Do you think it's wrong to hire teams to build products when you hope the products will succeed but you can't know 100% for sure?
This is just how normal, healthy business goes. You make bets, sometimes they succeed wildly, and sometimes they don't. When they don't, it often results in layoffs because there's not enough profit to keep paying those employees with, and there isn't immediately any new product for them to work on.
Believe me, a company with profit margins as thin as Spotify's can't afford to "hire for the sake of hiring". That's just not how it works.
I recently left Spotify for Apple Music, in large part because of this new development path. I don't want podcasts, audiobooks, etc mixed in with my music. I prefer separate apps.
I think what bothered me more was the focus on branching into these new paths without any innovation in the music department--I'm sure there was innovation that wasn't visible to me. I'm tired of the same black and green color scheme. I don't like that I don't have a 'Library' and everything just goes in liked or a playlist.
I think their expansion into other media was a signal to me to look for someone doing a better job at specializing.
> I don't like that I don't have a 'Library' and everything just goes in liked or a playlist.
I left Spotify a while ago, but one thing I hate is that there's no way of differentiating when you add complete albums to your collection vs only one song.
This is precisely why I also switched to Apple Music, it was annoying to have Spotify constantly pushing podcast content to me as someone who had no interest in Podcasts and no way to enable a "music only" mode either.
I too recently left Spotify for Apple Music because it works better on my Home Pod and Apple TV. I don't know why Spotify doesn't fix this. I know they are in a feud with Apple and maybe they think this is a way to apply pressure to Apple, but the risk is they lose people like me.
There were other reasons for leaving. I don't like that I can't hide or disable audiobooks or podcasts. They take up a lot of important screen space and are useless to me. I also really dislike the notifications from Spotify. I have them all turned off, but ever once in a while they decide to show one anyway.
What I found thoroughly missing in all music streaming was emotional composition, aka the Algo being able to play music tailored to what situations I I'm experiencing and giving it an arc.
Example:im programming and the concentration music goes towards a victorious crescendo once it works.
Part of my dev process at work involves running a (rather) flaky test suite on my laptop. The test suite takes several minutes to run, and it doesn't fail fast. No good for my short attention span.
I wrote a script which runs the test suite in a loop. When the tests fail, it plays horns.aiff (from The Price is Right). When the tests pass it plays the epic Champions League theme music.
The best part is, I can do other stuff while waiting for the flaky tests to pass, without having to remember to check the terminal they're running in. Audio cues are really great.
That’s me too. I disliked having podcasts in otherwise perfectly OK music app, and also Spotify’s efforts to rebrand ‘podcasts’ as something else than “mp3s on RSS”. But I was a paying customer for 10+ years so they had a good run.
Counter-anecdote, I like that Spotify hasn't changed, and if it changed significantly tomorrow, it might prompt me to look at competitors and decide afresh which music service to use.
I left spotify after reading their privacy policy and some news stories about how they plan to use your listening data to infer things about you and sell the results
That (deque) is actually one of my favorite features, and something that had tempted me in the past. I have to relearn some behavior on queue creation though. I'm use to just clicking play, rather than adding to queue, so I end up with a bunch of songs in queue that I didn't intend (because I played a song from a longer playlist to start).
There’s definitely some annoyances… the paramount one for me is actually the opposite of what you describe: I click on an item to simply play it and it makes me deal with a pop up asking me how it should interact with my queue, even when I have no queue at all! Just play the damned song, stop asking me questions.
Ugh… things like this make me wish we had just one FOSS music player with a paid backend. I’d comment out all the modals and get on with life.
That's a good attempt, but I'd rather not run a server - if I'm paying for the service I'd like to have an API I can run/write a frontend against. And ideally I'd have the ability to listen to lossless music, not whatever encoding Spotify thinks I deserve.
As I understand it that is for listening to a library of personally owned material remotely? That's not really what I'm looking for. I appreciate the MAAS model, it's just the UI's that suck.
Looking to do this - how did you migrate your playlists? Also my family was using my main Apple Music account - so I have to "clear out the new place" as I setup a family account for them.
The new cover videos bands can post on songs are ill. The changing of the like button to not be just for liked songs is great (usually, tho sometimes I wish it was two
separate buttons). There’s constantly a bunch of new tools to find new music, some hitting better than others. The “listen with friends,” while still buggy asf, is a great feature.
5 years ago, Spotify updates were more like “we changed the colors and layout of the UI and that’s about it.”
It’s true though. They haven’t reinvented music completely.
I'm not sure what you're referring to with the Like/Love button. It seems to be the same as it ever was for me, except the UI is different based on whether you're in CarPlay, mobile app, or desktop app, so sometimes it's a heart and sometimes it's a plus sign.
One of my biggest complaints for Spotify is the removal of star ratings, but that's been probably a decade ago at this point. Apple Music has it for the desktop app, but it's missing from mobile.
Buying music, downloading it and putting it into your music folder also works great! Then you can organize it, display it, order it and listen to it however you want by using a player that suits your preferences, decoupling the source of your music from the application you use to play it.
I think trying to normalize a ~20% workforce reduction as business as usual is a little bit much here.
Management made a lot of mistakes to get to this situation. It wasn't we tried a few things and it didn't work out, it was we burrowed too much money, spent too much money, and risked too much.
What other tech company has cut this deeply recently? You name their competitors, like Amazon and Apple -- is it happening there? 20% is not 2-3%.
> You name their competitors, like Amazon and Apple -- is it happening there?
Their competitors are not direct comparisons, though, and percentages can be a little misleading. Spotify is ~7.5k employees, and does one thing. Amazon is ~1.5m employees, and does many, many things.
Around end of 2022 and start of 2023, Amazon laid off 18k people from their corporate workforce - about 1.2% of their global employee count[0]. That seemed to be the figure the % above was from, as the % from their corporate workforce was 6%.
But what I'd expect is for them to cut only a little (not 17%), because they would place another bet on something else to remain competitive.
To cut so heavily looks like they've no great idea on the next bet that they could make, that they don't believe those people they hired could contribute towards another thing in the near future (or they have no runway to explore doing so).
Companies should place bets to stay relevant and grow, this looks like there isn't a big bet now.
> because they would place another bet on something else to remain competitive.
Now might not be the best bet making time. Circumstances and the market change.
Revolving loans might cost more to service, which also impacts R&D and product expenditures. It's very dynamic.
> To cut so heavily looks like they've no great idea on the next bet that they could make, that they don't believe those people they hired could contribute towards another thing in the near future (or they have no runway to explore doing so).
Exactly this. And that's just reality. No company has perfect information.
> Companies should place bets to stay relevant and grow, this looks like there isn't a big bet now.
AI clearly is looking interesting and shaping up in a big way for music, but the iron probably isn't hot enough to strike yet.
These are hard problems that leadership constantly grapples with.
> Now might not be the best bet making time. Circumstances and the market change.
This is true, but I personally believe that the loss of knowledge and experience from within is a significant drag on momentum for when you do want to hire again... these people likely won't return even if the markets change, they've been burned, why would they return.
If it's possible to place the next bet, retain as much knowledge and experience as possible, and leverage that towards something new, then surely that is the best thing to do.
Could there have been other bets? Probably, if audio is the definition of the market and what you have at the moment is predominantly Western music, then stronger pushes into native apps for different markets? A classical specific app / flavour? A jazz specific app / flavour? Podcasts are good, but I think audiobooks are better... the audiobook market does not feel "done" at all, there's a lot more that could be done here too. Generational AI dynamic music could be a thing too, not streaming a file but streaming the basis of a constantly generated infinite thing, i.e. study aids, sleep aids, etc. Or how about audio app sync with video devices to enable the audio from your film to come out of your smart speakers or Hi-Fi even without a 5.1 amp?
A lot of these are smaller bets than "podcasts will be worth a gazillion dollars", but each is still significant, sticky, and leads to higher retention, and fights against the commoditization of music playback and the low margins there.
17% cuts does signal a lack of ambition despite "economic headwinds", it feels like a "we need to cut deep" rather than a "what are all the new bets we can make and then we are compelled to cut the difference".
This is literally how all commerce works, though. If someone opens a restaurant, for example, it's a bet that there's a market for the food they're preparing, and that their staff will be capable of being able to meet the demand. Sometimes you're right, and sometimes you're wrong.
and destroying their future plans they might have set in motion that will be derailed because of management's incompetance, they don't have money that much money to float on specially in this economy where everything is overpriced, almost like they are humans with their own histories and possibly other people depending on them, did you really try and consider their perspective or was dehumanizing them your first instinct?
but i doubt management will be fired will it? they'll end up with nice fat stacks of bonuses for making terrible business decisions
Believe me, I have very very close experience with what it’s like to go through layoffs, and I feel for those who have just now realized that nothing in this world is guaranteed.
But griping that management should have kept paying salaries when the money wasn’t there won’t get anyone anywhere. Take your severance, hone your skills, apply for jobs. If you can, maybe take some time to go on a trip. Life will go on.
Companies don't stay profitable by investing in unprofitable markets, though. If they don't think this approach is going to work out long-term, they should stop spending money on it, even if that means reducing headcount.
This is a really poor approach to discourse. I imagine you don't really think that every job must last forever. Jobs come and go, and working them means we can live and make choices. It's not fun being laid off (I have been), but it's just life.
People should know that know job is permanent and plan accordingly. Do you really expect to work at one company the rest of your career and get a gold watch and a pension ?
But why shouldn't we expect to be able to work for one company and earn a gold watch (at some anniversary date, I guess?) and a pension?
It used to work that way. Why not now? It worked that way for my grandpa. It looked like it was going to work that way for my dad, until the corporate world did its huge pension rug-pulls. But it could still work that way.
I have a pension now (Sweden). My wife has one (Germany). You could, too.
This is what happens during periods of economic uncertainty. It's like counting cards with a freshly shuffled deck: nobody can tell what the state of the game is, so you place a minimum bet until you can get a feel for things again.
The movie is meh, but the boardroom scene in Margin Call has a great line:
"I'm here for one reason and one reason alone. I'm here to guess what the music might do a week, a month, a year from now. That's it. Nothing more. And standing here tonight, I'm afraid that I don't hear - a - thing. Just... silence."
Consumer confidence is down three straight quarters in a row. Nobody feels good about what the music is going to do next.
> Consumer confidence is down three straight quarters in a row. Nobody feels good about what the music is going to do next.
Sure, but you can leave a downturn four ways:
1. You went out of business
2. You experienced a decline and let a lot of people go
3. You managed to stay roughly where you were, no further forward, no further backwards (this is a small success but still a great achievement) and you may have let some people go — the expression "running to stand still" applies here
4. You find a way to come out better than you went in and maybe continued to hire
Spotify feel like they've gone from #3 to #2, but they had ambitions to be #4 of those scenarios, they will likely survive, but in what form and with what potential? And more to the point, if their competitors manage to achieve #3 or #4, at what long-term cost to Spotify?
5. Cut your losses and keep whatever cash stores you can for the storm to come.
We have zero insight into what the Spotify execs are seeing. Maybe ad revenue is already down. Maybe subscriptions aren’t renewing. Maybe costs are increasing.
Sometimes, the best thing to do is cut some employees now, so you don’t have to cut more later.
That's peak capitalism right there - you've got people spending to buy products with money borrowed from credit card companies and banks, which they will have difficulty paying off and will pay a good amount of interest on.
If you can't make a company work in that environment, you might want to do a bit of a self examination and notice that your advertising is annoying and off-putting and your web-browser based client is utter shit.
It’s also healthy to get backlash from the public and investors for layoffs. Personally I don’t think it’s ever right to layoff employees for leaderships mistakes. It should be used as a last resort only when the entire company is at risk of going under. Based on their post it doesn’t sound like that’s the case, they even bragged about a “positive earnings report”.
So, can at least the execs that made the wrong bets be fired? Those are multi million dollar mistakes. But nope… they just take “complete responsibility” and fire the dev teams.
I think that people get really upset about layoffs like they're an example of poor planning, but in reality it's all a calculated risk.
Laying off employees isn't a very negative thing from the perspective of the corporation. Very few costs are associated with laying off employees. A few months of salary, but that's it. It's an at-will arrangement.
I learned in a business class that, mathematically, most companies acutally take too few risks. It's not hard to understand why when you start doing some the math: if you invest $1 million into 10 projects 9/10 of those projects fail but the one successful project makes $10 million, then your investment broke even. But our brains see a 90% failure rate and want to be more conservative with our investments. Let's say, alternatively, we invest in 5 projects to be more conservative with our money, but because we didn't take enough moonshots we never found a project that paid off, so now we lost $5 million instead of breaking even. This hypothetical thought experiment is why many companies should be over-hiring and taking risks.
If you make a mistake, so what? You lay off the workers and you immediately stop paying for that cost, and you might even have something to show for taking the risk.
Also, yes, it takes more people to build something than to maintain it. Employees don't like to hear it, but hiring employees that you deliberately plan to lay off in a few years is a completely valid strategy.
If we want this to change then we need to have our governments have better layoff protections in place, like mandatory severance or notice periods. The WARN Act does this but only for large employers making large cuts.
> If we want this to change then we need to have our governments have better layoff protections in place, like mandatory severance or notice periods.
But then you push companies in the exact opposite direction than you say you want them to go. If it's harder to do layoffs, companies will take less risks that require hiring.
You're right, but remember that I was speaking from the corporations' perspective. They can make more money by taking more risks, but at some point larger society has to weigh corporate profitability against societal well-being.
For example, a factory could make more money if it dumped its pollutants into a river rather than paying extra to dispose them properly. That difference in incentives between greater society versus the individual business is why we have the EPA.
Basically, the intention of my last comment was to answer the common question that might be asked of: "Wow, this company laid off so many people, what were they thinking? Maybe they should plan ahead next time?" And the answer to that is usually "yes they planned for this scenario and they're perfectly okay with having a layoff."
I am honestly looking to move to a competitor because of their podcasting and audiobook efforts. Well, and I don't necessarily care about those things per se but Spotify used to be a focused music app, and they keep removing things from the app in favor of whatever new "growth thing" they want to do this year. I never know when I load up the app what is going to have changed and take me an extra 5 minutes to find what I want.
They have done so much damage to their app's usability by trying to "grow" that someone could probably sell me on some ultra-premium subscription that actually had a good music player that functioned more like the music players of 15 years ago.
There’s a lot about the Music app for Mac that makes me wonder how a trillion dollar company can produce such a crappy website (yes it’s a webview, not native), and the iOS app is jittery and buggy in its own way, but in the end I do agree it’s the best option around, and I’ve been a happy-ish paying customer for almost a decade now. (part of that time I had Spotify too)
You can avoid most of the annoyances by always using the Songs view and hitting Command-B to get the columns browser like iTunes. Then edit the columns to browse in the menu.
That's a neat trick! I just wish there was a Playlist option and Favorites. (The "Groupings" component is empty for me, not sure if that is supposed to have the playlists)
For playlists you can choose “view as songs” in one of the menus and then enable the column browser. I have a smart playlist for the classical genres that I do this for.
The groupings is a tag that’s free-form text: one nice thing about Apple Music is you can edit the tags, even if you don’t buy the music. I typically split “Classical” into “Baroque”/“Classical”/“Romantic” and then rewrite “composer” to be “last name, first name (years of life)”
There's always a business justification for hiring, simply because there has to be to get the headcount approved. That doesn't mean that it's the actual reason, as in the deciding factor that gets the decider to say "yes, we're going to hire more people". Principle agent problems are a thing. You can always come up with reasons that are true but wouldn't by themselves change your decision. And conversely, you can figure out what someone's actual reasons are by looking at counterfactuals where those conditions didn't occur and the person (or a peer) made a different decision.
Between 2020 and 2023, Google went from 118k employees to 190k. Meta went from 58,604 to 86,482. Stripe went from ~2000 to ~7000. Coinbase went from 1200 to 4500. These companies are not competing significantly in podcasting and audiobook efforts. But what they do have in common is that they are growth tech companies whose business models are pretty sensitive to interest rates and availabilty of capital. Who didn't hire in 2021-2022? Mostly industries like restaurants and hospitality that are not particularly interest rate sensitive, and were still recovering from COVID. They're catching up now that people are spending more.
That makes me strongly suspect that directors hire simply because there are funds available, and there are funds available because rates are low. Indeed, this is the Fed's lever on the unemployment rate. If they didn't, then changing the money supply wouldn't have any effect on unemployment or wage inflation, which would be purely determined by shifts in consumer demand.
> They didn't hire "for the sake of hiring" -- they hired specifically to build up their podcasting and audiobook efforts, which were totally new products within the app. Which they thought were essential to staying competitive
How many employees does it take to take an app that already works great on playing audio files and do a bit of UI redesign and change those audio files from music to podcasts and books? It's not like they're building this thing from the ground up.
The podcast app I use was built by one person, granted over a few years, and it works way better as a podcast app than spotify does. They are going to layoff 1,500 people. I assume those aren't all engineers but I think a team of 10, (including devops and QA) could build each of these features in the timeframe they did plus the additional business side of the ventures (negotiating contracts, acquiring rights, etc.).
>They didn't hire "for the sake of hiring" -- they hired specifically to build up their podcasting and audiobook efforts, which were totally new products within the app. Which they thought were essential to staying competitive -- e.g. what if people start moving over to Amazon instead with its Music+Wondery+Audible, or other competitors?
If this were true then wouldn't the cuts be limited to the podcasting and audiobook arms of the company i.e. the source of the overstaffing? The announcement however states the cuts are across the entire company - "To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company."
I'm not saying businesses shouldn't make bets or innovate, but in my experience hiring more people to do those things has a point of diminishing returns, and that point is much lower than most people think. From what I've experienced, more people tend to slow innovation, not accelerate it.
And while Spotify may not have hired for the sake of hiring, my comment was more targeted to the general behavior of tech startups during the ZIRP years, where I've personally experienced companies just hiring to show they they're growing, even when they have very little work for those extra personnel to do. It's not often intentional, but is rather the result of poor discipline or lack of forethought.
Maybe it’s just me, but as a CEO if you misjudge enough to have to fire a double-digit percentage of your staff shouldn’t you face some consequences, like demotion or losing your job yourself? Daniel only owns 7.5% so it’s not like he’s a majority that can push anything through.
If Spotify had a brain in their head they would’ve known that Amazon’s offering was desperation against losing so badly to the main big baddie, not a genuinely good product. The Amazon music player is a joke and the service sucks at integrating with other services and products.
>Honestly, what do you expect Spotify to do? Not try to stay competitive
That's a reductionist way of looking at it, but an alternative way would have been what Daniel said on that letter; They were "more productive and less efficient and they needed to be both".
From my ivory tower I do see some things that could have been done differently, such as adding only one new offering (maybe just podcasting), or rely more in contractors than employees and set the temporary expectation of the roles up front.
Innovate to grow, if growth is the objective. For example, they could better serve the audiophile market with higher quality offerings. Not as much growth there though.
How does innovation help them make more money? In the case of higher quality, they can charge more. There are premium services such as TIDAL doing that.
And if they charge more for the relative few people who want it, the record label still gets 70% of the revenue. They have to do something that is not dependent on music licensing.
My point still stands. They chose the path of trying to get market share from incumbents in the podcast and audiobook market rather than trying to innovate in their core music business and that has cost them in multiple ways.
I don't even know what the incumbents are. I had never listened to a podcast before they came to Spotify. So I can easily imagine there was a big untapped market of getting people to spend more time with podcasts, which I assume is much cheaper for Spotify than music licensing. So more customers and less royalties -- I can see a potential in that.
Audible for audiobooks is the most obvious there. That's an interesting point about podcasts, I naively assumed most people were familiar with them long before Spotify offered them. I have been using PocketCasts for many years but iTunes has also carried podcasts for a long time.
I agree in theory but practically this is a non-starter as the big 3 record companies are also investors in the company. Even if they weren't however the downside risks of the big 3 not agreeing to renegotiate licensing in the future would be catastrophic to Spotify. This is where I think Tidal got it right both in terms of a business model and something that was good for artists. It's a shame what became of Tidal.
Even if they did have a non negligible interest in Spotify, that is not the reason it is a non starter. It is a nonstarter because everyone wants to listen to music owned by the big 3 record companies.
Insufficient people are going to be interested in paying for a music streaming service without Michael Jackson, Sinatra, and a whole bunch of other big names and old songs that span decades. And people want to listen to music on demand, and repetitively. People are not going to be signing up for 1 month at a time like video streaming businesses, because people do not consume music the same way as video.
>"The big 3 record companies have negligible investments in Spotify":
This was not always the case however. The big 3 historically had interest at over 6% and they took money off the table only recently. [1]
>"Even if they did have a non negligible interest in Spotify, that is not the reason it is a non starter. It is a nonstarter because everyone wants to listen to music owned by the big 3 record companies."
Yes we are saying the exact same. I clearly stated that losing that licensing would be catastrophic.
The people who made the decision could bear the brunt of the failed "bet". But I'm willing to wager that the CEO's year-end bonus isn't going to change radically in light of this.
They didn't hire "for the sake of hiring" -- they hired specifically to build up their podcasting and audiobook efforts, which were totally new products within the app. Which they thought were essential to staying competitive -- e.g. what if people start moving over to Amazon instead with its Music+Wondery+Audible, or other competitors?
Now it's turned out those bets haven't been as successful as they wanted, so they're keeping them but massively scaling back on future investment. Which means they don't need those employees anymore.
Honestly, what do you expect Spotify to do? Not try to stay competitive, and risk a competitor taking their place, and then go the way of Pandora? Do you think it's wrong to hire teams to build products when you hope the products will succeed but you can't know 100% for sure?
This is just how normal, healthy business goes. You make bets, sometimes they succeed wildly, and sometimes they don't. When they don't, it often results in layoffs because there's not enough profit to keep paying those employees with, and there isn't immediately any new product for them to work on.
Believe me, a company with profit margins as thin as Spotify's can't afford to "hire for the sake of hiring". That's just not how it works.