Spotify is reducing its staff by 200 people, or about 2% of its workforce, as the company restructures its podcast division, the Swedish streaming audio giant said Monday.
The layoffs come amid increased pressure for tech companies to cut costs and boost profits in an uncertain economic environment. Earlier this year, Spotify trimmed its staff by 6% or roughly 600 people, with Chief Executive Daniel Ek citing the increased importance of efficiency.
The Stockholm-based audio company said podcast production companies Gimlet and Parcast will be combined into a “renewed Spotify Studios operation” that will be overseen by Julie McNamara, head of global podcast studios.
“Looking ahead, as a key component of our focus on creators, we remain committed to original programming,” wrote Sahar Elhabashi, vice president of podcast business, in an internal update that was adapted and shared on Spotify’s website.
The company heavily invested in podcasting over the years, buying several production companies such as Gimlet and Parcast and expanding its footprint in downtown Los Angeles with a campus that includes a building known as “Pod City.”
Spotify has become a top podcast publisher, with more than 100 million monthly podcast listeners, according to the company.
But the cost of getting there, including expensive deals with newsmakers and celebrities, has come under scrutiny. Last year, the company cut roughly 40 people from its podcast staff and scrapped 11 shows.
Ray Wang, principal analyst at Constellation Research, said Spotify’s approach was too costly, which is why it is making these changes.
“It’s really a supply-and-demand issue,” Wang said. “Too many podcasts with too little audience.”
Unionized Gimlet and Parcast employees said in a statement they were “frustrated by the mismanagement that led us here.” The employees, who are part of the Writers Guild of America East, said teams were given little direction and many podcasts were exclusive to Spotify, limiting the revenue they could generate.
“Gimlet and Parcast were studios with vision that helped shape our industry,” the employees said. “Whether Spotify Studios has a vision remains to be seen.”
Spotify’s Elhabashi said the company will broaden its analytics capabilities and maximize “consumption from the massive audience we’ve established through format innovation and ensuring that more creators in more places achieve success.”
Bill Simmons will continue to run The Ringer, which produces sports, entertainment and pop culture podcasts, as a separate studio and serve as head of podcast innovation and monetization.
Among Spotify’s top five podcasts in the U.S. are “The Joe Rogan Experience” and “Call Her Daddy.”
“We are expanding our partnership efforts with leading podcasters from across the globe with a tailored approach optimized for each show and creator,” Elhabashi wrote. “This fundamental pivot from a more uniform proposition will allow us to support the creator community better.”
Spotify stock closed at $156.34 a share, up 3%.