this post was submitted on 04 Dec 2023
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Because of interest rates hikes, companies like Spotify have to focuses on more trivial matters like being profitable. 17% lay off seems like a lot. I wonder if they will go bankrupt?
They reported a 65m profit on the quarter before these layoffs. I don't think they're going bankrupt unless this last quarter has been a disaster for them.
Spotify's issue isn't unique. Fundamentally, given how much money the labels demand and how relatively low streaming subscription fees are, there's simply not a ton of money around. Spotify has been unprofitable for most of the past few years. The fact of the matter is that people expect to be able to listen to essentially all music for a relatively cheap price, and labels expect to get most of that money. The specifics of the company don't matter much. If Spotify dies, people will migrate to another platform, and the finances won't be meaningfully different there. Maybe someone like Apple could afford to eat the losses or is actually big enough to tell the labels to pound sand, but otherwise, this is just kinda what the situation is.
I think it's more related to rising interest rates which hasn't happened for decades now. I don't Spotify is in any real trouble tbh, it's just house cleaning and future planning given the business landscape changes.
I agree that's probably their main issue right now, and they're hardly unique there. You've seen layoffs and belt tightening everywhere as the free money faucets have dried up.
That said, I think the core business model isn't exactly challenging. Similarly to Netflix ten years ago, they're primarily serving content that they don't own, but unlike Netflix, they're probably not going to be able to pivot into content creation unless they want to actually become a proper label, and even then, they'd need big enough stars that other distribution platforms can't afford to not cooperate with them. Otherwise, they're always going to be at the mercy of the labels, though there is some balance, since the labels also need the streaming platforms to at least survive.
And this is why they focus and promote the podcasts so much. Podcasts don't have any label intermediate