Music streaming giant Spotify has redirected its strategy in the podcast industry, aiming to earn consistent profits and mollify investors. The company had previously spent over $1 billion in podcasting, including buying two podcast studios and signing high-profile podcasters to exclusive deals. It had also built a podcast campus in Los Angeles and dubbed it "Pod City".
However, in June, Spotify announced a further 200 layoffs, primarily in its talk division. The company is shifting its focus towards providing tools for podcast producers and monetizing via advertising, similar to YouTube's model. Previously, Spotify had created exclusive, premium content to bring users to its platform, but it now intends to distribute some of its high-profile podcasts, such as Anything Goes by Emma Chamberlain, on other platforms.
As part of this change, Gimlet Media and Parcast, two of Spotify’s prominent studio acquisitions, are being rebranded and brought under the broader umbrella of Spotify Studios. There were moments of hope for employees, such as creative suggestions and upcoming projects, but the studios' annual budgets hadn't been allocated, and deals weren't renewed. Founders of the acquired companies also left, and top stars allowed their contracts to lapse.
The job cuts have triggered California’s WARN Act, which requires companies to offer 60 days of notice for mass layoffs. The Writers Guild of America, East, which represents employees at both Gimlet and Parcast, say that 47 members lost their jobs. The union is discussing ways to represent the remaining employees. The fate of Spotify's guarantees to them, including a substantial budget for diversity, equity, inclusion, and accessibility measures, is unclear.
Despite budget cuts, Spotify is focusing on another acquisition, Megaphone, the podcast hosting, and advertising service, which it bought for $235 million in November 2020. While cutting back on big investments, the company is flying podcasters and musicians out to Cannes for a party at Cannes Lion, an important event for companies hoping to meet with the world's biggest ad agencies.
In conclusion, Spotify's move to podcasting was previously focused on exclusive premium content, but with layoffs and changes in strategy, the company is shifting towards tools for podcast producers and advertising monetization. Companies under the Spotify umbrella are also being rebranded, and some employees have lost their jobs. However, Spotify is still investing in its acquisition Megaphone and hopes to connect with major advertisers at Cannes Lion.