Spotify is screwed
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Spotify is screwed

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This week, WIRED Start takes a look at Spotify’s increasingly precarious business model. The world’s biggest music streamer rarely turns a profit and just cut 17 percent of its workforce.

“Spotify and the recording industry have a deeply entwined and sticky relationship”

Just days after people gleefully posted their Spotify Wrapped, bad news came for the music streaming giant. Spotify announced that it would cut 17 percent of its workforce, a chunk that equates to an estimated 1,500 people. It’s the third time the world’s largest music streamer has cut jobs this year.

The news came after Spotify posted its first profitable quarter since 2021. In a memo to staff, CEO Daniel Ek said the company had expanded its workforce and offerings significantly throughout 2020 and 2021, thanks to lower-cost capital, but is now bumping up against the same problems startups across industries are facing, like high capital costs and slowed economic growth.

Despite its popularity (Spotify held 30 percent of the music streaming market by late 2022), the company has long struggled to turn consistent profits. The layoffs wrap up a bad year: Spotify cut 6 percent of its workforce last January, followed by another 2 percent in June as it slimmed down its podcasting business. Even as the world’s most recognizable music streaming service, Spotify is plagued by an unreliable business model, one in which record companies sit back and rake in royalty payments while artists can struggle to bring in enough cash.

Spotify and the recording industry have a deeply entwined and sticky relationship: Spotify is seen by some as a savior of the music industry, but artists earn wildly different incomes based on how Spotify pays.?

Read the full story here.


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Until next time

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Jad Nohra

Solving and re-solving @Irreducible

1 年

Why must every company always have to have amazing profit? Isn’t the product existing and self-sustaining good enough? To turn into profit constantly, I’m sure Spotify users would be happy to have a slightly higher subscription fee.

Colin Crapo

Logician, Research Developer, Technologist

1 年

There's a problem on both sides of this argument. The music industry needs to change significantly to account for all the solo labels now, vs the 'We Say So' record labels. At the same time, independent artists shouldn't expect the same levels of payout from previous decades. When you're on your own, there's more risk you take on yourself. Spotify isn't here to make small artists rich, nor is it trying to fuel the disastrous and monstrous industry that has become the modern music industry. Expectations on all sides need to be adjusted, but people who put too much into making a living off making music alone, that market is now super saturated. You can't flood a market and expect pricing to hold up

Brian Bokor

Senior Staff Software Engineer at Slack

1 年

Music streaming will never be that profitable. They will have to continually cut costs. Ultimately, they need time expand their business to have other products

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