Spotify will reduce total headcount by approximately 17%

I thought this was just me. Defo a bug.

I would presume it's many more products than just Spotify app.

Having had a wee insight into how it worked at Rdio (obligatory: I miss Rdio!), one big chunk of the answer is they need a literal army of lawyers.

A worldwide streaming music library is a hoard of licensing liabilities for every possible country, with deals that expire, renew and change hands daily on every possible mix of business days and holiday calendars.

As for the design and development headcount, I guess they dispatch teams and tasks as efficiently as Meta with their thousands of acqui-hired product people.

1. iOS App 2. Android App 3. Windows App 4. Microsoft App 5. Web App 6. Underlying API 7. Artist Portal/App 8. Advertising Portal/App 9. PlayStation App 10. Xbox App

There are probably entire engineering teams for each micro-service in the overall product (personalization, playlists, player, etc.).

No Spotify, I do not want to listen to Joe Rogan and other right wing podcasts.

Just let me hide Podcasts already :-(

As much as I hate to see layoffs from an empathization perspective, maybe this is the reason? Remember Brook's Law - adding manpower to a late project makes it later. Too many cooks spoil the broth and all that.

They consider their workforce a liability and expense instead of an investment and necessary for quality and competitiveness.

They're just cutting into their workforce to impress investors to bilk more money out of them.

It's a sick philosophy for short-term gain that will ultimately destroy the company.

You just need that many people if you are going to go that route. Unfortunately for them, once the economy goes from "stupid good" to "very good", it all starts falling apart.

It's unchecked complexity that at some point is going to destroy you.

And it can literally destroy them.

"From Unicorns to Zombies: Tech Start-Ups Run Out of Time and Money"

https://www.nytimes.com/2023/12/07/technology/tech-startups-...

They could’ve been more careful about avoiding lock-in by building more on something like kube but most startups don’t have that foresight, and the expense of moving to on-prem is compounded even more when they have so much wrapped up in the aws ecosystem.

> Spotify is cutting almost 1,600 jobs as the music streaming service blamed a slowing economy and higher borrowing costs in the latest round of redundancies at big tech companies.

It clearly states later that in a zero interest environment Spotify borrowed heavily and over hired, in this environment it’s no longer sustainable and they had to let employees go.

Did you just assume “costs” meant infrastructure costs like cloud?

Isn't this what made Spotify success? Yes, they could have build their own datacenters, but someone else could outcompete them in the meantime.

They have traded off something for another thing.

> I've seen their cloud bill and it's significantly higher than 1,600 peoples jobs

An apples-to-apples comparison requires looking at all associated costs of switching to on prem (salaries, hardware, etc...).

I've only been a part of this analysis at a company dealing with a cloud bill in the low tens of millions, nowhere near the scale of Spotify (and I'm still relatively new to all of this).

> And cloud has a lot more lock-in than most employees.

It's a shame there are not better abstractions to facilitate moving to and fro.

I'm not sure what you mean by this as Spotify was actually quite late buying into cloud. They ran on bare metal through at least 2015. From their engineering blog:

">Thus, in early 2015 we started exploring what a cloud strategy would look like for Spotify."[1]

So they would have been running on bare metal through some of the biggest spikes in growth i.e launching in the US market. I don't think they bought in any more or any less than anyone else who transitioned from bare metal to cloud and for probably the same reasons.

[1] https://engineering.atspotify.com/2019/12/views-from-the-clo...

how did you see this. How do you know what all the discounts and backdoor deals that were applied to the bill. How do you know the final amount that was paid out.

i am skeptical that some rando is privy to this information.

In lieu of actual profitability, they also chucked in $1bn to buy up their own stock to maximize the CEO's already enormous compensation.

https://techcrunch.com/2021/08/20/spotify-to-spend-1b-buying...

Source? Because losing money every year does not seem sustainable.

https://www.macrotrends.net/stocks/charts/SPOT/spotify-techn...

Seems like their headline gambles didn't work but googling suggests that the podcast listener market increased 10% in the last year so I think they'll probably try again.

I still think it was not a smart move...

Its like that blue haired streamer going from twitch to what ever the msft clone of it was.

Yes Spotify is super popular but I hear more and more people moving away from it to for example apple music or other services.

They don't focus on the core anymore that much.

For example they are super late on the lossless audio train.

Yes you can hear a difference from spotify and apple music. I tested it with all my colleagues in the office. You can clearly hear that apple music or tidal sounds better then the spotify versions.

It's so hard to fire people in France, that some large companies simply have a policy of "no france office".

Layoffs are not desirable for a company, but sometimes they are required. The fact that a CEO decides to go with layoffs when it's the right thing to do shouldn't be seen as a failure of the CEO. It's the pit stop that keeps the company from exploding if you just ignore all financial health markers and keep everyone employed until the money runs dry and you have to gut the business and sell of part to cover the bankruptcy.

Lay-offs happen for all sorts of reasons. It may be very reasonable to have X number of people one year, but changed market conditions, or financing rates, or whatever else mean it no longer does the next year.

People don't have magic crystal balls. But even if they did, it may still make sense to hire people while financing such a thing is cheap, and to lay those same people off when it isn't any more. Make hay while the sun shines, and all that.

You may not like the fact, but getting rid of poor performers makes businesses stronger and better. Rounds of lay-offs undeniably make such decisions easier to make and justify in large companies.

CEOs who do the same (or more) with fewer resources are generally rewarded. As a shareholder in the company you'd want them to do more with less and make you more value, right?

You might as well argue that any CEO who needs to hire more people has failed. That sounds obviously silly, but it's genuinely an almost equivalent argument.

All of this may not be pleasant for those involved and especially those who are losing their jobs, but that's capitalism for you. Big business doesn't tend to optimise for people's feelings - it cares more about the bottom line and being competitive.

In this case there is an obvious and pressing need. The streaming music scene may be a tremendously complex place to operate a business in, with all it's licensing and labels and countless jurisdictions and legal complexities, but both Apple and Google are sitting there ready to eat Spotify's lunch if they can't figure out profitability.

9500 is probably excessive, but think of it just this way:

1. Spotify has a worldwide presence, apparently 184 markets; that probably entails a legal presence in many of those jurisdictions, sales, marketing, support, localization, etc.; at a conservative 2 persons per market, just that's going to generate about 400 jobs; now, most of those markets will be grouped up but the big ones will probably have tens if not hundreds of people dedicated to that market (the US is likely to have hundreds of people supporting it, for example).

2. Spotify has to build, update, maintain, extend, etc a global infrastructure. Just the ops team for that has to cover 3x 8h shifts to make it 24/7. Each region should have at least 3 people in it, for high support availability. That's 9 people right there, and it would be crazy to support ~550 million active users with 9 people, they probably have 10 times that many people and teams supporting various components. So just an ops team of 100 is perfectly reasonable.

3. Then they need a dev team. They have... ads, various integrations, songs, audiobooks, podcasts, their apps or whatever are available on smart TVs, web, cars, bla bla bla, if it's 10 people for each client, that would probably mean at least 50 people. And 10 people per client is probably silly low, make that at least 100-200.

4. Then they have a bunch of backend services, probably a lot of them. Plop another 5-10 people for each service. That's going to be many more hundreds of people.

5. Then they have actual R&D, where they're exploring stuff. This depends on the company, but for a company that's still clarifying its business model, having 100 people researching stuff sounds reasonable.

That's ~1500 people just from me eyeballing their business. 9500 is maybe on the high side, but considering their scale, if we dig deep enough into their business model, probably 5000 is perfectly fine.

These services are crazy complex and "streaming mp3s" is a very reductive view.

For context, I find this artist's explanation of the situation helpful: https://www.youtube.com/watch?v=gDfNRWsMRsU

No, they're saying that severance is based on tenure (and local notice period requirements). On average, people laid off get 5 months worth of severance - some more, some less, based on tenure.

This seems to be some megatrend with the big tech companies. Hire on ~10k staff, ignore your core features, ???, profit.

On top of that, the company wants to innovate and probably has teams working on hardware and whatnot.

Whether it’s efficient is not clear, but most people there probably work hard on their particular daily grind.

Ensuring Spotify can smoothly operate globally

These are probably not all devs/engineers. Usually, selling services/products in multiple countries mean, dedicated legal, HR, accounting replicated in nearly every location where no common treaty exists, and management in large tech tends to have too many levels and adds up quickly as well.

I hate Xitter like the next guy, but if there is one thing Musk made right is to show you can axe most of the staff of an established platform and you can still have a running global scale operation (ignoring some early downtimes/hiccups and all other, khm, content-related issues). It seems currently they have around 600 full-time engineers.

> I have made the difficult decision to reduce our total headcount by approximately 17% across the company.

I think this was the first corporate notice about layoffs that didn't read like absolute bullshit.

I guess it depends a bit what they mean by `the average employee receiving approximately five months of severance` (and also where you are seeing it from, maybe its seen as more generous when seen from the US). In Sweeden the notice period for the employer is between 1 and 6 months, depending on how long the empoyee has worked there. If they count that period in as part of the severance package, it could wery well be "the legal minimum" or "the legal minimum + 2 months", which sounds less great than 5 months :-p

If its "the legal minimum + approximately 5 months" then it's generous.

In the other developer-downscalings I know about here in Scandinavia (Norway if it matters) the most common deal has been 6 months, either "work for the remaining notice period, then 6 months pay" or "6 months pay, you work out the current month". I say "deal", because its a deal where the employee gets that pay, and then resigns voluntarily. If they don't take the deal they only receive the legal minimum, but they can then fight the firering, which can get expensive and complicated (I have never heard about anyone not taking the deal).

"Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact. More people need to be focused on delivering for our key stakeholders – creators and consumers. "

While this is likely partly true, this is mostly management's fault. I didn't see anything in the email that talks post-mortem about the root cause and how it will be prevented going forward.

Also the fucking music industry sucks.

I also used to work for a company that used to have a streaming service and they paid like over 20 million alone just to the record industry.

This is exactly what Amazon did/does. Doesn't mean that they have "limped along"

Smaller artists? Not a chance. They get paid in exposure, which is the #1 rule not to do in the creative arts.

What's stopping them from bigger cuts? We've seen that big SW products can run on lean teams(whatsapp, post-Musk Twitter) and we know many large tech companies are overloaded with way more workers than they need to run(Google), just because they could overhire when money was free.

>Apple and Amazon will eventually eat Spotify given enough time, if they don't find a moat to be built

What prevents Google from doing the same? They already have a large customer base in Android users.

I doubt it.

Apple is restricted to Apple devices. As for Amazon, the same argument could be made about Prime Video eating Netflix, and that never seemed to happen.

On top of that, as far as I know, Spotify is profitable.

PS. Spotify had already two layoffs, once 6% in Jan 2023 and 2% in June. This combined seems like a 25% ish cut.

They can also just keep being the most complete music streaming service.

That is a low margin business, but it’s a business, and you probably don’t need a lot of people to run it.

However, after that experience, I'm starting to think there's no way in hell a massive multi-product conglomerate like Apple/Amazon is going to overtake a single-product music streamer like Spotify.

Apple/Amazon are clearly stretched too thin, and in a worse strategic position on audio due to the way the licensing agreements shook out. In music, everybody basically has access to the same catalog on every platform.

And given that songs are 4 minutes long (vs 4 hours binging TV shows), you spend wayyy more time interacting with the software in audio vs. video. So in audio, it's purely just deciding which UI/features you like best.

Spotify seems to be trying its best to screw up the UI, but no way it ever gets as bad as Apple Music given that's their only meal ticket.

You go in, you build, and when the job is done, you leave.

We just haven't figured out how to get the job done yet.

Were they not paid during their employment? Not to mention everything they are doing for those exiting employees (average five months of severance including healthcare, 2 months of career placement services, etc)

> In the past, layoffs typically came with an expectation that the employee might be rehired if more work became available or the employer’s financial condition improved. An RIF, on the hand, did not come with such an expectation; it usually meant that a certain position or an entire department was being eliminated. https://www.lawyers.com/legal-info/labor-employment-law/rif-...

> TBH I don't see what changed on Spotify for a customer perspective in the past few years. I still see bugs I reported years ago, the UI is largely the same.

He didn't get into it because you answered it yourself. And anyone who has used it for a while has most likely the same initial thought.

It's impossible to tell if this is what's happening though. It can really go either way.

I've seen orgs where the perf-review meat grinder is driven so tight that engineers are essentially punished/PIPd for doing things that NEED to happen even if they aren't sexy business impact. Like upgrading library versions (not all of them, just the core/most important ones!) so you don't wake up one day and realize you're on a 6 year old version of a core library/framework. Even remediating incidents was treated as "not impactful work". This resulted in the expected shitstorm and teams were literally churning employees because oncall was so bad and just doing anything was so awful, and it took a staff engineer's guile just to get an otherwise-relatively-simple project over the line because you had to be a ninja just to navigate the awful existing mess of 10 years' worth of laser-focus on business impact.

And I've seen orgs where the engineers run rampant, doing random side-quests constantly, junior engineers run amok over-architecting every project with all of the skills their CS degrees gave them, senior engineers make magnum opuses of medium-sized projects, and principal engineers pontificate and aid and abet any and all architecture-astronauting that anyone else in the org does. And naturally none of it was done in any way shape or form in coordination with product.

And naturally there's everything in between. So whether they have a healthy amount of focus on non-sexy work and wish they were neglecting it more to reap shorter-term product-focused gains, or they have too much bikeshedding and they want to be more product-focused, it is difficult to say.

(Naturally the cynic in me says it is probably the former, though...)

Tech workers need to stop working for corporations they don't own, aren't seeing the profits of, and who will just throw them away at any moment. The solution are businesses in the form of employee-owned co-ops and organized labor.

Announced now, people can at least try to scale back Christmas and NYE plans if necessary.

If they were worried about efficiency, they would not have grossly over hired during covid. That's why we need unions.

Some companies try to make the reason of their existence to grow as fast as possible, no matter what.... and in the process they destroy the value they originally offered to its customers, processes, people and quality controls.. for what?

There was a class from Darden School that talked about that, I recommend reading this summary from it https://iveybusinessjournal.com/publication/growth-to-greatn...

Don't be embarrassed, that's probably most people.

We like what we like.

In countries with functional labor laws, it's straight-up illegal unless you're basically going through bankruptcy. Mass firings should only happen if either 1) there's a very significant economic crisis going on, or 2) the company is doing so poorly its immediate future is uncertain.

The Silicon Valley style mass-hiring followed by mass-firing style of management is indicative of poor management. In a well-run company this should never happen, as the same could be achieved by simply reducing the hiring rate and letting natural attrition take care of the rest.

You can look at companies like Spotify and Twitter, they ship like one feature a year if you average.

Will things change next year? Maybe if some IPOs hit and the VC pump and dump pipeline gets back up and running.

Not to say that those employees don't provide value, but the spread between operationally stable employment levels and current headcount is far wider than other industries.

Thus, more potential for large cuts.

All management hates unions, and especially the management of SV companies. They will do everything to crush it. So you either do it fast or lose employees as the management will attack first.

As far as I can tell, its biggest beneficiaries are the 3 record labels who can use Spotify being one of its customers to be able to negotiate better terms with Apple/Alphabet/Amazon.

And, strangely enough, once a sales channel is big enough it can begin taking a bigger slice of profits and telling suppliers what they should be doing (a la Walmart).

There's a Spotify playlist for everything, young people regularly share Spotify playlists each other, and for many: the hardest part about switching to another service is losing access to those playlists.

The "official" playlists provide two other functions. One is to initially amplify artists. Record labels can buy slots on these playlists, just like they used to buy airtime on the FM radio stations of yesteryear.

The second is that Spotify can use its own filler muzak on its playlists to keep licensing costs down. E.g. they pay a pianist to play generic "Christmas piano music," make up an artist name, and put a bunch of those songs on its official holiday playlists.

The end game was always about rapidly burning VC money to acquire more users, while kicking the can of profit-making down the road. Now ZIRP has ended for the time being, the chicken has finally come home to roost.

I imagine there's a big team dedicated to getting inventory on the service through negotiations with music producers around the world. You'd need to keep them to continue expanding, adding newly produced music, and re-negotiating expiring deals.

There will be a large editorial team producing playlists, curation, tuning the algorithm with expertise, etc. That all needs to be localised and to cover lots of niche music tastes. That's also not evergreen content or work, it needs constant updates to remain relevant.

Then there's international expansion and enabling the tech to work for more countries, more languages, more payment methods, more types of music publishing.

Honestly, where do you get "80%"?

The complexity is not the player, it's the whole business... Winamp didn't have recommendations, tack on another 100-200 people working on data to surface those. There are close to a 100 markets being offered content with licencing deals, each with different regulations.

There are internal platforms, infrastructure, development, each platform requires team(s) to maintain, and develop them.

What's the size of the largest tech company (with a single product) that you've worked at? Just so I know how to translate how larger organisations work to a worldview that you have experience with.

Spotify has developed a huge surface area, because they are attempting to be the one-stop shop for all things audio. The thesis is that the whole is greater than the sum of the parts, and that's what they're selling to investors. That means there are countless bets they could be making at any one time, to compete with everybody else out there.

For a company of Spotify's stature, when capital is cheap, they can raise the money to do all the things, all at once. They don't have to make prioritization choices. Usually this means many dozens of teams, which each seem pretty lean if you zoom in. Like, I'm guessing there's a team of 3ish developing the in-app lyrics experience, or something like that. The scale is in how many of these bets are going at once.

The capital markets have changed, and now Spotify (like many others) has to constrain its bets. The thesis hasn't changed, but their capacity to try to prove it out isn't as limitless as before.

At some scales of business, spending a lot more to get incremental gains can be worth it.

https://spotifystudios.com/

Corporations can’t magically know the optimal number of employees to maximize profits. And even if they could this will change over time. So we should expect them to cut when they have too many and hire when they have too few.

Not sure what you are trying to achieve by saying something so blatantly untrue that a two-word query into any search engine can debunk it as fast as your browser loads a web page.

Businesses need to be able to grow and shrink. Otherwise we just end up with "too big to fail".

One thing is to have layoffs when you are raking in record profits. This doesn't seem to be the case. The text makes a decent enough case.

Spotify reported that it had 9,400 employees at the end of the third quarter of 2023. It had already cut back employee numbers by 6% in January and by a further 2% in June.

Did they retrench the people who made that decision? Did they retrench the management who approved that contract?

Spotify employees should be pushing for some degree of corporate and fiscal responsibility given they are retrenching, but they still gave Joe the bag.