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Comment by mahmoudhossam | Hacker News Reader

This isn't about rising costs though, this is about the labels and shareholders being greedy and wanting an even bigger piece of the cake that is already massive.

Meanwhile artists are getting paid next to nothing and now even workers are getting the short end of the stick.

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I see this response a lot on these threads. Why is it so hard to accept that two digit inflation over the past couple of years and interest rates well above 5% could be a major factor?

Well how about thinking stakeholders first and shareholders second?

Firing your employees because you are incompetent leadership and management without good foresight should result in letting you go.

Why the high compensation for leadership when it doesn‘t know what it does?

Braun didn‘t get the design leader in the past because they threw out their team, they got there because they kept the team together. The more you learn the better for the company.

This goes for all tech related job cutting in the last months.

Nonsense. You didn't address my point...

Tech is disproportionately affected by rate changes (both inflation and loans/bonds), as it's the highest growth sector. High growth businesses are investing heavily in infrastructure and as such are also highly leveraged.

Well vice versa great answer.

Who planed and executed a strategy like this and why isn‘t it done in a way to not get as much employees which would lead into them getting laid off?

Why getting cheap money without taking into account that the situation is different in 5 years?

I couldn’t care less that growth businesses run into this situation. Then don‘t grow it so fast!

People are getting fired across so many businesses. It appears unlikely they will get another job soon. The situation leads to health problems and has ramifications for people. Fucking management can do whatever they want. They still get highly compensated.

What? I addressed your comment. I'll make it simpler: you are spouting nonsense.

Spotify didn't "plan and execute" anything. The current situation was brought on by 2 decades of quantitative easing and then multiple black swan events and even more cash injection until it all came crumbling down. The amount of blame you place on the board of a single company to combat what is essentially a global crisis brought on by actions taken by world governments is extremely naive. Spotify isn't alone in this. Nearly every big tech company has had layoffs and I don't think we're anywhere close to being done yet. I hear rumors more are coming for mamaa.

There are large forces that affect our lives that are beyond our control which cause us anxiety. We can deal with this in different ways; religion, government, or employers are all authorities who we may believe can help us through times of need (our healthcare, for some of us our literal ability to continue living, is tied up in our employment, at least in the US). It’s only natural that we run into problems when our bulwark against the uncertainties of the world is taken away. And then tie up the prestige of working for FAANG and the identity that comes with it, to learn that perhaps you weren’t so special; you were just caught up in a ZIRP phenomenon - it can be hard for an individual to take.

I don't disagree, but we all need to strive to do better. Pleading with perceived corporate overloads to fix problems they are simply victims of themselves isn't helping anything. I'm seeing this trend more and more where people want to blame ceos like they have some magical wand to fix the worlds problems. That's not how things work.

If we want to look for solutions, we should look at the 20 years of stimulus which go us here and question why this was happening and what we should have been doing about it. But, alas, few were complaining when they were able to get 500k loans with sub 3 interest rates...

How do things work? From what I can tell (speaking as an American), we do seem to have imbued corporate leaders with a reverence classically reserved for religious leaders. And who else are we supposed to look to? God is dead, and 40-odd years of starve the beast has left the government with seemingly few policy tools to enact change; though as you note they can still change interest rates and print money.

Hopefully someone will come along and save us, but it's hard to imagine who.

The government printed the money. They are the issue. Corporations compete with each other for survival, they cannot afford to be altruistic and expecting them to be is totally naive

Given that they are responsible for providing (and I suppose delivering as well) the healthcare of a majority of Americans, it seems problematic that corporations are nihilistic profit-maximizing machines though, doesn't it? I mean, I'm pretty sure we're all just boned at this point, but obviously I'm not much of an optimist. Judging by the declines in birthrates though, it seems like that's more or less what others are coming to conclude.

How much more money do you want Spotify to lose?

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

https://dqydj.com/stock-return-calculator/

https://dqydj.com/sp-500-return-calculator/

Shareholders have a 1.52% return since it went public, Apr 2018. A riskless investment in sp500 earned 11.7% since Apr 2018.

How much more do you want shareholders to lose? They have been losing 10%+ per year for 5.5 years.

I‘m no business major, I have no clue how to handle a company on a stock market. But the results I see is that leadership took steps that let into people loosing their jobs. Why are shareholders and management so important and employees at the branches are not? Everyone in that chain should be taken into account.

Do you have a specific claim or question, or is this an emotional response anytime employees are let go?

I already showed you that shareholders have been losing money for 5.5 years (while employees were being paid).

Yeah this emotional because it makes no sense. The system appears to be not working.

The system literally is working. Spotify still exists and you can get music there. Most employees kept their job.

The system that’s not working is literally the one in your head. Literally, your imagined ideals sign zero paychecks and add no value.

Shareholders have had a poor investment so they do share in the failure. But the way a business works is shareholders vote for a board and the board installs management. This management then installs leaders/managers to oversee the different components of the business.

These people are the business and are often compensated in large part with meaningful equity. Everyone else (middle managers and contributors) are not the business - they just work for it. They are mainly compensated with a salary and are called employees. They are hired to complete tasks for the managers.

The managers will increase and decrease the number of employees based on the CEOs and other managers plan which the board approves. Plans often have certain assumptions that everyone (managers, not employees) agrees on and sometimes it doesn’t pan out so they have to change the plan.

Sometimes the managers resign or are fired when the plan fails and it was their fault. Other times they aren’t because it wasn’t something they could avoid (economic downturn, rise in rates, inflation, etc) or other reasons (they could be large shareholders themselves).

If they keep running losses, every employee loses their jobs. The company is losing money.

> A riskless investment in sp500

Just a nitpick, but this isn't the traditional definition of "riskless", which would be Treasuries. I believe the S&P 500 experiences an average drawdown of 14% in any given year, so it's hardly without risk.

You could more accurately say that SPOT has been underperforming "the market", "equities", or "beta".

It is my tongue-in-cheek way of referring to the belief that the US federal government will ensure the broad market does not stay down for long.

That is an absolutely fair point. ;-)

Given that the major shareholders are the big music rights holders which is one of Spotifies major costs shareholder have done alright.

This is not true. They must be very insignificant shareholders (less than 1%).

https://finance.yahoo.com/quote/SPOT/holders/

Thabks for that. I've not been paying attention - the major labels have all sold (almost all) their stakes over the last few years.

I can’t find any references for when the 3 major labels held significant stakes in Spotify. Only Sony did with 5.7% at the time they went public, according to the principal shareholders section:

https://www.sec.gov/Archives/edgar/data/1639920/000119312518...

Other majors had slightly less than Sony each - just under the 5% threshold.

I tend to think the overhiring was not a "mistake" but planned. They still get to keep all the intellectual output of the people they let go.

Have you looked at the financials? The company runs net losses, every year. Losses are not a "massive cake", they are a "massive hole".

The labels are definitely getting a massive slice of the cake - and recently pushed for more.

> This isn't about rising costs though, this is about the labels and shareholders being greedy and wanting an even bigger piece of the cake that is already massive.

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

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

Are you not aware how dire inflation and the very high interest rate make the current situation?

Hasn't inflation gone down to ~3%?

Has it? Nothing in my life except gasoline has gotten any cheaper.

Edit: I misread the comment. I am aware of the difference between rates and absolutes.

Why would it get cheaper with a low inflation rate?

Low inflation rate means stuff get more expensive slower. It's still getting more expensive.

That isn't what the inflation number means. An inflation rate of 0% means prices stop going up and stay at their current level, not that prices go down. Prices going down would be deflation, and that almost certainly won't happen.

that's not what "less inflation" means

The other mistake you made was assuming that your personal experience is valid for the economy as a whole.

No, I made it quite clear it was a question.

Sweden's current inflation rate is 4.2%

https://www.riksbank.se/en-gb/monetary-policy/the-inflation-...

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