Spotify is canceling six shows and laying off 200 people (2% of Spotify’s total workforce) as it seeks to merge podcast divisions of Gimlet and Percast to consolidate Spotify studio operations and generate revenue. do.
According to a company spokesperson, Spotify plans to shut down five Parcast shows and one Gimlet show, including:
- disappearance case
- murder case solved
- unexplained mystery
- cold case
- unsolved murder case
These cuts are in addition to the 11 Gimlet and Parcast podcasts Spotify canceled last year. Nearly a third of Percast and Gimlet union members were laid off last October. Spotify laid off 6% of its staff in January.
Spotify’s latest financial results report “improving podcast profitability,” with podcast revenue growing nearly 20% from 2021 to 2022, but people familiar with Spotify’s restructuring said Gimlett and Percast are separate. of shows are struggling to achieve profitability and grow viewership.
Spotify does not separate its podcast interests from its other businesses. Spotify’s gross margin was flat year-over-year, according to a shareholder document released on April 25. Q1 2023 operating expenses increased 36% year-on-year.
A Spotify spokesperson said the company is shifting resources to building creator partnerships. Spotify announced an exclusive video deal with creator Markiplier in March. Under the deal, the video version of his podcast will be available exclusively on Spotify, and audio episodes will be available anywhere.
In a statement posted Monday, the Gimlet and Percast labor unions blasted Spotify’s monetization strategy, saying, “Spotify restricts many of our shows to platforms, limiting the amount of revenue studios can make.” It pointed out.
A spokesperson declined to say how profitable the Gimlet and Percast podcasts were.
In a blog post shared on Monday, Spotify’s vice president and head of podcast business Sahar Elhabashi described the changes as a “fundamental axis” that “allows us to better support our creator community.” Summarized.
pursue podcast profits
Spotify CEO Daniel Ek said during an earnings call in January that Spotify’s podcasting business “is a drag on our gross margins.” Spotify CFO Paul Vogel said on a conference call that the company expects the business to reach break-even “within a few years,” adding that “consolidated gross margin could reach 30% within five years.” It has potential,” he added. Ek and Vogel recommitted those schedules at the company’s April 25 earnings call.
“We’ve been talking about podcasting, and 2022 will be our peak year in terms of the impact of podcasting on our gross margin, so we expect things to improve in 2023 as well.” added Vogel on a conference call in January.
Spotify will continue to produce original shows with Gimlet and Parcast, including “Stolen,” “The Journal,” “Science Vs,” “Heavyweight,” “Serial Killers,” and “Conspiracy Theory.”
In a memo, Elhabashi wrote that The Ringer would continue to operate as its own unit. Both studios “greenlight new programming with an increased focus on always-on programming that attracts dedicated and loyal viewers and attracts advertisers,” she wrote.