This Light homepage

Blog -

Spotify cuts 17% of its total workforce

On Monday, an internal memo and a blog post announced that the leading streaming platform was cutting 1,500 jobs, an equivalent to 17% of its total workforce.

“Economic growth has slowed dramatically and capital has become more expensive,” Spotify’s CEO Daniel Ek wrote in the email and post. “Spotify is not an exception to these realities.”

Katarina Berg, Spotify’s chief HR officer, made available an FAQ document on Spotify’s internal platform Workplace stating that people departing the company were selected due to: “a combination of factors including but not limited to organizational design, such as duplication of roles, streamlining layers to ensure efficiency, and optimizing our organization for the next chapter of Spotify.”

The company had already cut 600 employees in January and another 200 in June.

In the memo, Ek also discussed financial challenges created by the debt Spotify took on in February 2021, when the platform raised $1.3 billion by offering exchangeable notes due in 2026: “In 2020 and 2021, we took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals,” he said. “These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year.” He then added, “However, we now find ourselves in a very different environment […] And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”

When the streaming giant raised that debt, the market was experiencing low borrowing costs, and the US Federal Reserve had aggressively cut interest rates to prop up the country’s economy during the pandemic. Today, we see inflation-fighting rates of about 5.5%.

Spotify’s latest layoffs are part of a strategy to cut costs, allowing the company to raise $1.3 billion in cash to pay off creditors. Refinancing that debt would be a more expensive alternative.

Spotify’s CFO is out

Following the layoffs described above, Spotify announced on Thursday that its CFO, Paul Vogel, would also be leaving the company:

“Spotify has embarked on an evolution over the last two years to bring our spending more in line with market expectations while also funding the significant growth opportunities we continue to identify. I’ve talked a lot with Paul about the need to balance these two objectives carefully. Over time, we’ve come to the conclusion that Spotify is entering a new phase and needs a CFO with a different mix of experiences. As a result, we’ve decided to part ways, but I am very appreciative of the steady hand Paul has provided in supporting the expansion of our business through a global pandemic and unprecedented economic uncertainty.”

A SEC filing, posted before the announcement on Thursday, showed that Vogel exercised 47,859 stock options on Tuesday, selling those shares at one of the highest prices of the past two years and cashing out a total of $9.377 million, only 24 hours after the global layoffs were made public.

Spotify announces changes to its Royalty System

Spotify published a post in its blog on November 21, 2023, announcing that is making changes to its Royalty System. Music Business Worldwide had already published an article about this matter last October.

The changes, according to the platform, are aimed at driving ‘an additional $1 Billion toward emerging and professional artists’. That amount is among the $40 billion Spotify pays out. The article does not specify if this value is monthly or yearly though.

This new policy is supposed to fight three problems in the current system:

  • artificial streaming;
  • distribution of small payments that aren’t reaching artists;
  • players attempting to game the system with noise.

Artificial Streaming

To fight artificial streaming, Spotify is betting on two initiatives.

The first is to ‘start charging labels and distributors per track when flagrant artificial streaming is detected on their content’. With this, they hope to disincentivize bad actors from uploading content in the first place.

The second is improved artificial streaming detection technology, implemented earlier this year.

Payments Lost in the System

To defend this line of action, Spotify explains that tens of millions of its more than 100 million tracks have between 1 and 1,000 streams in a year, generating an average of three cents per month for their owners. The company claims that due to minimum payment thresholds and bank fees, these payments get lost and are never received by the uploaders. Aggregated, however, they add up to $40 million per year, a sum that the platform claims would be better used if directed at ‘artists who are most dependent on streaming revenue’.

To address the issue above, in 2024, ‘tracks must have reached at least 1,000 streams in the previous 12 months in order to generate recorded royalties’.

Gaming the System with Noise

Yes, we are talking about actual noise. More specifically, ‘functional’ genres: white noise, whale sounds and other things of this kind. Spotify says that some publishers are cutting their tracks in segments artificially short (like the minimum amount of 30 seconds required to monetize a stream) in order to earn ‘outsized payments’.

Next year, the platform will increase the minimum time for monetization eligibility to two minutes for noise tracks. Noise streams will also be valued at a fraction of music ones.

Our side of the matter

We listened to Spotify’s arguments, and many of them make sense, but they also create issues for small artists like you and me.

The minimum threshold and bank fees are not an issue if small artists wait long enough to withdraw their payouts. That’s what I do. If you think of it, there is no rush to get our hands on this money. Monthly, it will not be enough to buy two draught beers in a bar. But, in a year, it may generate enough to pay, for example, for part of the costs of maintaining a website, which, in turn, helps with the artist’s promotion.

This initiative may help remove the money from the hands of bad actors, but it will not be positive for artists who are in the middle tier. Imagine not being able to receive a few dollars, especially knowing that that money is ending up in the pockets of the mainstream artists, who already make millions of dollars and do not need our five bucks. I spend a lot of hours producing music, and not seeing any return of it is discouraging. Of course, I do not make music for money, but that small amount that is paid is like a little bit of recognition.

This may end up having the opposite effect. Small artists who, until now tried to play the game fairly, may engage in artificial streaming to reach the monthly 1,000 streams per track.

Given the amount of attention and support that Spotify gives to small artists, it is hard to say if these changes to Spotify’s royalty system will benefit artists out of the mainstream like you and me. They are more likely to serve the purposes of large corporations that already make tons of money.


Playlists made private by Spotify

In the past 12 months, I had two playlists made private by Spotify. This means they cannot be found on the search or even be seen by other users by using a direct link like https://open.spotify.com/playlist/23IXDdvjbr6fIDuvBsLXaQ.

I was informed of this fact through an email by Spotify titled ‘Notice under Spotify Terms and Conditions of Use’ which states that my account ‘has engaged in unauthorized use of the Spotify service in violation of the Terms’. That’s all the information I have. They do not clarify what ‘unauthorized use of the Spotify service in violation of the Terms’ specifically means.

For months, I have been trying to get this reverted or simply obtain the information of what I did wrong.

I have been developing these playlists through honest methods for years. I never bought followers or streams. I never used bots. Through this unilateral action, Spotify made my efforts in the past years useless.

Spotify’s support team does not offer any light on this. After many contact attempts, an escalation case was opened in March 2023, but I never received any follow-up. I have been contacting support in a loop. They not only do not explain what the issue that originated their action was but also abruptly disconnect the conversation when they feel it’s time to. They also do not provide a status of the escalation case. Sometimes they disconnect even before the conversation even starts, probably because they feel that my initial request, which is a long chunk of text aimed at providing context on the whole situation, is not worth their time. Spotify has been burning a lot of support time due to that, given their representatives had to spend a considerable accumulated amount of time reading my request over and over. In one of these occurrences, I spoke with the same agent on two different days and this person did not even seem to recognize the case. My gigantic initial message would be easy to remember, I would assume. No wonder their score on Trustpilot is 1.9.

I also sent hundreds of messages requesting the status of the escalation case to support@spotify.com. I never received any response. And I am not alone in this. Other curators are being punished for undisclosed reasons and receiving the same treatment from Spotify.

It’s unfortunate, however, that Spotify believes they can unilaterally take these actions without the consideration of telling users what they did wrong so they do not repeat whatever that is. I would be very willing to comply with whatever that is if the playlists were made public again. It’s unfortunate that their support is not interested in solving anything and is trained to disconnect conversations in the middle.

Curators like me are forced to rely on the correct functioning of these platforms, and we believe that by following the rules, the other side will keep their side of the bargain, but this does seem the case here. Playlists made private by Spotify hurt independent curators and that is not good for the industry as a whole.

How are my Spotify playlists different?

For the last couple of years, I have been very active both as a playlister and as an artist submitting my songs to playlists through several different methods. And from time to time, I wonder ‘How are my Spotify playlists different?’.

Not always the experience as an artist is pleasant. Worse than getting a submission rejected is never hearing back from the playlister you submitted to. And that happens. A lot.

What about you? Do you feel that some playlist submission systems have a really low rate of response? Do you feel like some playlisters are out there to get the benefits of the artists’ submissions (who are normally followers for their own stuff) but don’t want to invest their time working on their side of the deal? Impressions may differ, I assume.

So, for starters, I can say that I review submissions every day, several times a day. Either on my own site or on Daily Playlists, I keep up to date with submissions daily.

Second. I try to be very inclusive. Independent artists do not have the support of record companies and we only have each other to rely on. So I have several Discovery playlists entirely dedicated to small artists in order to have space for everyone. Of course, I reject content with low quality, but I don’t reject tracks just because I don’t like them, as long as I feel they meet the spirit of a given playlist and meet good quality standards.

Third, I created my own submission system.

Fourth, I never charge for this service. There’s no upsell, no attempt to make you spend any money in any way. I do it as a free service where all artists give me back is follows and likes in my Spotify stuff (account, artists, playlists, tracks). And I work on my side of the deal relentlessly.

Another inclusivity aspect of my work is that you will find music from many different backgrounds in my playlists. Be ready to hear songs from different countries and in different languages. Some people may shy away from tracks not sung in English, but I am actually attracted to them. Arabic, Mediterranean, Indian and Asian rhythms are among my favourites and you will find a lot of them in my playlists.

I hope all the above gives you a good picture of my relationship with music, artists and the activity of playlisting itself. And, if you are an independent artist, I hope you’re soon part of one of my playlists.

How are my Spotify playlists different?