Spotify’s chief financial officer, Paul Vogel, has announced that he will be parting ways with the streaming giant on 31 March next year.
Ben Kung, VP of financial planning and analysis, will “take on expanded responsibilities” to support the company’s realignment of its financial leadership team, Spotify said.
Vogel’s departure follows Spotify’s announcement four days ago that it would be cutting 17 per cent of its global workforce or some 1,500 jobs.
In a statement, Daniel Ek, founder, chairman and CEO of Spotify, said that the firm was “entering a new phase and needs a CFO with a different mix of experiences”.
“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,” Ek said. “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.”
Spotify’s recent huge layoffs came after positive earnings news and financial performance. Ek said that the company’s costs were still too high.
“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. These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year. 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,” he told staff.
“When we look back on 2022 and 2023, it has truly been impressive what we have accomplished. But, at the same time, the reality is much of this output was linked to having more resources. By most metrics, we were more productive but less efficient”.
Spotify also went on a high-profile shopping spree for podcasting companies in recent years, paying hundreds of millions of dollars on Gimlet, The Ringer, Anchor, Parcast, Megaphone. It then spent more hundreds of millions of dollars chasing big names around from Joe Rogan to Prince Harry. All told, it has spent more than a billion US on these efforts. But it is now cutting shows produced by the studios it spent so much to acquire.
It has also abandoned its stance on podcast exclusivity, which was determined as a good way to drive user growth. However, the Gimlet and Parcast unions said that some shows lost more than three-quarters of their audiences when moved to Spotify exclusively after Spotify restructured and laid off their staff.
— Gimlet Union (@GimletUnion) October 7, 2022
“Yesterday, Spotify told show teams that their podcasts were being cancelled because of low numbers. But decisions Spotify’s leadership made directly contributed to these low numbers. Their decision to make most of Gimlet’s and Parcast’s shows Spotify exclusive caused a steep drop in listeners,” they said in a statement.
So what’s the reality of the situation with podcasting? ARN proudly said last month that podcast ad spend was up some 88 per cent.
“In the current media landscape, podcasts continue to be Australia’s fastest-growing mass media, fostering unparalleled engagement and intimacy between advertisers and audiences. With an 88 per cent surge in Australian podcast advertising spend year-on-year, it highlights the continued proven impact of the medium and a host’s ability to connect and drive action,” said Corey Layton, ARN’s head of digital audio,” said Corey Layton, ARN’s head of digital audio.
Has Spotify over-extended and exposed itself to too much risk with podcasting? Almost certainly. But it still has room to manoeuvre with its gargantuan user base. Is it charging them enough money? Can ads fill the holes in Ek’s financial planning? If so, would users be happy considering they used to get an ad-free experience?
Something has to change for the company. But what?
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