Author/Qian Tongxin
The layoffs at international technology companies continue. On January 23, music streaming company Spotify announced plans to lay off 6% of its workforce. Although the scale of Spolify is much smaller than that of the Silicon Valley technology giants, it also reflects the trend of decreasing advertising revenue of Internet companies.
As of September 30, Spotify had about 9,800 full-time employees, and the layoffs involved about 600 people. The company also said Dawn Ostroff, chief content and advertising business officer, is leaving.
Spotify shares surged nearly 6% after the layoffs were announced. Spotify stock has fallen more than 50% over the past year.
Just last week, Google announced that it was laying off 12,000 employees. Advertisers have been cut back on online ad spending over the past year as rising interest rates and inflation have hammered businesses, hurting revenues for internet technology companies such as Google and Meta.
As of now, the four major Internet technology giants Google, Amazon, Microsoft and Meta have laid off more than 50,000 employees in total. This reflects that Internet companies are gradually returning to rational growth after experiencing rapid expansion during the epidemic, especially in the context of the global economic downturn.
Spotify’s layoffs once again show that the “golden age” era of Internet companies’ advertising revenue growth is over. Spotify CEO Daniel Ek said in a statement: “All the top tech companies want to be able to maintain the strong momentum brought about by the pandemic, and I do too, thinking that the risk of slowing advertising revenue will affect us less. But in hindsight, the investment was still too aggressive until our revenues grew.”
In October, Spotify said it would slow down its hiring. According to Spotify’s financial report for the third quarter of fiscal year 2022 released in October last year, the company’s revenue was 3.036 billion euros, a year-on-year increase of 21%; however, the net loss reached 166 million euros, compared with a profit of 2 million euros in the same period last year.
Still, Spotify’s growth slowdown is more modest than that of internet giants Google and Meta. According to forecast data released by research firm Insider Intelligence, Google and Meta’s advertising revenue growth rates in the U.S. market will be 3% and 5% respectively in 2023. In contrast, Spotify will still achieve a 30% growth in advertising revenue, and Amazon TikTok is on track to achieve 36% ad revenue growth, compared to Apple and Apple’s ad revenue growth of 19% and 26%, respectively.
Monness Crespi Hartdt analyst Brian White remains bullish on Spotify’s earnings outlook. Spotify will benefit from revenue from ad-supported monthly active users, although it faces some challenges this year, such as attracting new paying users may be difficult and pressure from reduced digital ad spending will continue, White said in a note. .
Spotify also previously won the support of EU regulators in its anticompetitive lawsuit against Apple. The European Union passed the “Digital Market Act” last year, which will be officially implemented in May this year, which is expected to help Spotify provide users with more favorable subscription services outside the Apple iPhone application.
Responsible editor: Li Yuan
media reports
Sina Netease Technology Sina Technology
related events
- Spotify, the music streaming platform, will lay off 6% of its staff, and the chief content officer will leave2023-01-24
- Spotify’s revenue in the third quarter increased by 14% year-on-year to US$2.3 billion, with 320 million users2020-10-29
- Siri may be compatible with Spotify service2019-08-13
- Spotify brings back its 99-cent Premium offer 2019-05-15
- Apple responds to Spotify antitrust lawsuit: just wants to enjoy the benefits but is unwilling to contribute2019-03-15
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