The Pop Corporation

Just the other day, everyone was sharing their Spotify Wrapped graphics and having a giggle and all that, but things were about to get tremendously serious at Spotify HQ.

This week, the streaming behemoth announced that they’d be sacking 17% of their staff. That’s around 1,500 people losing their pay just before Christmas. Pretty brutal. This is the third time there’s been job losses this year, also. Now, given that Spotify has published a profitable quarter – their first since 2021 – something is clearly amiss.

Spotify, it seems, doesn’t quite work for anyone, apart from listeners who like having all of the music in the world in their phones. Pretty lousy for bands, and seemingly, Spotify themselves.

CEO Daniel Ek said that this whole thing may be “surprisingly large given the recent positive earnings report and our performance,” but thanks to “the gap between our financial goal state and our current operational costs,” the company have to take “substantial action.”

While the runaway success in terms of music streaming, Spotify is going to have to look at ways of becoming a sustainable business model, and you have to assume that the most obvious thing they’ll be looking at is micropayments. Want to listen to Taylor Swift’s new album a week before everyone else, like a Pay Per View sports event? With Bandcamp being proof positive that people are willing to put their hands in their pockets for small outfits, will Spotify allow for a model that tiers a release for those wanting a better return, and take a cut in the process?

It has worked in the world of video games, where customers are happy to pay upfront, as well as a subscription, and then pay for additional content on top. This will not have escaped the attention of Spotify and their rivals.

That said, it all seems incredibly convoluted and, god, isn’t it just simpler just buying a record, taking it home, and pressing play on the turntable?

We’ve seen Silicon Valley being referred to as the New Detroit, with investors impatient with tech firms not making enough money for them. Layoffs have been hugely prevalent in the world of tech, social media, and the rest. Spotify it seems, is just following what has already been seen elsewhere, and resizing and remodelling.

All this, depsite 574 million monthly users. And sure, Spotify has more music fans than the competition, but looking at Amazon and Google, they have numerous revenue streams to fall back on, while Spotify only has the one. Will they be restructuring their subscription prices? It’s almost inevitable that they will.

One thing Spotify will also be concerned about is that – and there’s no hiding from this – customers are getting subscription fatigue. If a young person has to pay a number of monthly costs to watch TV, play games, listen to music, see movies, something is going to give.

Spotify isn’t working in the state it finds itself in. Something is about to break.