Music streaming giant Spotify has announced that it will cut 6% of its workforce, with around 600 employees leaving the company in total.
Spotify’s move is the latest in a series of mass layoffs at big tech companies, with Microsoft, Amazon, Facebook parent Meta and Google parent Alphabet all recently announcing job cuts in response to the current economic downturn. Tech companies had previously been on a hiring spree as pandemic-related spending led to increased demand for consumer goods and services.
But Spotify isn’t the only entertainment streaming service cutting staff – Netflix has shed 2% of its workforce in May last year as part of a major cost-cutting program that saw a number of projects in development canceled, many in the company’s animation division.
Spotify had previously made its own content cuts to reduce costs. Back in October 2022, the company canceled 11 original podcasts, mostly from the Gimlet and Parcast studios it acquired as part of its aggressive foray into the podcast space. Spotify had spent billions of dollars building its podcast presence and lost $200 million alone on its deal with Joe Rogan, the platform’s biggest crowd puller.
How Spotify’s problems will affect future pricing is unclear, but the subscription costs for the The Best Music Streaming Services are increasing in general, with Apple Music increasing the price for an individual plan from $9.99 / £9.99 to $10.99 / £10.99 per month (and $4.99 / £4.99 to £5.99 $/£5.99 for a student plan) back in October 2022, followed by similar ones announced price increases for Amazon Music Unlimited.
CEO Daniel Ek commented in the company’s layoff announcement that “in 2022, Spotify’s operating expense growth exceeded our revenue growth by twice” and that the situation was “unsustainable in any climate over the long term.” Spotify is clearly in hot water, and Ek’s statements seem to indicate that the cost of the service, which has maintained a stable $9.99/£9.99 individual pricing plan since its inception, is about to rise as the company struggling to cope with rising expenses and falling revenues.
As reported by diversitySpotify’s CEO had previously said in an October 2022 earnings conference call that a price increase “is one of the things that we’d love to do, and it’s something that we’re going to do.” [discuss] with our label partners.”
Analysis: A more expensive Spotify will be difficult to sell
Streaming prices are rising for all types of services, and a price hike for Spotify can easily be swallowed up by long-time and reliant music listeners. After all, Apple Music and Amazon Music Unlimited are both more expensive now, and the cost of everything from eggs to plane tickets is increasing.
To the right?
Not so fast. Compared to Apple Music and Amazon Music Unlimited, Spotify was already a bad value. For their monthly cost of $10.99/£10.99, both Apple Music and Amazon Music Unlimited offer lossless and high-resolution audio, while Spotify continues to stream using a lossy compression format that reduces sound quality. The company had announced plans for a Spotify HiFi Lossless Hi-Res audio stage, but that was in 2021 and we’re still waiting for it. (It’s unclear if the higher tier would be significantly more expensive than the company’s current premium offering.)
Apple Music and Amazon Music Unlimited also both offer tracks and full albums in spatial audio – essentially Dolby Atmos for music – as does Tidal, another music service that delivers lossless streams and does so at a price of $9.99/9, £99 per month. Spatial Audio, which can be experienced either through headphones or a full home theater speaker system, always impresses us with its sound quality and is one of the most exciting advancements in music listening in decades.
Apple Music and Amazon Music Unlimited costs can also be reduced by opting for the larger bundled subscription services from these companies. Apple is offering its Apple One bundle which includes Apple Music, Apple TV Plus, Apple Arcade and 50GB of iCloud Plus cloud storage for $16.95/£16.95 for a single plan and $22.95/£22.95 £ per month for a family plan of up to five people includes accounts. If you’re an Apple user, you get a lot for your money there.
Amazon Music Unlimited, meanwhile, is available at a reduced price for Amazon Prime members (currently $8.99/£8.99 but may rise to $9.99/£9.99 if the price of the service increases in February ).
When you add it all up, Spotify doesn’t really offer music fans enough to justify a potential price increase. It offers exclusive podcasts and at least in the US audio books, but most listeners are drawn to its music platform. We’ll see what happens over the next few weeks or months as the smoke clears from the company’s downsizing, but a more expensive Spotify seems inevitable at this point.
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