Spotify CEO Daniel Ek surprised at negative impact of laying off 1500 Spotify employees – Fortune

When Spotify announced its largest-ever round of layoffs in December, CEO Daniel Ek hailed a new age of efficiency at the streaming giant. But four months on, it seems he and his executives werent prepared for how tough filling in for 1,500 axed workers would be.

The music streamer enjoyed record quarterly profits of 168 million ($179 million) in the first three months of 2024, enjoying double-digit revenue growth to 3.6 billion ($3.8 billion) in the process.

However, the company failed to hit its guidance on profitability and monthly active user growth.

It didnt seem to put off investors, who sent shares in the group soaring more than 8% in New York after markets opened Tuesday morning.

Still, as he addressed those investors following the latest earnings release, Ek didnt shy away from the obstacles that stopped the streamer from hitting some of its targets this year.

In addition to surprisingly successful 2023 growth to compare against and the impacts of falling marketing spend, Ek blamed operational difficulties linked to staffing for the group missing its earnings target to start the year.

In December, Spotify culled 1,500 jobs, equivalent to 17% of employees, as part of an aggressive efficiency drive as the group strived for profitability.

Staff costs for those employees carried a long tail, as most workers received five-month severance packages when they were let go in December.

At the same time, the footprint left behind by those employees was bigger than Ek and his executives anticipated.

Another significant challenge was the impact of December workforce reduction, Ek said on an investors call following Spotifys Q1 earnings release.

Although theres no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipated.

It took us some time to find our footing, but more than four months into this transition, I think were back on track and I expect to continue improving on our execution throughout the year getting us to an even better place than weve ever been.

Ek didnt elaborate on what aspects of operations were most affected by the layoffs.

Back in December as the platform he founded faced persistent losses and a falling share price, Spotify CEO Ek used a well-trodden path by tech giants to steer the ship around: mass layoffs.

We still have too many people dedicated to supporting work and even doing work around the work, rather than contributing to opportunities with real impact, Ek said in a memo as he announced he would be cutting his workforce by 17%.

Investors initially reacted well to the news, though skeptical voices asked whether the move merely put a sticking plaster over harder-to-solve issues at the group, particularly its low margins thanks to the costs of bumper record deals.

However, it appears to have worked so far. In the four months since the layoff announcements, shares in the group have jumped more than 60%.

Spotify has also recently proved it is able to raise prices in some of its key markets without seeing a flight of listeners to rival services like Apple Music.

In the long run, Spotify and Ek also remain convinced the tough round of layoffs has set Spotify up for long-term profitability.

The apparent collective surprise at how that can affect operations in the short run, though, marks a dash of hubris for the newly bullish streaming group.

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Spotify CEO Daniel Ek surprised at negative impact of laying off 1500 Spotify employees - Fortune

Neil Young’s Spotify tiff is a reminder that tech giants always win – Euronews

The opinions expressed in this article are those of the author and do not represent in any way the editorial position of Euronews.

As a listener, you might not care. But as an artist, it can be a tough pill to swallow to know that an algorithm, as opposed to human preference, might be behind your success or failure, Jonah Prousky writes.

Neil Young and Joni Mitchell begrudgingly returned their music to Spotify last month, two years after leaving the platform in protest of its largest podcaster, Joe Rogan.

According to Young, Rogan was using the platform to spread misinformation about the COVID-19 pandemic.

They can have Rogan or Young. Not both, wrote Young to his manager at Warner Music Group.

It turns out, Spotify can have both.

And, no matter what you think of Youngs protest (or boycott, or whatever it was), his clash with Spotify is a reminder that tech giants have a funny way of getting what they want and resistance from artists is usually futile.

Many creators have long been frustrated with platforms like Spotify and YouTube due to the algorithms they employ, which in part drive views and streams, and by extension, pay.

Most creators, however, dont have the clout to issue ultimatums, nor the money to leave these platforms.

While some artists on Spotify make a decent living, there is a far, far greater volume of artists literally millions of them who are struggling to make ends meet from their streaming royalties, according to Rolling Stone.

Also, without an established audience of ones own, artists are pretty much beholden to Spotify and YouTube for views.

According to Forbes, Spotify holds a dominant 30.5% of the music streaming market, more than double its nearest competitor, Apple Music, which has a 13.7% share. YouTube is virtually unrivalled.

Who cares, you might say, Spotify is beloved. And, hasnt the company done a lot to democratise music?

Its true, the company cut out a lot of the red tape associated with the legacy music business by giving new artists a direct line (and business model) for reaching listeners.

That ethos is even enshrined in the companys mission statement, which is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it.

The company has done much to advance that mission. Its capable of launching music careers in ways that never would have been possible in decades past. An artists streams and by extension, earnings can skyrocket almost overnight if their songs make it onto one of the platform's most-listened-to playlists.

It can quite literally be the difference between driving Uber and making music on the side and earning $200,000 (187,880) in streaming royalties.

So any attempt to criticise the platform ought to be wary of what its done for some musicians. But, in many ways, the platforms algorithm has homogenised music tastes around a small number of top artists, making it harder for new musicians to gain traction.

Algorithms", wrote Scott Timberg in a column for Salon, "are about driving you closer and closer to what you already know. And instead of taking you toward what you want to listen to, they direct you toward slight variations of what youre already consuming.

What people are already consuming is just a small subset of Spotifys artist base, whose tunes gobble up our collective attention.

In 2013, the top 1% of artists accounted for over three-quarters of all revenue from recorded music sales. In that year 20% of songs on Spotify had never been streamed, wrote Ludovic Hunter-Tilney for the Financial Times.

Maybe thats always been the case, youll wonder. I mean, anyone who's seen The X Factor knows that not every artist is worthy of our attention. But the decision of what and who to listen to used to be a human one.

As a listener, you might not care, especially if you think the algorithm has a good handle on your taste. But as an artist, it can be a tough pill to swallow to know that an algorithm, as opposed to human preference, might be behind your success or failure.

So, say youre a musician or content creator who feels the algorithm has treated you unfavourably. What are you going to do, leave? Boycott?

Well, some are. A growing wave of artists and content creators are leaving Spotify and YouTube, often for platforms like Substack and Patreon, where their earnings arent beholden to the algorithm.

Platforms like Substack and Patreon allow creators to own their audience since earnings on these platforms arent tied to views, rather, audience members pay creators directly and the platforms take a small cut.

Still, that move is really only viable for established artists like Young and Mitchell who have audiences.

So, if youre just starting out as a musician or content creator, you really have no choice but to dig in your heels and hope the algorithm likes your stuff.

Jonah Prousky is a Canadian freelance writer based in London. His work has appeared in several leading publications including the Canadian Broadcasting Corporation (CBC), Toronto Star, and Calgary Herald.

At Euronews, we believe all views matter. Contact us at view@euronews.com to send pitches or submissions and be part of the conversation.

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Neil Young's Spotify tiff is a reminder that tech giants always win - Euronews

Seattle’s Pioneer Square Labs and Silicon Valley stalwart Mayfield form AI co-investing partnership – GeekWire

Navin Chaddha (left), managing partner at Mayfield, and Greg Gottesman, managing director at Pioneer Square Labs. (Mayfield and PSL Photos)

Seattle startup studio Pioneer Square Labs (PSL) and esteemed Silicon Valley venture capital firm Mayfield are teaming up to fund the next generation of AI-focused startups.

The partnership combines the startup incubation prowess of PSL, a 9-year-old studio that helps get companies off the ground, with Mayfield, a Menlo Park fixture founded in 1969 that has stalwarts such as Lyft, HashiCorp, ServiceMax and others in its portfolio.

As part of the agreement, PSL spinouts focused on AI-related technology will get a minimum of $1.5 million in seed funding from PSLs venture arm (PSL Ventures) and Mayfield.

Weve really been focusing a lot of our efforts on building defensible new AI-based technology companies and found a partner who feels very similarly and has incredible talent, resources, and thought leadership around this area, said PSL Managing Director Greg Gottesman.

Navin Chaddha, managing partner at Mayfield, described the partnership as very complimentary. PSL specializes in testing new ideas before spinning out startups. Mayfield steps in when companies are ready to raise a venture round and at later stages.

They have strengths, we have strengths, Chaddha said.

Its a bet by both firms on the promise of AI technology and startup creation.

Its a once-in-a-lifetime transformational opportunity in the tech industry, Chaddha said.

Mayfield last year launched a $250 million fund dedicated to AI. Chaddha published a blog post last month about what Mayfield describes as the AI cognitive plumbing layer, where the picks and shovels infrastructure companies of the AI industry reside.

Theres so much infrastructure to be built, Chaddha said. He added that the applications enabled by new AI technologies such as generative AI are endless.

Gottesman, who helped launch PSL in 2015 after a long stint with Seattle venture firm Madrona, said more than 60% of code written at PSL is now completed by AI a stark difference from just a year ago.

Its not that we have humans writing less code were just moving faster, Gottesman said.

The $1.5 million seed investments are a minimum;PSL and Mayfield are open to partnering with other investors and firms. The Richard King Mellon Foundation is also participating in the partnership.

The deal marks the latest connection point between the Seattle and Silicon Valley tech ecosystems.

Madrona, Seattles oldest and largest venture capital firm, opened a new Bay Area office in 2022 and hired a local managing director.

Bay Area investors have increasingly invested in Seattle-area startups including Mayfield, which has backed Outreach, Skilljar, SeekOut, Revefi, and others in the region. The firm was an early investor in Concur, the travel expense giant that went public in 1998.

Chaddha previously lived in the Seattle area after Microsoft acquired his streaming media startup VXtreme in 1997. He spent a few years at the Redmond tech giant, working alongside Satya Nadella who later went on to become CEO.

I think its fantastic that Mayfield is making a commitment not just to AI, but also to the Seattle area as well, said Gottesman.

PSL raised $20 million third fund last year to support its studio, which has spun out more than 35 companies including Boundless, Recurrent, SingleFile, and others. Job postings show new company ideas related to automation around hardware development and workflow operations for go-to-market execs. The PSL Ventures fundraised$100 million in 2021.

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Seattle's Pioneer Square Labs and Silicon Valley stalwart Mayfield form AI co-investing partnership - GeekWire