Music streaming giant Spotify‘s foray into direct ticketing faces an uncertain future following a significant downsizing of its dedicated team in the latest wave of company-wide job cuts.
The Stockholm-headquartered company, which announced a 17% workforce reduction in December impacting over 1,500 employees, saw most of its staff dedicated to direct ticketing let go, according to TheTicketingBusiness.com, which cited several individuals affected by the redundancies.
A former employee reportedly told the news outlet that Spotify has communicated to its remaining engineers that it plans to revive its efforts to establish a presence in the ticketing space by the end of 2024. However, considering the perceived lack of success in its initial venture, the company may turn to M&A to achieve its goal, TheTicketingBusiness.com reported.
The move raises serious questions about Spotify’s commitment to the venture, launched in August 2022 with pre-sales and events for smaller artists.
Spotify started testing concert ticket sales directly to fans over a year ago via its new ‘Spotify Tickets’ site.
While initial trials showed promise, with outgoing CFO Paul Vogel touting artist enthusiasm and increased fan engagement, efforts to expand stagnated by late 2023 amid internal concerns about the supporting technology’s effectiveness, the report said.
This latest round of cuts follows similar workforce reductions earlier in 2023, including 500 jobs axed in January and 200 podcast-related roles cut in June. The downsizing marks a stark reversal from a period of rapid expansion that nearly doubled Spotify’s workforce in just three years.
CEO Daniel Ek, in a December memo to staff justifying the latest cuts, acknowledged the shift in the environment, stating, “we now find ourselves in a very different environment” compared to previous expansionary periods.
“To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company.
“I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented and hard-working people will be departing us,” Ek said at the time.
Despite continued user growth, adding 6 million net subscribers in the third quarter of 2023 alone to 226 million paying users, Spotify’s path to consistent profitability remains challenging.
According to the Financial Times last month, Spotify has a “flawed” business model. The newspaper highlighted that for every dollar of revenue Spotify generates, about 70 cents is paid back to the music owners on the platform.
In the third quarter of 2023, Spotify booked a rare operating profit of €32 million.
“We are confident in our path and expect another year of meaningful progress towards delivering on our profitability goals for the business… And our expectations are now that we will consistently be in the black moving forward,” Vogel told investors in October.
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