Advertisement

Spotify unwraps the Christmas present of nightmares

Daniel Ek
Only last year, Daniel Ek was outlining a vision of a business that would be generating $100bn (£79bn) of turnover by 2030 - Toru Yamanaka/AFP

Marketing campaigns are a fine art, but sometimes the accompanying strap-line sounds like it was dreamt up in a parallel universe.

Take “Spotify Wrapped” – that time of the year when the streaming service begins bombarding customers with personalised playlists based on what they’ve been downloading.

Personally, I think the whole idea is naff. Do I need an algorithm to spell out how narrow my music tastes are because I’ve been listening to the same 10 albums again? Of course not. Nor is this commercialised surveillance made any less creepy by the use of neon colors or quirky commentary.

But this year, it really does strike the wrong note as the company “unwraps” the Christmas present of nightmares: mass lay-offs. Seriously, what could be more tin-eared than the launch of a cheery campaign based on the naive assumption that everyone has had another memorable year just as hundreds more employees are being handed their P45s?

Spotify Wrapped
The music streaming app has crunched new data as part of its ‘Wrapped’ feature to tell listeners what their musical personality is - The Telegraph

In case that wasn’t insensitive enough, staff were told in an email from billionaire founder and chief executive Daniel Ek that they would be notified by “calendar invite”. Talk about going that extra mile to soften the blow of being fired in the run-up to Christmas. It surely doesn’t need saying that this is an appalling way to run a company.

If Spotify was curating its own annual highlights reel, it would be a painful listen. Indeed, 2023 will be remembered as the moment when the music well and truly stopped at the Swedish streaming giant.

This is the third time this year that the company has wielded the axe. In January, it laid off 600 staff, and in June it announced another 200 job losses. Another 1,500 this time around speaks to the dysfunctional manner in which Spotify is being run. It is classic short-termism of the sort that sadly is par for the course in a tech industry obsessed with growth.

Predictably, Ek is blaming the economic slowdown and rising costs, and he’s pointing out that the cuts will make Spotify a leaner machine. All of which is true on one level, but the idea that the company has simply found itself at the mercy of the economic gods and is now having to adjust accordingly doesn’t remotely stack up.

“Today, 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 wrote. “As we’ve grown, we’ve moved too far away from this core principle of resourcefulness,” he later added as if somehow he wasn’t the person responsible for it all.

Fuelled by a potent mix of cheap money; the backing of credulous, unquestioning shareholders; and immense hype, Spotify made the mistake of wildly over-expanding during the pandemic as its quest for growth hit new heights.

Yet those same fickle Wall Street investors who cheered on much of the tech sector’s decadence when times were more forgiving have adopted a more questioning tone, prompting many companies to begin “realigning resources” as Google boss Sundar Pichai quaintly referred to it after another quarter of slowing sales.

Spotify wasn’t the only company to get carried away, of course. Indeed, it is hard to think of a major tech company that wasn’t guilty of extreme exuberance during lockdown after an entire industry fooled itself into thinking some profound shift in consumer behaviour was taking place.

At Spotify, employee numbers nearly doubled in just three years as the company poured billions into new areas including podcasting.

Archetypes
The Duke and Duchess of Sussex’s reputed $20 million Spotify deal has ended after just one series of Meghan’s Archetypes podcast - Facebook

Ek at least had the decency to concede during the first round of cuts that he was “too ambitious in investing”. But having expanded too quickly, Spotify has also been too slow to retreat, unlike Facebook, Amazon and others who wasted little time in letting people go – at times in the tens of thousands. The scramble to reverse much of the breakneck growth led to more than 100,000 tech workers being made redundant in the first three months of 2023.

By virtue of their sheer size, the tech giants will always hire and fire in far greater numbers but they have been much more decisive and ruthless in scaling back and resetting their respective operations.

An extraordinary recruitment drive at Meta doubled the workforce during the pandemic boom – but by March this year, the owner of Facebook had already drawn up a proposal to shrink employee numbers back to where they stood in mid-2021. And in classic corporate style, a plan that would result in more than 20,000 people losing their jobs was even given an innocuous-sounding name: the “year of efficiency”.

One wonders whether the penny has fully dropped at Spotify’s Stockholm headquarters. After all, it was only last year that Ek was excitedly outlining a vision of a business that will be generating $100bn (£79bn) of turnover by 2030 – a near eightfold increase on $13bn last year. He also predicted it would be profitable in 2024, despite racking up half a billion dollars of annual losses at the last count.

The tech world is full of companies that think they can defy the laws of gravity. One by one they are returning to Earth with a bang.

Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month, then enjoy 1 year for just $9 with our US-exclusive offer.