Spotify Adjusts Ticketing Strategy Following Substantial Job Losses

Spotify's entry into direct ticketing faces an uncertain future following a substantial downsizing of its dedicated team during the recent company-wide job cuts. The Stockholm-based company, which announced a 17% reduction in its workforce impacting over 1,500 employees in December, witnessed the departure of a significant portion of its direct ticketing staff, as reported by TheTicketingBusiness.com, citing affected individuals.

Sources suggest that Spotify has communicated its intention to revive efforts to establish a presence in the ticketing space by the end of 2024 to its remaining engineers. However, given the perceived lack of success in its initial venture, the company might explore mergers and acquisitions (M&A) as an alternative strategy to achieve its goal, according to TheTicketingBusiness.com.

This development raises serious questions about Spotify's commitment to the venture, which was launched in August 2022, offering pre-sales and events for smaller artists. The streaming giant began testing concert ticket sales directly to fans over a year ago through its 'Spotify Tickets' site. While initial trials showed promise, with outgoing CFO Paul Vogel highlighting artist enthusiasm and increased fan engagement, efforts to expand stalled in late 2023 due to internal concerns about the effectiveness of the supporting technology.

These job cuts follow similar reductions earlier in 2023, including 500 jobs cut in January and 200 podcast-related roles eliminated in June. This downsizing marks a significant reversal from a period of rapid expansion that nearly doubled Spotify's workforce in just three years.

In a December memo to staff justifying the latest cuts, CEO Daniel Ek acknowledged the shift in the business environment, stating, "we now find ourselves in a very different environment" compared to previous expansionary periods. Despite continued user growth, with 6 million net subscribers added in the third quarter of 2023, bringing the total to 226 million paying users, Spotify's path to consistent profitability remains challenging.

The Financial Times recently described Spotify's business model as "flawed," highlighting that for every dollar of revenue generated, about 70 cents is paid back to music owners on the platform. While Spotify booked a rare operating profit of €32 million in the third quarter of 2023, challenges persist on the road to consistent profitability. Despite this, CFO Paul Vogel expressed confidence in their path, expecting another year of meaningful progress towards profitability goals and anticipating consistent profitability moving forward.