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Hosting packed-out parties headlined by Sam Smith, Charlie XCX, and Chase & Status. Employees flown to Stockholm on the company’s dime. And then, days later, widespread job cuts in a bid to “control costs.”
There’s an uncomfortable conversation going on among Spotifiers currently who feel the company is throwing too much money at company events whilst the streaming platform makes rounds of layoffs citing the need to reign in expenses amid slow economic growth.
It’s easy to see why these employees are so frustrated.
In November, Spotify hosted parties in Houston and London to celebrate another launch of ‘Wrapped,’ one of the platform's most successful annual features, with high-profile music stars headlining the events, including Gunna and Sam Smith. Employees, celebrities, and special guests including fans were all invited to take part in the free-flowing celebrations at high-capacity venues.
Just four days later, many of the employees who helped deliver Wrapped were laid off as part of a round of job cuts that saw 1,500 Spotify staffers – 17% of its workforce - get the boot. In a memo to employees, CEO Daniel Ek described the layoffs as “a substantial action to rightsize our costs” amid slow economic growth and expensive capital. Spotify had also made layoffs in January and June, totaling 2,300 job cuts in 2023.
The Wrapped party was not Spotify’s only major bash in 2023. In August, two months after it cut 200 jobs in June, which Ek described as a “considerable effort to rein-in costs," the streaming giant put on ‘Spotifest.’ Here, Diplo and T-Pain headlined an event at the Brooklyn Mirage in New York for hundreds of employees who could also witness an acrobatic show, have a quick trim at a barbershop, or get some fresh ink at a temporary tattoo studio.
"It was surprising to me that they stated they're on a cost-cutting drive but then continued spending," one employee told Business Insider. Another said, “Whether it's a team party, Grammys party, Christmas party, branded parties, or extra parties that are relatively under the wraps, there's certainly a ton of money being thrown at parties.”
To party or not to party? That is the question
The employees have a point. On the surface, it does seem that Spotify is happy to spend the big bucks on internal and external events even whilst it takes drastic measures to trim the fat elsewhere.
However, although Spotify arguably should have handled the execution a little better, it could well be justified in spending big on the events even amid cost-cutting measures elsewhere.
Labor costs and spending on parties, particularly those focused which are externally focused brand events, will likely sit in two different cost centers.
Moreover, the parties, whether public or private, offer great value to Spotify that could be offsetting the costs in more ways than one. Public events are critical to driving its brand forward, and employee-focused events are a valuable source of employee engagement.
A Spotify spokesperson told Business Insider that it will continue events such as Wrapped and employee-focused events, explaining they are fundamental to its business model. “[The events] are key to promoting artists, engaging listeners, encouraging collaboration amongst employees, and highlighting our services… Spotify is a global company dedicated to celebrating creators, fostering a collaborative employee culture, and recognizing team achievements."
Indeed, one employee who spoke to Business Insider said that Spotifest was a good way to boost employee morale. With layoffs going on, canceling employee parties is a sure-fire way to get a workforce to turn against you. Making extensive cuts to what many workers would see as a big perk of the job would only serve to damage employee motivation and engagement.
It’s arguably a positive that whilst the unfortunate job cuts are taking place, Ek and his team are still keen to create an engaging work culture.
Should Spotify listen to employee spending suggestions?
It would be overly simplifying a vastly complex issue to suggest that Spotify could spare cutting close to 20% of its workforce by canceling or scaling back some of its biggest events.
However, employees who say that layoffs are poorly timed and that the company needs to be better with its spending are justified in doing so. Yes, there’s no good timing for layoffs, but Ek and his team could certainly have pre-empted the criticism they would get and done more to hear and action employee suggestions for cutting costs. One worker even told Business Insider his proposals were ‘shrugged off.’
Workers have criticized, among other things, the company’s ‘Intro Days,’ where many new hires are flown out to Spotify’s Stockholm HQ to learn more about Spotify’s culture. One employee said it amounted to the company “spending tons of money flying people to Sweden to drink the Kool-Aid."
Employees have flights, hotels, and meals paid for. “It's just such a stupid waste of money,” one worker noted. Another added, “I really questioned executive leadership's decision-making and where they spend money, and I think Intro Days are a good example.”
Again, this is not to say that Spotify should cut the entire Intro Days program on a few pieces of feedback – or even worse, to continue the program but shift the cost onto employees. But workers are evidently frustrated with some of the decision-making about spending at Spotify.
Spotify leadership would do well to make sure employees feel their voices are heard. Even if they are not prepared to act on the suggestions, they should offer a better explanation to employees about why spending on big-budget parties like Spotifest and culture-building programs like Intro Days are so valuable to the company, and why they are protected from cost-cutting measures.
