Streaming and scheming.

Spotify’s not-so-golden age of podcasting

February 13, 2023

Our hearts go out to Zoom CEO Eric Yuan who will forego his bonus and take a 98% pay cut after laying off 1,300 employees last week. This means poor Eric will be paid as little as $6,000 in 2023 after receiving roughly $1,000,000 in compensation in 2022. Now, before you go and bring him a pasta bake and some warm clothes, keep in mind that the amount he will forego represents roughly 0.03% of his $3.6 billion net wealth – the equivalent of the average person saying, ‘You’re fired, but don’t worry because ten dollars fell out of my pocket before, so we are in this together.’

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Flex your finance muscle

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Given this newsletter is written for finance teams, we don’t know whether the following should be read as a warning or a suggestion on how to cut costs. Up to you really.

Shrinkflation

Shrinkflation is a phenomenon where the size or quantity of a product decreases over time, but its price remains the same or increases. This can happen in response to a variety of factors, such as rising production costs, inflation, and changes in consumer preferences. As a result, consumers are effectively paying more per unit of the product.

Shrinkflation is most often seen in packaged goods such as food, beverages, and personal care products, and it can be a source of frustration for consumers who feel as though they are not getting what they paid for.

The phenomenon is currently exploding in Poland ($), where inflation is currently running at 17% or roughly double the eurozone average.

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Spotify’s not-so-golden age of podcasting

Spotify’s market capitalization is a fraction of its record high in 2021 when it was valued at nearly $70 billion. Since then, the company has been focused on building out its podcast business, which has been a bit of a drag so far.

Despite acquiring multiple podcasting companies and signing content deals with celebrities, podcasts only bring in low single digits of Spotify's total revenue and the company reported a net loss of €430 million in 2022 ($).

To reduce costs, Spotify recently laid off 6% of its workforce and canceled some podcasts. CFO Paul Vogel warns that more cancellations may be on the way. This doesn’t seem to be enough for activist investor ValueAct Capital Management which on Friday disclosed it had bought an undisclosed stake in Spotify and will undoubtedly have a plan for how to turn the company around.

The content we're consuming today

Off-balance sheet items

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