Spotify Technology S.A. is letting go 200 employees, or about 2% of its workforce, as part of an effort to revamp its podcast business.

The company announced the layoffs today. The move comes a few months after Spotify detailed plans to cut about 600 roles in a bid to reduce operating costs. Prior to that round of layoffs, the company reportedly had 9,400 employees. 

The latest workforce reduction affects employees at Spotify’s “global podcast vertical and other functions,” Sahar Elhabashi, the head of Spotify’s podcast business, wrote in a blog post today. “The company will support these individuals with generous severance packages, including extended Healthcare coverage and immediate access to outplacement support.”

The layoffs at Spotify’s podcast business are related to a series of strategy changes the company is currently implementing. As part of the effort, Spotify is expanding the analytics features available to podcasters. The startup already offers an analytics tool that tracks metrics as the number of users who listen to a show and audience retention rates. 

Spotify will also start taking a more “tailored approach” to how it manages partnerships with podcasters. “This fundamental pivot from a more uniform proposition will allow us to support the creator community better,” Elhabashi wrote.

To support the initiative, the company is updating its podcast business’ organizational structure. The business includes two units called Gimlet and Parcast that produce original content for Spotify. As part of the initiative announced today, they will be merged into a single unit called Spotify Studios.

Gimlet became part of the music streaming provider through a $230 million acquisition in 2019. The company bought Parcast later that year for $56 million. Since then, Spotify’s podcast business has experienced significant growth.

The company detailed today that its user base includes more than 100 million podcast listeners, 10 times more than in early 2019. Spotify’s content catalog has likewise expanded significantly in that time frame. As a result, there are now more than 5 million podcasts on its platform. 

But despite its growth, the company’s podcast business currently accounts for only a small fraction of its revenue. Last July, Spotify disclosed the business generated sales of $215 million in 2021. Spotify’s overall revenue that year was $11.4 billion.

Last quarter, the company reported that its podcast revenue grew nearly 20% year-over-year but didn’t share absolute numbers. Previously, Spotify disclosed in 2022 that its podcast business was operating at a loss. However, Chief Executive Daniel Ek has expressed the view that the business has the potential to reach gross margins of up to 50% eventually. 

Image: Spotify