Spotify reducing employee base by about 6%

I'm sure you took responsibility for your bad stock markets returns in 2022 by saying you'll never make investment decision ever again and hand everything to your partner, right?

I've been thinking about this question as well. Is it better to have not given these people a job at all rather than to have given a job and then fired? I don't know. There are a lot of ways to look at it that all could be right.

> You need the three major music producers and the rest will come.

This isn't how the market works. I know musicians, and they don't care that you are playing licensing monopoly/bingo and have 3 key squares and now they clearly are going to waste their time uploading their music to your service. You need to essentially already have the subscriber count to provide them a new revenue source that is greater than the pain of dealing with you... which forms a brutal catch-22.

This is similar to why live video also isn't just a feature and YouTube is having to go to war with them to bring streamers to their platform (though as Twitch isn't really about a "back catalog", Spotify is actually in a much better position than Twitch). Social networking is another example of a thing that isn't just a feature you can throw together, even if it looked like that to a lot of companies.

Essentially, anywhere there is either a catalog or a network effect to be had (these are related concepts), you have to provide something that isn't just equivalent but fundamentally new to build a user base that can pull in the new market participants, or people are going to keep using the old service even if they hate it because it has a better library.

(The alternative is you have to do something explosively better for the content producers, enough that they want to get on the ground floor. The most obvious way to do that is by just handing them free money with massive subsidies due to VC raises, which was certainly a lot easier a few years ago than it is today.)

I was the developer behind a major content marketplace that had tens of millions of users and which was able to operate for over a decade despite tons of people trying to build competitors. Hell: my software was open source! I only shut it down because the entire market I was in stopped being technologically viable (resulting in my lawsuit against Apple), and it still took years for the content to become stale enough for people to move on (which doesn't happen as quickly for music). I am speaking from direct experience.

> Just like today, you wouldn’t create a separate spell checker application like in the 80s.

Spell checking, like Dropbox, has no network effect and no first mover advantage.

> Why are you even arguing this? There already exist two major competitors that are treating streaming music as just an insignificant portion of a multibillion dollar business - Amazon and Apple. Also to a lesser extent Google/YouTube.

Amazon, Apple, and Google (to their lesser extent due to YouTube) are also in the content licensing business... the same business Spotify is in. Are you saying that iTunes, or Amazon.com, is also a shitty business? I'm betting you aren't. If you are, I recommend looking at how much money Apple makes on iTunes: it is sufficient to have let them subsidize sales of the iPod.

The reason Spotify is in a bad place is because they have bad contracts for their core content (vs. Apple) and a lack of vision for how to change up their business model (maybe by having a feature similar to Amazon Prime / Hulu where you have to pay for add-on subscriptions for various artists), not because "music streaming is a feature": their business isn't "music streaming".

> Again, a successful business doesn’t depend on the long tail - that’s been debunked by every single market - app stores, music, movies, etc. the vast majority of money is made from hits.

I am not saying the vast majority of revenue comes from the long tail, I am saying having access to a large catalog matters and prevents even large companies from being able to just shut you off as I do believe that people--yes, actual people, like my customers--actually care about access to the long tail, even if it isn't most of their usage or where you book your revenue.

> You’re also failing to realize that Spotify’s issue of trying to be profitable just streaming music while its competitors can sell at cost to prop up other businesses.

They aren't, though! iTunes is profitable. It has tried (and succeeded!) to add Spotify as a feature, but Spotify can and should respond by adding track sales or artist-specific subscriptions as a feature. There are tons of things they could be doing--because their business is not music streaming: their business is content licensing--to become profitable. Why don't they at least have a built-in Patreon mechanism where people can pay arbitrarily more for their subscription and have it (after they take a cut) doled out to their streamed artists?! They are just dumb.

They certainly aren't Dropbox: Dropbox's entire business is just a technological feature and fundamentally continued to be a feature forever. There is no real reason to use their feature over someone else's implementation of that feature except code quality (and I have a queued article to write about how Dropbox is broken ;P). There absolutely is a moat that Spotify has here, and to ignore that is extremely strange. They may be squandering their ability to compete, but they aren't "just a feature". Being a dumb company that needs better leadership to establish a better business model is not the same as being a feature.

It wasn't over-hiring given the environment at the time. It was over hiring given current environment. It seems clear that companies who took a more conservative approach to hiring have come out better for it. Not all companies could be so lucky. Some had activist investors who aggressively pushed for growth or else pushed out leaders. Messy world we live in.