Spotify lays off about 30 in ad sales as the company restructures

• Spotify laid off about 30 employees this week, primarily in ad sales, two sources familiar with the matter told Business Insider.
• One of the sources said Spotify was restructuring and that the layoffs would allow it to invest in other, unspecified areas.
• Spotify was profitable in the third quarter for only the second time in its history, with ad revenue up 29%, but missed internal revenue goals after switching from Google's DoubleClick Sales Manager to another platform. It's unclear if the layoffs were related.
• Click here for more BI Prime stories.

Spotify went through a round of downsizing this week that impacted around 30 people, mostly in ad sales, two sources with knowledge of the matter told Business Insider.

One of the sources said some positions were eliminated while the company invests in other areas.

Complimentary Tech Event

Transform talent with learning that works

Capability development is critical for businesses who want to push the envelope of innovation.Discover how business leaders are strategizing around building talent capabilities and empowering employee transformation.Know More

Spotify had a global ad sales team numbering 350 as of 2017.

Spotify reported a surprise profit for the third quarter of 2019 but missed internal revenue goals

The move followed an October earnings call in which Spotify reported a profitable quarter for only the second time in its 12-year history, with ad revenue rising 29% year-over-year.

However, Spotify missed internal revenue goals due largely to a change in Google's ad tech stack, the company said on the earnings call.

It's unclear if the layoffs were related to the goal being missed.

The search giant retired its DoubleClick Sales Manager platform over the summer, leading Spotify to switch to another platform. During the call, CFO Barry McCarthy said this change caused programmatic ad growth to decline nearly 50% from the same period last year.

Advertising plays a relatively small role in the company's business, with paid subscriptions providing about 90% of third quarter revenue. The earnings report also cited Spotify's increasing ability to convert free users to paid subscribers.

The competition heats up as TikTok and Amazon move in on Spotify's turf

At the same time, Spotify faces new competition. The Financial Times reported that TikTok plans to launch a music streaming service on Monday, the same day Amazon announced that it would launch a free, ad-supported version of Amazon Music.

Spotify's stock price dropped on the news.

The company has also recently made significant changes to its marketing team, naming Lee Brown of BuzzFeed as VP of global sales strategy in September, replacing Brian Benedik.

Spotify's most significant growth area in the third quarter was podcasts, with streaming hours increasing by 39% over the same period in 2018.