The Highs and Lows of Spotify: A Major Campaign and Layoffs in One Week

It’s been an eventful week for Spotify. As reported by our sister newsletter The Hustle, the company announced a round of layoffs just days after the launch of its annual campaign Spotify Wrapped.

While The Hustle talked about the business and employee implications of Spotify’s recent layoffs immediately following Wrapped, I’d like to take a look at this series of events from a marketing perspective.

The Marketing Power of Spotify Wrapped

Wrapped is to Spotify what “All I Want for Christmas Is You” is to Mariah Carey — a sure bet for engagement at the end of each year.

Since it began in 2016, Spotify Wrapped has given users a detailed analysis of their listening habits each year. While Wrapped was initially distributed in email format, its popularity exploded when social media sharing was added to the mix.

The idea to turn Wrapped results into sharable social media stories was pitched by former Spotify intern Jewel Ham in 2019. Since then, Spotify users can see their year-end data within the platform’s app and easily share listening stats directly to their Instagram stories.

According to Time, 156 million users engaged with Wrapped in 2022, and it’s estimated that half of Spotify Wrapped users share their results to their Instagram stories. That’s a lot of positive engagement Spotify can count on each year.

Not only has the campaign provided content opportunities for Spotify users, but several brands have hopped on board creating their versions of Wrapped and meme posts parodying Spotify’s branding.

Spotify released the 2023 Wrapped results on Wednesday, November 29. Per usual, social media feeds were flooded with Wrapped graphics and parody memes. However, just a few days later, the company made major announcements that cast a shadow over the positive buzz generated by Wrapped.

Then Came the Layoffs

On December 4, Spotify announced it was laying off 17% of its workforce, around 1.5k people.

This was the platform’s third round of layoffs in 2023, following reductions in January and June. After the layoffs were announced, mentions of Spotify on social media had a generally negative sentiment.

While the tech industry has seen a wave of job cuts this year, the timing of this round of layoffs didn’t cast Spotify in a positive light for the following reasons:

In Q3, the company reported profit for the first time in a year, with €32M in operating income (about $34.6M)
Employees were let go immediately after they completed work on a major campaign that had a positive impact on the company
Workers were laid off during the holiday season when people tend to have more financial obligations

While we know that Spotify, like any business, is looking to cut costs and boost profitability, this series of events wasn’t a good look in the court of public opinion where most people empathize more with the needs of employees than companies.

If Spotify were to produce its own Wrapped chronicling company events in 2023, it would yield interesting results.