Spotify's Layoffs Lead to More AI Integration for its Platforms

Spotify is reportedly leveraging artificial intelligence (AI) across all of its platforms, a move just after its latest three rounds of layoffs in a span of one year, a move commended by Wall Street, as per a CNN report.

Spotify's recent layoffs were reportedly due in part to higher borrowing costs and a "significant" strategy shift, that aims to make the company more efficient, as per a separate CNN report. It saw "many smart, talented and hard-working people departing" the company, as described by Spotify CEO Daniel EK.

Now, after a week from the company's third round of layoffs, the music streaming giant has shifted to bolster its AI investments even more. A move that already saw the company's previous introduction of its AI DJ, which replicates a conventional radio experience, in 50 more regions.

The company is now also introducing AI Voice Translation for its podcasts as well as audio books that premium subscribers will soon be able to access across its numerous platforms. A move that is reportedly lauded by Wall Street.

Analysts Commending Spotify's AI Moves

As to Justin Patterson's research note, an equities research analyst at KeyBanc Capital regions, he believes that Spotify's increased focus on AI offers the music streaming giant a significant number of chances to increase engagement and, eventually, boost revenue.

Douglas Anmuth, managing director and internet analyst at JP Morgan, in a research note as cited by CNN, also adds that podcast investments have the ability to boost engagement over time, in addition to artist advertisements.

ABI Research senior analyst Reece Hayden also reportedly adds comments to Spotify's AI investments, expressing optimism that large language models (LLMs), may boost participation on Spotify's platform.

According to his email to CNN, large language models can better suggestions, make recommendations more representative of user preferences, and increase customization by interpreting complete text or video instead of only using keywords or metadata.

He went on to say that unlike "basic predictive models" that rely on keywords and metadata, LLMs are able to comprehend and analyze podcasts to see whether they align with user interests and may learn more about the preferences of its users by examining all of their data.

Spotify's AI-Driven Future

Spotify proves to be seeing the same notion as have the analysts as CNN adds that as per an email, a Spotify official stated that, depending on feedback from creators and users, the firm intends to expand these artificial intelligence technologies in the future.

Ek has also previously stated during Spotify's October earnings call, that the main way to think about these AI projects is that they increase engagement, and more engagement means the company minimizes user subscription cancellations.

The CEO adds that increased involvement also translates into greater value being produced for customers that allows the firm, thanks to the favorable value to price ratio, to raise prices, as the firm has successfully did, this past quarter.