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When Spotify announced yesterday that it would lay off 200 employees from its podcast unit and combine Gimlet and Parcast into a single operation, it came as a shock to outside observers. But former and current podcast employees at Spotify have seen the writing on the wall for some time. 

“We definitely have expected for several months now that they’d be axing people since the vibe at Gimlet had been very much one of walking on eggshells for months now,” one former Gimlet employee who was a part of yesterday’s layoffs told Hot Pod. “Zero joy. [The layoffs] were more just a matter of when. The fact that it was yesterday, that was the surprise.”

It’s been more than a year since Spotify first eliminated its namesake podcast production unit. Last fall, Spotify laid off dozens of Gimlet and Parcast workers and pulled 11 original shows from production. It began this year by axing 600 jobs companywide (including a number of ad and business jobs under Podsights and Chartable). High-profile executives such as content chief Dawn Ostroff (who steered Spotify’s podcast operations) have left. Prominent names, including Barack and Michelle Obama’s Higher Ground Productions, Brené Brown, and Esther Perel, have exited deals with the platform. Jemele Hill hasn’t left yet but is weighing other options. 

As Bloomberg reported last week, neither Parcast nor Gimlet had received annual budgets, so they hadn’t been able to greenlight new shows or approve travel expenses. It was only this week that we found out Spotify’s reasoning for this: both Gimlet and Parcast will be combined to form a new Spotify Originals studio focused on original productions, which will include producing shows like Stolen, The Journal, Science Vs, Heavyweight, Serial Killers, and Conspiracy Theories. 

Another Gimlet employee who was laid off noted that production staff — producers, reporters, and engineers — seem to be most heavily hit by the job cuts. 

Both nonfiction and fiction shows were impacted. Spotify spokesperson Grey Munford confirmed that Case 63, which dropped its first season last fall, will be continuing. The show is produced by Gimlet along with Julianne Moore and Oscar Issac’s production companies, FortySixty and Mad Gene Media. Much of the Gimlet fiction team behind Case 63, the chart-topping fiction podcast starring Moore and Issac, is now under Spotify’s head of development, Liz Gateley, according to Munford.

As far as what Spotify wants the remaining chunk of Gimlet and Parcast to be doing, it appears to be along the lines of not getting in the way as it embraces creators and third-party deals. The company spelled out clearly that the next phase of its podcast strategy was to focus on creators and users, including the Spotify for Podcasters — the company’s ad and monetization platform. 

“We know that creators have embraced the global audience on our platform but want improved discovery to help them grow their audience. We also know that they appreciate our tools and creator support programs but want more optionality and flexibility in terms of monetization. Fortunately, Spotify is not a company that ever sits still. Given these learnings and our leadership position, we recently embarked on the next phase of our podcast strategy, which is focused on delivering even more value for creators (and users!),” wrote Sahar Elhabashi, Spotify’s head of podcast business.

The merging of Gimlet and Parcast seems to be an unnatural one, according to a number of former employees. Parcast, which Spotify acquired in 2019, focuses largely on true-crime podcasts, with shows like Criminal Passion and Criminal Couples. Gimlet is known for its lineup of audio journalism series and interview podcasts, as well as scripted audio dramas. Gimlet won its first Pulitzer Prize in audio reporting earlier this year for Stolen: Surviving St. Michael’s by investigative journalist Connie Walker. A second season of Stolen has been greenlit. 

“I’m not sure what folding Parcast and Gimlet together in one team means. They’re very different styles of production and development, so they need different kinds of support in terms of marketing, PR, development, and other skill sets,” said one former Gimlet employee, who left prior to this week’s layoffs. 

Gimlet blew up largely due to its original shows, which helped define the podcast boom. Series like Reply All, The Nod, Heavyweight, and StartUp helped push the bar on what audio storytelling could be, and both advertisers and investors lined up to get involved. But under the leadership of Spotify, both Gimlet and Parcast struggled to find direction. Reply All came to an inglorious end just over a year ago, and Gimlet under Spotify hasn’t produced another equivalent hit. 

The blame is at least partly due to Spotify’s inability to fully understand what it was buying for a combined total of roughly $300 million. Unifying Parcast and Gimlet was a good example of that. 

“Our shows and content are very different,” said one Gimlet worker who was laid off yesterday. “The fact that Spotify is merging them so clumsily only further illustrates that they never really understood or appreciated either of us fully.”

The hasty merger and axing of original programming echo similar tactics from the world of streaming video, such as Warner Bros. Discovery’s decision to combine HBO Max and Discovery Plus’ offerings into one streaming platform or Paramount’s decision to merge Showtime (which generates premium scripted series like Yellowjackets) with Paramount Plus, which is home to shows from CBS, BET, and TV Land — as well as live sports. 

Such decisions reflect the reality of today’s cash-strapped streaming environment. Much like how Netflix would once go on buying sprees at Cannes and now makes reality shows like Too Hot to Handle, Spotify is moving away from pricey originals and embracing amateur podcasters and creator partnerships (not to mention its highest-value celebrity audio deals, such as that with Joe Rogan). In both cases, companies are trimming their original programming in favor of content that is cheaper to produce and generates more eyeballs and downloads. 

Less prestigious content won’t make a difference to advertisers, says Max Willens, a senior analyst at Insider Intelligence. “I would say that advertisers will welcome this decision in the sense that it may give them more inventory to advertise against, possibly at a more attractive price. The longform, highly produced content that Gimlet made its name creating was costlier and took longer to produce, and often commanded premium ad prices, which advertisers sometimes chafed at.”

But for those who work in the audio industry, Spotify’s hasty exit from the world of podcasting and original audio journalism aligns with the behavior they’ve grown to expect from the tech company. 

“[The individuals laid off] are some of the most talented, experienced producers in the entire industry,” said a Gimlet staffer who left prior to this week’s layoffs. “It’s disappointing that Spotify never understood that — and how to harness that creativity and experience.”

SAG-AFTRA overwhelmingly voted in support of a strike if they don’t reach a deal with the studios, union leadership announced on Monday night. Although SAG-AFTRA is known traditionally as Hollywood’s actor union, its 160,000-strong membership includes DJs, news anchors, voiceover artists — as well as podcast hosts and audiobook narrators. 

The looming SAG-AFTRA strike is with the Alliance of Motion Picture and Television Producers (AMPTP) and would only impact contracts bargained with them. Productions covered by SAG’s TV and theatrical contracts would be considered off-limits. 

“Only productions that are covered by the TV/Theatrical Codified Basic Agreement and Television Agreement would be struck in […in the event of a strike]. Scripted dramatic live action entertainment production that is covered by the SAG-AFTRA TV/Theatrical Contracts would be considered struck work,” wrote SAG-AFTRA’s chief communications officer Pamela Greenwalt in an email.

In other words, most podcast and audiobook contracts under SAG-AFTRA would not be considered “struck” work. This is in contrast to the ongoing WGA strike, where writing on scripted, fiction podcasts covered by WGA isn’t kosher and striking members are not allowed to work on non-union projects. 

“So while work by any member (celebrity or otherwise) under SAG-AFTRA’s Audiobook Contracts would NOT be covered by a TV/Theatrical strike, all members will honor that action in the areas of work that are impacted should a strike need to be called,” clarified Greenwalt.

Which means that for performers looking to work during a Hollywood strike, the audio world may become their go-to destination. Celebrity audio dramas have certainly become in vogue lately, with the likes of Demi Moore, Chris Pine, Rami Malek, Matthew McConaughey, and others contributing their voice talents to fiction podcasts. Audible has showcased a number of celebrity-narrated audiobooks by Meryl Streep, Tom Hanks, Nicole Kidman, Thandiwe Newton, and others. 

It’s still uncertain whether SAG-AFTRA will even call a strike. The union is scheduled to start contract negotiations with AMPTP on June 7th. In the event that they’re unable to reach a deal with the studios, SAG-AFTRA can then take steps to go on strike.