{"id":11310,"date":"2023-12-10T20:33:42","date_gmt":"2023-12-10T20:33:42","guid":{"rendered":"https:\/\/connectwithfund.com\/business\/spotify-slashes-staff-to-move-faster-into-ai-and-wall-street-loves-it\/"},"modified":"2023-12-10T20:33:42","modified_gmt":"2023-12-10T20:33:42","slug":"spotify-slashes-staff-to-move-faster-into-ai-and-wall-street-loves-it","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=11310","title":{"rendered":"Spotify slashes staff to move faster into AI \u2013 and Wall Street loves it"},"content":{"rendered":"
\n

\n Spotify made a name for itself in the audio-streaming business through its hyper-personalized user experience, thanks to artificial intelligence and a team of 9,800 staffers at the end of 2022.\n <\/p>\n

\n But after three rounds of layoffs in one year:\u00a0590\u00a0positions in January,\u00a0200\u00a0in June, and another\u00a01,500\u00a0this week, Spotify\u2019s investments into AI to boost margins for its podcasting and audiobook divisions look like a complete overhaul in strategy that Wall Street seems confident can work.\n <\/p>\n

\n \u201cSpotify is leveraging AI across its platform, launching AI DJ, <\/strong>simulating a traditional radio experience, in 50 additional markets and rolling out AI Voice Translation for podcasts,\u201d said Justin Patterson, equity research analyst at KeyBanc Capital Markets, in a research note. \u201cCoupled with audiobooks rolling out to Premium Subscribers, we believe Spotify has several opportunities to drive engagement and eventually stronger monetization.\u201d\n <\/p>\n

\n Shares of parent company Spotify Technology SA are up more than 30% over the last six months and up more than <\/strong>135% year to date.\n <\/p>\n

\n The company joins other tech firms in retrenching as pandemic-era demand has dried up. It also has to make up for the more than $1 billion it spent on podcasting, much of which went toward deals with celebrities to make podcasts that never materialized and acquiring podcast studios that <\/strong>it later shuttered.\n <\/p>\n

\n \u201cEconomic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities,\u201d Ek wrote in a letter to staff posted to the company\u2019s website.\n <\/p>\n

\n In November, Spotify unveiled a partnership with Google Cloud to overhaul how the platform recommends audiobooks and podcasts through its use of one of Google Cloud\u2019s <\/strong>language models, Vertex AI Search.\n <\/p>\n

\n Large language models like ChatGPT are computer programs trained on large sets of data that can recite human-like text and information back to users based on what the program \u201cknows.\u201d\n <\/p>\n

\n Spotify introduced an \u201cAI DJ\u201d in February and began using OpenAI\u2019s \u201cWhisper\u201d voice translation tool to translate select episodes of English podcasts into Spanish, French and German.\n <\/p>\n

\n A representative for Spotify said in an email to CNN that the company plans to expand the technology in the future pending creator and audience feedback. They also pointed to some comments made by Ek during the company\u2019s third-quarter earnings call, where the word \u201cefficiency\u201d was used more than 20 times.\n <\/p>\n

\n \u201cThe primary way you should think about these\u00a0 (AI) initiatives, (is that it creates) greater engagement and that greater engagement means we reduce churn,\u201d he said during Spotify\u2019s October earnings call. \u201cGreater engagement also means we produce more value for consumers. And that value to price ratio is what then allows us to\u00a0raise prices\u00a0like we did this past quarter with great success.\u201d\n <\/p>\n

\n In a research note, Douglas Anmuth, managing director and internet analyst at JP Morgan, said that along with investments into advertisements by artists, investments into podcasts have the potential to drive engagement over the long term.\n <\/p>\n

\n Spotify has hyper-personalized its experience for users for about a decade. It was able to add that personal touch once it acquired music analytics firm, The Echo Nest Corp, in 2014, to combine machine learning and natural language processing.\n <\/p>\n

\n Spotify\u2019s technology builds a database of songs and artists by <\/strong>recognizing musical <\/strong>pitches and tempos and connecting the works of artists within a shared <\/strong>cultural context.\n <\/p>\n

\n Metadata like release date and metrics like volume, duration and how likely a song is to get someone dancing also <\/strong>go into determining which songs fit a user\u2019s taste.\n <\/p>\n

\n From here, playlists like \u201cDaily Mix\u201d and \u201cDiscover Weekly\u201d are born. So-called Time Capsules and \u201cOn Repeat\u201d playlists gather a user\u2019s most-listened to songs, to either keep users hooked to what they\u2019re already listening to or revisit songs they haven\u2019t heard in a while.\n <\/p>\n

\n In an email to CNN, Anil Jain, global managing director of strategic consumer industries at Google Cloud said that its Vertex AI Search allows media and entertainment companies to build content discovery capabilities across video, audio, images and text. Jain did not comment on any details of the deal with Spotify.\n <\/p>\n

\n Vertex AI Search considers a range of factors when recommending content for users such as real-time user behavior, content similarity and content related to what users are searching for.\n <\/p>\n

\n Challenges and opportunities
\n<\/h2>\n

\n Reece Hayden, senior analyst at ABI Research, expressed confidence that large language models (LLMs) could work to increase engagement across Spotify\u2019s platform.\n <\/p>\n

\n \u201cLarge language models can enhance personalization, improve recommendations, and ensure recommendations are more reflective of user interests by understanding entire text\/video rather than utilizing keywords\/metadata,\u201d he said in an email to CNN.\n <\/p>\n

\n He added that unlike keyword\/metadata dependent \u201cbasic predictive models,\u201d LLMs <\/strong>can understand and interpret podcasts to see if they match user interests and can gain a deeper understanding of user preferences by analyzing all user data to determine their preferences.\n <\/p>\n

\n But that comes at a cost.\n <\/p>\n

\n \u201cRunning LLMs to understand all podcasts\/audiobooks is resource intensive and may add limited value compared to basic predictive models \u2026 LLMs bring additional data privacy and cost\/resource challenges which will be significant,\u201d he said.\n <\/p>\n

\n He expressed faith in Whisper to help translate podcasts, but admitted mistakes may be made in the form of flubbed sentences or phrases as generative AI learns.\n <\/p>\n

\n \u201cGiven the availability of data points, different language translations models like Whisper will quickly improve, ensuring a high degree of accuracy,\u201d he said. \u201cThe downside of whisper is that its core competency is translating from other languages to English \u2026 Most podcasts are recorded in English and therefore it cannot be applied effectively across the board.\u201d\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Spotify made a name for itself in the audio-streaming business through its hyper-personalized user experience, thanks to artificial intelligence and a team of 9,800 staffers at the end of 2022. But after three rounds of layoffs in one year:\u00a0590\u00a0positions in January,\u00a0200\u00a0in June, and another\u00a01,500\u00a0this week, Spotify\u2019s investments into AI to boost margins for its podcasting and audiobook divisions look like a complete overhaul in strategy that Wall Street seems confident can work. \u201cSpotify is leveraging AI across its platform, launching AI DJ, simulating a traditional radio experience, in 50 additional markets and rolling out AI Voice Translation for podcasts,\u201d said<\/p>\n","protected":false},"author":1,"featured_media":11311,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":["post-11310","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\nSpotify slashes staff to move faster into AI \u2013 and Wall Street loves it | ConnectWithFund<\/title>\n<meta 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