Swedish music-streaming giant Spotify is set to reduce its workforce by 17%, cutting approximately 1,500 jobs.
CEO Daniel Ek described the decision as "difficult" but necessary due to a significant slowdown in economic growth.
With about 9,000 employees, Spotify aims to "rightsize" costs to align with its objectives. Ek acknowledged the impact on the departing team, emphasizing the painful nature of the decision.
Despite posting a profit of €65 million in the last quarter, Spotify deems substantial cost-cutting vital for financial health. This move follows earlier staff reductions and contrasts with the recent positive financial results. The company had earlier contemplated smaller cuts over the next few years but opted for more immediate and comprehensive action.
Spotify, striving to reach a billion users by 2030, currently boasts 601 million users, up from 345 million in 2020. The recent job cuts align with the company's growth strategy, necessitating adjustments for financial stability. Ek acknowledged that despite positive results, the announced layoffs would feel unexpectedly large for many.
Spotify, known for substantial investments in business growth and exclusive content, has faced challenges and successes with its podcast strategy. Exclusive deals, including those with high-profile figures like the Obamas and the Duke and Duchess of Sussex, come at a significant cost. The company's approach to podcast content has been met with mixed results.
The streaming giant's layoffs are part of a broader trend in the tech industry, where significant job cuts have been announced, notably by companies like Meta, Microsoft, Amazon, and Alphabet. Despite this trend, some companies, like Apple, are actively hiring in specific sectors, signaling diverse strategies within the tech landscape.
Affected Spotify employees will be informed of the decision, with the company offering five months of severance pay, holiday pay, and healthcare coverage for the severance period. Additionally, immigration support will be provided to employees whose immigration status is linked to their employment.
These job cuts reflect ongoing adjustments in the tech sector, responding to economic shifts and company-specific strategies. The landscape continues to evolve, with each company navigating its unique challenges and opportunities.
Mihir Gadhvi is the co-founder of illustrake and HAYD. Illustrake is a D2C Enabler and offers Performance Marketing, Retention Marketing, and Content Creation Services. HAYD is a brand New, homegrown fashion line that aims to make clothing easy for us without taxing our planet. Although the concept is quite known now, HAYD wants to accomplish sustainability by reducing its impact on the environment with safe and fair manufacturing.