Spotify cuts 6 per cent of its workforce
Image credit: Photo 188227498 / Business © Natanael Alfredo Nemanita Ginting | Dreamstime.com
Spotify has become the latest technology giant to announce large-scale layoffs, which will affect 6 per cent of its global workforce.
The audio streaming service is expected to cut about 600 jobs, as part of its post-pandemic restructuring plan.
CEO Daniel Ek announced the restructuring in a message to employees, confirming reports leaked during the weekend.
Spotify has a total workforce of around 9,800 people, according to its latest filing. Based on that number, the job cuts are expected to impact about 600 employees.
Following on the lead of the main executives of Meta, Microsoft, Amazon and Alphabet – which have recently announced large-scale layoffs – Ek explained the decision as a result of changes in customer and advertisers' behaviours, as they have reduced spending in the face of a looming recession.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” Ek said.
“In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6 per cent across the company."
The executive added that he takes "full accountability for the moves that got us here today".
Spotify’s operating expenditure grew at twice the speed of its revenue last year, Ek wrote, as the Stockholm-based company invested heavily in its podcast business. The executive labelled this growth as "unsustainable".
The company said it would provide affected employees with six months of severance pay, as well as healthcare and immigration support during the severance period, at a cost of between €35m (£30.7m) and €45m (£39.6m).
In addition to the job cuts, Ek also announced a restructuring of the company's leadership. As part of this effort, he revealed that Dawn Ostroff, chief content and advertising business officer, would be leaving Spotify.
Spotify has never posted a full-year net profit, despite its popularity in the online music market.
With this news, the company joins hundreds of other technology players that have recently opted to reduce their workforce due to market concerns.
At the start of the year, Amazon confirmed reports that the company is planning to lay off 18,000 employees in what would be the largest job cuts in the company’s history.
Last November, Meta, the parent company of Facebook, Instagram and WhatsApp, also said it will cut its global workforce by 13 per cent, letting go of more than 11,000 employees. Shortly after, Salesforce, the cloud software provider, announced it would cut 8,000 jobs.
In the days following Elon Musk’s $44bn acquisition of Twitter, the social media company laid off approximately half its workforce. Lyft, Snap, Stripe and other technology firms have also laid off workers in recent months.
Shares of Spotify climbed more than 3 per cent Monday, following the news of the cost-cutting measures.
Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.