Monday, December 04, 2023
In a strategic move to curb costs, Spotify, the Swedish music-streaming titan, has declared its decision to trim its workforce by 17%, amounting to approximately 1,500 jobs.
Chief Executive Daniel Ek, acknowledging the difficulty of the decision, cited a substantial need to "rightsize our costs" amid a significant slowdown in economic growth.
While Spotify, with around 9,000 employees, previously underwent staff reductions, this latest announcement far exceeds its prior measures. In the recent quarterly results, the company reported a profit of €65 million (£55.7 million) for the three months ending in September, marking its first quarterly profit in over a year, propelled by increased subscriber numbers and price hikes.
Despite the positive financial upturn, Ek admitted the job cuts would be "incredibly painful for our team." He emphasised the significant impact on "many smart, talented, and hard-working people" who would be departing the company.
Ek, cognizant of the surprise factor due to recent positive results, justified the drastic action, indicating that smaller reductions in 2024 and 2025 were initially considered but deemed insufficient for the necessary financial improvement.
Spotify, aiming to reach a billion users by 2030, has expanded globally, currently boasting 601 million users compared to 345 million at the end of 2020. The company has invested heavily in global expansion and securing exclusive content, such as podcasts featuring high-profile personalities like Michelle and Barack Obama and the Duke and Duchess of Sussex.
The repercussions of these job cuts echo a broader trend in the tech industry, where giants like Meta, Microsoft, Amazon, and Google have also announced significant workforce reductions this year.
Spotify plans to inform affected employees starting Monday, providing severance pay, holiday pay, and healthcare coverage for the severance period. Additionally, immigration support will be offered to employees whose immigration status is linked to their employment.