Spotify to Cut Workforce by 17% Amid Economic Woes
By Adedapo Adesanya
Music streaming service, Spotify, will cut about 17 per cent of its global workforce in another round of layoffs amid slowing economic growth.
According to the CEO of the streamer, Mr Daniel Ek, this figure represents around 1,500 of its 9,000 staff.
Earlier in January, Spotify, based in Sweden, said it would cut staff by 6 per cent and announced a hiring slowdown in October, but this move to reduce costs goes much deeper.
Most Spotify staff impacted by the cuts will receive approximately five months’ severance pay, including healthcare, and be eligible for two months’ outplacement services.
According to Mr Ek, the move was a “strategic orientation” rather than a “step back” even as the company posted a profit of $34.8 million profit and boosted revenues by 11 per cent year-on-year in the third quarter of the year.
“Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business – one designed to achieve our goal of being the world’s leading audio company and one that will consistently drive profitability and growth into the future,” wrote Mr Ek in the company’s blog.
“While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.
“I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” he added.
“We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives. While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team,” he further stated.
He noted Spotify had taken “advantage of the opportunity presented by lower-cost capital” in 2020 and 2021 and “significantly” upped investment in staff, ‘content enhancement,’ marketing, and new verticals.
According to the executive, while these generally helped Spotify grow, the company was now in “a very different environment.” Despite efforts to “reduce costs this past year, our cost structure for where we need to be is still too big.”