Despite announcing 550 million active users and positive earnings report, Spotify announced a significant reduction in its workforce, shedding 17% of its employees.
The surprise decision comes as the music-streaming giant deals with economic uncertainty and attempts to restructure its operations. CEO Daniel Ek acknowledged the upcoming difficult times and outlined the reasoning behind the layoffs. He noted that the reductions were required to match Spotify’s cost structure with its long-term ambitions and ensure sustainable growth. He stressed the importance of taking fast action to close the growing gap between Spotify’s financial ambitions and existing operational costs.
“While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team,” he said.
Approximately 1,500 of Spotify’s 9000 employees are expected to be affected by the layoffs. They will be taken care of by Spotify’s five-month severance package healthcare coverage throughout that time, and immigration/career support to offset the damage.
Spotify’s decision mirrors the broader issues that the technology industry is facing, with numerous companies facing economic headwinds and being forced to make difficult decisions. Nokia’s recent announcement to cut 14,000 positions, as well as big tech firms like Google, Amazon, Microsoft, and Meta cutting off more than 200,000 staff combined in 2023, highlight the industry’s difficulties.
