In a move to tighten its financial belt, Swedish music-streaming titan Spotify has declared a significant workforce reduction, slashing 1,500 jobs, constituting 17% of its employees. The decision, termed “difficult” by CEO Daniel Ek, comes as the company faces a dramatic slowdown in economic growth.
Spotify, which currently employs approximately 9,000 individuals, reported its first quarterly profit in over a year at €65 million (£55.7 million) for the quarter ending September. Despite positive recent results, Ek emphasized the need for “substantial action to rightsize our costs” to align with the company’s objectives.
This reduction surpasses previous staff cuts announced earlier this year, reflecting the depth of the cost-cutting measures. Ek acknowledged the painful impact on departing team members, recognizing the contributions of many talented individuals.
Spotify has been on a global expansion drive to reach a billion users by 2030, currently boasting 601 million users, up from 345 million at the close of 2020. Ek noted that, given the recent positive results, the magnitude of these job cuts might be surprising for many.
The company, known for its significant investments in business growth and securing exclusive content like podcasts from notable figures such as the Obamas and the Duke and Duchess of Sussex, has decided on a more immediate and drastic approach to enhance its financial position.
Affected employees will be informed starting Monday and will receive approximately five months of severance pay, holiday pay, and healthcare coverage. Additionally, Spotify plans to provide immigration support to employees whose immigration status is tied to their employment.
These layoffs add to a series of job cuts in the tech industry, including those by giants like Meta, Microsoft, Amazon, Alphabet, as well as BT, reflecting the ongoing impact of the Covid pandemic on the job market. While some tech companies are trimming their workforce, others like Apple are actively hiring, particularly in the AI sector.