Spotify to Cut 1,500 Jobs (17% of the Workforce) Amid Economic Slowdown
Swedish music-streaming titan Spotify has unveiled plans to slash 17% of its workforce, equating to approximately 1,500 jobs, in a strategic move to control costs. CEO Daniel Ek, citing a “dramatic” slowdown in economic growth, characterised the decision as challenging yet essential for the company to align with its objectives.
Ek acknowledged the painful impact on the team, expressing understanding for the departure of smart, talented, and hard-working individuals. This substantial workforce reduction surpasses previous cutbacks made by Spotify earlier this year.
Despite reporting a quarterly profit of €65 million (£55.7 million) for the three months ending September, Spotify is now taking drastic measures to rightsize its costs. The company, with about 9,000 employees, had previously experienced a surge in profits attributed to price increases and a growing subscriber base, reaching 601 million users by 2023 from 345 million in 2020.
Ek highlighted that, given the recent positive results, these job cuts might seem surprisingly large to many. While contemplating smaller reductions in 2024 and 2025, Spotify opted for immediate, significant action to enhance its financial position.
The company’s expansion strategy, aiming to reach a billion users by 2030, has involved considerable investments in business growth and exclusive content, including high-profile podcasts. Notably, deals like the one with Harry and Meghan, costing $25 million (£19.7 million), contributed to this effort.
Affected employees will be informed starting Monday and will receive approximately five months of severance pay, holiday pay, and healthcare coverage. Spotify is also extending immigration support for employees whose status is linked to their employment.
This move by Spotify aligns with a broader trend of job cuts in the tech industry, with companies like BT, Meta, Microsoft, Amazon, Alphabet, Yahoo, and LinkedIn also announcing layoffs. However, Apple appears to be an outlier, planning to hire staff in the AI sector.
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