Spotify: Cutting the Workforce by 17% 📉
Ek, Spotify's CEO, penned an open letter to the team, acknowledging the economic downturn and the increased cost of capital. He stated, "Honestly, we're losing quite a few brilliant, skilled, and dedicated individuals."
Scheduled to hold individual meetings with affected employees by Tuesday, the redundancies will result in around five months' severance pay for most employees. Spotify, with over 9,000 employees, trimmed its workforce by over 500 individuals back in January and joined other tech giants like Microsoft and Amazon in implementing job cuts. In June, they dismissed 200 employees from their podcasting division.
Ek admitted to Spotify's robust growth last year but acknowledged that the company had become less efficient and had strayed from its innovative roots as a technology startup. He added, "Unfortunately, there are too many people involved in supportive roles instead of focusing on serving creators and consumers."
Despite adding 6 million subscribers between June and September, exceeding their expectations by 2 million, Spotify only reported a €32 million profit against a €228 million loss in the same period the previous year. With 226 million subscribers overall, Ek emphasized the need for Spotify to become more resourceful, communicating a shift in strategy that would entail changes in their operations.
Adapting to the New Normal
Under the influence of economic growth slowdown, Spotify is rethinking its cost structure to align with its future objectives. The company plans to focus on becoming "relentlessly resourceful," cutting unnecessary costs to better serve its creators and consumers.
This restructuring will result in reduced operational costs and improved efficiency. With layoffs expected to hit over 1,500 employees, Spotify is preparing to reorganize its operations, ensuring its long-term sustainability and profitability, despite Secure earnings reports.
