Spotify has announced another round of layoffs for its staff, citing a slowdown in economic growth and a desire to focus on profitability.
The company’s CEO Daniel Ek announced today (4 December) that 17pc of Spotify’s workforce will be cut to ensure it is “right sized” for future challenges. The company employs roughly 9,200 staff, which means this announcement will impact around 1,500 people.
“We debated making smaller reductions throughout 2024 and 2025,” Ek said. “Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to right size 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.”
This announcement follows Spotify’s decision to cut 6pc of its staff at the start of 2023. The company employed about 9,800 people at the time, which meant the earlier round of job cuts impacted more than 580 people.
In the latest announcement, Ek said a reduction in size will feel “surprisingly large” given the company’s recent earnings reports. Earlier this year, Spotify’s monthly active users shot up to 574m, a 26pc year-on-year increase. Revenue for Spotify’s third quarter went up by 11pc to €3.36bn.
Spotify said at the time that the jump in monthly active users represented its second largest third-quarter net addition performance in history.
Despite this growth, Ek claims Spotify has too many people that support work or do “work around the work”, rather than contributing to “opportunities with real impact”.
“By most metrics, we were more productive but less efficient,” Ek said. “We need to be both. While we have done some work to mitigate this challenge and become more efficient in 2023, we still have a ways to go before we are both productive and efficient.
“More people need to be focused on delivering for our key stakeholders – creators and consumers. In two words, we have to become relentlessly resourceful.”
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