A sombre tune as Spotify announce 6pc layoffs

23 Jan 2023

Image: © natanaelginting/Stock.adobe.com

In what is becoming a familiar lament for tech companies, Spotify announces restructuring plans that include nearly 600 job losses.

“Change is the only constant,” CEO Daniel Ek told Spotify employees today (23 January) in his announcement that the company will cut around 6pc of its workforce.

“As you are well aware, over the last few months we’ve made a considerable effort to rein in costs, but it simply hasn’t been enough.” In 2022, Spotify’s operational expenditure was double its revenue growth.

Ek described the current economic environment as “challenging” and that this decision was “difficult but necessary”. He maintained that his focus is “on ensuring that every employee is treated fairly as they depart”. He listed the support laid-off staff would receive to include severance pay, healthcare during the severance period and two months of career support.

As of September 2022, Spotify employed about 9800 people globally, meaning today’s announcement will affect over 580 people.

As well as layoffs, Ek announced some changes in the leadership team. “In an effort to drive more efficiency, control costs, and speed up decision-making, I have decided to restructure our organization.”

Chief content and advertising officer Dawn Ostroff will depart after four years at the company.

Ek also advised that the “majority of engineering and product work” would be centralised under chief product officer Gustav Söderström, who has worked at Spotify for over 14 years. Spotify’s business sector will be centralised under Alex Norstrom, another long-term Spotify employee.

“I’m happy to say that Gustav and Alex, who have been with Spotify for a long time and have done great work, will be leading these teams as co-presidents, effectively helping me run the company day-to-day,” Ek said.

Despite the layoffs, Ek described the company’s position in a positive light, saying “our overall business continues to perform nicely”.

This is another in a series of layoff announcements in recent weeks with major tech companies Alphabet, Microsoft and Amazon all cutting staff due to fears about macro-economic instability and restructuring plans.

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Rebecca Graham is production editor at Silicon Republic