Spotify cuts 17% of jobs as financial progress slows

Almost 1,500 workers are anticipated go away the corporate.

Music streaming big Spotify mentioned Monday it might scale back the variety of its workers by round 17 % in a bid to chop prices amid “dramatically” slower financial progress.

The announcement comes on the heels of a uncommon quarterly internet revenue of 65 million euros in October, in comparison with a lack of 166 million for a similar interval a 12 months earlier, following 26 % progress in lively customers for the third quarter to 574 million.

Round 1,500 individuals will go away the corporate, Spotify mentioned.

It was the newest in a collection of layoffs introduced within the tech trade chopping tens of 1000’s of jobs following a increase throughout Covid pandemic lockdowns.

“I realise that for a lot of, a discount of this measurement will really feel surprisingly giant given the latest constructive earnings report and our efficiency,” chief govt Daniel Ek wrote in a letter to workers, which was seen by AFP.

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He mentioned that in 2020 and 2021, the Swedish firm “took benefit of the chance offered by lower-cost capital and invested considerably in staff growth, content material enhancement, advertising and new verticals.”

“Nonetheless, we now discover ourselves in a really completely different surroundings,” noting that “financial progress has slowed dramatically and capital has turn out to be dearer.”

“Regardless of our efforts to scale back prices this previous 12 months, our value construction for the place we should be remains to be too large,” he added.

Ek mentioned that in 2022 and 2023, Spotify, which is listed on the New York Inventory Trade, was “extra productive however much less environment friendly. We should be each.”

The corporate had “too many individuals devoted to supporting work and even doing work across the work fairly than contributing to alternatives with actual impression.”

A leaner construction will “permit us to take a position our earnings extra strategically again into the enterprise,” he mentioned.

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Heavy investments

Spotify has invested closely since its 2006 launch to gas progress with expansions into new markets and, in later years, unique content material similar to podcasts.

It has invested over one billion {dollars} into podcasts alone.

In 2017, the corporate had round 3,000 employees members, greater than tripling the determine to round 9,800 on the finish of 2022.

The corporate has by no means posted a full-year internet revenue and solely sometimes quarterly earnings regardless of its success within the on-line music market.

Within the third quarter, Spotify registered a 16 % rise in paying subscribers, which make up the majority of the corporate’s income, to 226 million, regardless of worth hikes.

It mentioned it anticipated to exceed 600 million lively customers by the tip of the 12 months.

Monday’s lay-off announcement was Spotify’s third this 12 months.

In January, the corporate introduced round 600 job cuts, adopted by one other 200 within the podcast division in June.

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“We debated making smaller reductions all through 2024 and 2025,” Ek wrote in his letter.

“But, contemplating the hole between our monetary objective state and our present operational prices, I made a decision {that a} substantial motion to rightsize our prices was the best choice to perform our targets.”

British telecom group BT mentioned in Might that it’ll axe as much as 55,000 jobs by the tip of the last decade.

Tech giants Meta and Microsoft have revealed plans to scale back their workforce by as many as 10,000 workers this 12 months.

In January, on-line retail big Amazon introduced it was chopping over 18,000 jobs worldwide and Google father or mother firm Alphabet introduced cuts of round 12,000 individuals.

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