United States: Digital music service Spotify is cutting 17 percent of its workforce in its third round of layoffs this year.
Spotify stated that in an effort to reduce costs, it will lay off about 1,500 employees, or 17 percent of its headcount.
The music streaming giant had laid off 600 employees in January, followed by 200 in June. Mr. Daniel Ek, Spotify CEO, remarked that, “To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision.”
“I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented, and hard-working people will be departing us,” Mr. Ek added.
In an internal memo, Mr. Ek said that the company employed more people in 2020 and 2021 due to the lower cost of capital, and while its output has increased, much of it was linked to having more resources.
The company CEO pointed out that the reduction will seem significant in light of the company’s recent profitable third-quarter earnings report and its continuous performance, including hitting its audience target of 601 million users early.
“By most metrics, we were more productive but less efficient. We need to be both,” Mr. EK commented. The company will begin informing affected employees on Monday.
“We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives,” Mr. EK noted.
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