Music streaming giant Spotify is laying off 17% of its employees in an attempt to cut costs, according to a memo seen by MARKETING-INTERACTIVE.
CEO Daniel Ek made the announcement to staff on 4 December, citing slowing economic growth and capital becoming more expensive as reasons for the cuts.
"To align Spotify with our future goals and ensure we are right sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company," wrote Ek in the memo.
This news comes after Spotify revealed its third quarter 2023 earnings where the company saw a 11% total revenue growth of SG$4.9 billion.
"I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance," continued Ek.
"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 is the streaming giant's third round of layoffs this year. In June, Spotify downsized its podcast unit wherein approximately 2% of Spotify's workforce were let go.
Prior to that, the company slashed 6% of jobs in January.
In his announcement, the CEO added that Spotify has found itself in a "different environment" where the company is now "more productive but less efficient." Ek noted that embracing a leaner structure will allow the company to invest its profits more strategically.
"More people need to be focused on delivering for our key stakeholders – creators and consumers. In two words, we have to become relentlessly resourceful," wrote Ek.
"With a more targeted approach, every investment and initiative becomes more impactful, offering greater opportunities for success. This is not a step back; it’s a strategic reorientation."
Affected employees will be invited to have one-on-one conversations with HR and will be given a severance pay of approximately five months in addition to career support services.
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