Music streaming Spotify is laying off 17% of its staff to cut costs and adapt to slowing growth, CEO Daniel Ek on Monday.
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In an email sent to staff, Ek said Spotify is taking “significant actions to adjust our spending,” adding that the company hired many employees in recent years, from 2020 to 2021, when capital was cheap and tech companies were able to invest significant amounts in expanding the team.
The latest cuts represent about 1,500 jobs, according to a source familiar with the matter, CNBC reported. A Spotify spokesperson would not comment on the exact number of positions affected by the measure. At about 4:15 a.m. ET, Spotify shares were up about 2% in premarket trading in the United States.
“Over the past two years, we’ve focused heavily on growing Spotify into a truly exceptional and sustainable business, building a plan to become the world’s leading music company and a plan that will deliver continued profitability and growth into the future,” Ek said in an internal message shared on Spotify’s website.
“While we have made commendable progress, as I have shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is no exception to these realities.”
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It comes after Spotify reported a profit of 65 million euros ($70.7 million) in the third quarter, citing reduced spending on marketing and personnel.
Spotify raised the prices of its subscription plans earlier this year and is expanding into podcasts and audiobooks.
The latest layoffs follow a series of cuts at the company, which, like other growth, has been forced to cut spending over the past year or so due to higher interest rates and a worsening macroeconomic situation.
At the beginning of the year, Spotify cut its staff by 6%, about 600 employees. Then, in June, Spotify laid off 2% of its staff, about 200 positions.
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The areas most affected by the layoffs at Spotify are the business operations related to the development and maintenance of the platform. This includes the areas of technology, software development and data management. The layoffs in these areas are due to Spotify's effort to save costs and focus on more profitable activities.
Additionally, the advertising and marketing areas were also affected by the layoffs. Spotify acknowledged that spending in these areas was high and decided to reduce its staff in these groups. This may lead to a reduction in Spotify's advertising presence and changes to the company's marketing strategy.
Finally, the layoffs also affect the content production sector. Spotify invests heavily in content creation, such as music and podcasts, and the layoffs could have an impact on its ability to produce and deliver quality content to its users.
Overall, the layoffs at Spotify primarily affect the areas of technology, software development, data management, advertising, marketing, and content production.
Source: cnbc
