Spotify joins the list of technology firms laying off employees for cost reduction yet again. Daniel Ek, co-founder and CEO of the Swedish audio streaming service, disclosed in a public memo that the company plans to cut its workforce by approximately 17%. An analysis of the latest quarterly report indicates this equates to around 1,500 employees out of a global staff of 9,241.
This marks Spotify’s third round of layoffs, following the release of 600 employees in January and an additional 200 from the podcast division in July, alongside increases in the pricing of its premium subscription service.
The executive mentioned considering gradual staff reductions over 2024 and 2025. However, the substantial difference between the desired financial targets and existing operational expenses necessitated the present course of action.
According to the memo, Spotify significantly expanded its workforce in 2020 and 2021. The Wall Street Journal highlighted that the employee count nearly doubled during this period, as Spotify focused on expanding its content, marketing, and exploring new business areas.
Despite increased productivity in 2022 and 2023, the company did not achieve the desired efficiency levels, compelling Ek and Spotify to take more severe measures.
Each employee being let go will be compensated with a severance package that includes roughly five months’ worth of wages and payment for their accrued and unused paid time off (PTO). Additionally, they will maintain their healthcare benefits throughout the severance period and will have the opportunity to seek new employment starting two months after their departure.
Ek highlighted that these adjustments are aimed at steering Spotify towards a more concentrated strategy. He perceives the staff reduction not as a setback, but as a strategic shift in direction.
The expectation for the remaining employees is to demonstrate extraordinary ingenuity and adaptability in the company’s forthcoming operational, problem-solving, and innovative endeavors.
