Spotify is laying off 17 percent of its workforce in an effort to cut costs, its CEO Daniel Ek announced to employees today. The cuts are expected to affect more than 1,500 people, based on a total of 9,241 employees revealed during its last earnings release.
In a memo sent to employees, one said slow economic growth and rising costs were responsible for the cuts, which he said would make Spotify a leaner company. One wrote, “Today, we still have too many people dedicated to supporting the work and even working around the work rather than contributing to opportunities that have real impact.” He later said, “As we’ve grown, we’ve moved far away from this core principle of resourcefulness.”
“As we’ve grown, we’ve moved far away from this core principle of resourcefulness”
These layoffs follow a significant increase in Spotify’s workforce during the pandemic, with its workforce nearly doubling over the past three years. wall street journal notes. In his memo, Ek defended his decision to develop the team during that period, but said that “we now find ourselves in a very different environment.”
Employees affected by Spotify’s latest layoffs will receive about five months of severance pay, according to Ek’s memo, during which time the company will continue to cover their health care.
Spotify has generally prioritized growth over quarterly profits throughout its history, but WSJ Note that investors have been emphasizing profitability over the past year. Eck said at an investor day last year that he intended to make Spotify profitable by 2024. Although the company had reported quarterly profit in its last earnings release, WSJ Note that it lost €462 million (about $502 million) in the first nine months of this year.