Reem Makari
Dec 06, 2023

Spotify lays off 17% of workforce amid cost-cutting drive

CEO Daniel Ek says cuts will ensure company is “right-sized” for future challenges

Spotify lays off 17% of workforce amid cost-cutting drive

Audio giant Spotify has announced its third round of layoffs for this year, cutting 17% of its workforce, which CEO Daniel Ek said is necessary in order to meet the company’s objectives for the future. 

This round of layoffs marks the highest number of job cuts within the company this year. According to the company’s Q3 financial report, Spotify had 9,241 full-time employees working for the company globally by the end of that quarter which means the layoffs would amount to an estimated 1,570 employees in total. The company has not stated which specific roles, divisions or geographies will be affected.

Employees that have their position impacted by this decision are being notified today and will receive “approximately five months of severance”, PTO, healthcare during the severance period, immigration support for those whose status is affected, and career support with employees being eligible for outplacement services for two months. 

Despite reporting positive growth for the company in Q3 - with revenue up by 11% year-on-year and operating loss income down by 154% - Ek said that the layoffs were the best decision for the company in order to meet future objectives and face other challenges. 

“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,” said Ek in an internal memo sent to Spotify employees which was later shared on its public blog. 

“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.” 

Spotify previously announced that it was cutting 6% of its staff in January this year, in an effort to reduce its costs and improve efficiencies within the organisation after the company experienced €224 million (£198m) in operating loss income in Q4 2022, partly due to heavy investments in podcasting. The company then later announced in June this year that it was laying off a further 2% of its workforce as part of its new podcast strategy. 

In addition to the layoffs, Spotify has made a number of changes to its podcasting strategy this year, no longer making a number of hit shows exclusive to its platform in order to grow its ad sales and audience, as well as ending partnerships with big name figures such as Meghan Markle and Prince Harry. 

Ek added that Spotify’s future strategy is defined by being “relentlessly resourceful” in its operations. The CEO said that Spotify will also be changing the way that it works and that it will be sharing more details on what this means in the coming days and weeks. 

“We’re still committed to investing and making bold bets, but now, with a more focused approach, ensuring Spotify’s continued profitability and ability to innovate,” said Ek. “Lean doesn’t mean small ambitions; it means smarter, more impactful paths to achieve them.”

(This article first appeared on www.podpod.com.)

Source:
Campaign India

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