- Spotify cuts 1,500 jobs
- Q3 profits of €65m
- Tech sector layoffs rise
Spotify, the Swedish music streaming behemoth, has announced a 17% reduction in its workforce, equating to approximately 1,500 positions, as part of an effort to cut expenses.
Daniel Ek, the chief executive officer, stated that he made the “difficult” decision due to a “dramatic” slowdown in economic development.
Mr Ek emphasized that significant action to rightsize costs was necessary for the company to achieve its goals, given its current employment of around 9,000 people.
He acknowledged the “extremely painful nature” of the layoffs for the team, expressing awareness that many individuals who made significant contributions would be leaving the organization.
“I am aware that this will have an effect on a number of individuals who have made significant contributions.” Many intelligent, talented, and diligent individuals will leave our organization.
While Spotify reduced personnel earlier this year, these forthcoming announcements surpass those of the past.
Financial Performance and Global Expansion
Spotify disclosed profits of €65 million (£55.7 million)y for the three months ending in September. This marked the company’s first quarterly profit in over a year, aided by pricing increases and increased subscriber count.
The technology company has been actively pursuing global expansion to attain one billion consumers by the year 2030.
There are 601 million of them, compared to 345 million after 2020.
In light of the recent “positive” results, Mr. Ek stated that the announced layoffs “will feel surprisingly severe” to many individuals.
He stated that Spotify had contemplated implementing minor price reductions in 2024 and 2025 but ultimately determined that more drastic measures were required to improve the business’s finances.
Since its inception, Spotify has invested heavily in business expansion and acquiring exclusive content, including podcasts produced by the Duke and Duchess of Sussex, Michelle Obama, and Barack Obama.
Reportedly, the agreement with Harry and Meghan cost $25 million (£19.7 million) and concluded in June after fulfilling only 12 episodes throughout two and a half years.
Regarding podcast content, Mr. Ek stated, “In all honesty, only a portion of it has been successful. The remainder has not.”
Monday is when the organization will begin notifying affected employees. Employees will receive approximately five months of severance pay, holiday pay, and healthcare coverage during the severance period.
Additionally, Spotify will assist with immigration matters for personnel whose employment is linked to their immigration status.
Tech workforce reductions persist
These are the most recent redundancies to be announced in the technology sector, eliminating tens of thousands of positions since a surge in activity during the Covid pandemic lockdowns.
BT announced in May that it could eliminate as many as 55,000 positions by the conclusion of the current decade.
Technology titans Meta and Microsoft also disclosed intentions to lay off up to 10,000 workers this year.
Amazon, the largest e-commerce website in the world, announced it would eliminate more than 18,000 positions and Alphabet, the parent company of Google, proposed layoffs of approximately 12,000.
This year, layoffs have also affected smaller organizations, as both Yahoo and LinkedIn announced.
In contrast, Apple emerged as an outlier by declaring its intention to recruit personnel in artificial intelligence.
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