Spotify is the latest tech company that will lay off employees as a cost-cutting measure. According to a public memo from Daniel Ek, co-founder and CEO of the Swedish audio streaming platform, approximately 17% of the workforce will be reduced.
A quick calculation based on the latest quarterly report reveals this is about 1,500 of the total 9,241 employees worldwide.
This is the third time Spotify is laying off employees, on top of increasing prices of its Premium subscription service. January saw 600 people get released, with 200 more from the Podcasts division being shown the door in July.
The executive said that making smaller reductions throughout 2024 and 2025 was discussed, but the gap between the financial goal state and current operational costs lead to the current decision.
Spotify headcount increased “significantly” in 2020 and 2021, reads the memo. The Wall Street Journal noted that employees nearly doubled as the company aimed to enhance its content, marketing and “new verticals”. The following 2022 and 2023 were more productive, but Spotify failed to become more efficient, pushing Ek and the company to drastic measures.
Each employee that is being released will get severance pay of approximately five monthly wages and their accrued and unused PTO will be paid out. Healthcare will be provided during the severance period, and employees will be eligible to work at a new place after two months.
Ek pointed out this will allow Spotify to have a “more focused approach,” and the shift in manpower is not a step back but a “strategic reorientation”. The remaining employees are supposed to be “relentlessly resourceful” in any future ways the company is operating, tackling problems, and innovating.
