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Business News/ Companies / News/  Spotify to cut 17% of its workforce: Report

Spotify to cut 17% of its workforce: Report

Spotify to sack 17% of its staff, Reuters reported

Spotify to slash workforce this week (REUTERS)Premium
Spotify to slash workforce this week (REUTERS)

Music streaming giant Spotify said on Monday that it will reduce its total headcount by around 17% across the company in a bid to cut costs amid "dramatically" slower economic growth, news agencies reported.

Impacted employees will be notified on Monday and meet with human resources by the end of the day on Tuesday, the music streaming company said in a statement, Bloomberg reported.

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Chief Executive Officer and founder Daniel Ek said, “We still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact".

Spotify in October posted a rare quarterly operating profit of 32 million euros, compared to a loss of 228 million for the same period a year earlier, on the back of 26% growth in active users for the third quarter.

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“I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance," Ek wrote.

He said that in 2020 and 2021, the company, “…invested significantly in team expansion, content enhancement, marketing and new verticals".

“However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big," Spotify founder wrote.

He also said that he will focus on a leaner structure that will allow it to be more strategic about how the company reinvests profits in the business.

Ek will address the cuts on Wednesday in an “Unplugged" session.

Notably, in January this year, Spotify said it would sack about 6,000 employees or 6% of staff. In June, it announced plans to trim an additional 200 jobs or 2% of its workforce.

Those cuts brought changes to the C-suite, including the departure of Chief Content Officer Dawn Ostroff.

Spotify has invested heavily since its launch to fuel growth. It has invested over one billion dollars into podcasts alone.

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In 2017, the company had around 3,000 staff members, more than tripling the figure to around 9,800 at the end of 2022.

Last month, Spotify said it will modify how it pays artists in 2024. The music streaming app announced that from early 2024, Spotify will require a minimum of 1,000 streams over 12 months before paying out royalties.

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Published: 04 Dec 2023, 01:00 PM IST
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