In a bid to navigate the challenges posed by a notable economic slowdown, Swedish music-streaming giant Spotify has announced a substantial reduction in its workforce, cutting approximately 1,500 jobs, which accounts for 17% of its employees. This decision, characterized as “difficult” by Chief Executive Daniel Ek, is part of an ongoing effort to align the company’s costs with its objectives.
With an existing employee count of around 9,000, Spotify had already implemented staff reductions earlier in the year. However, the most recent announcement far surpasses those prior measures. Mr. Ek underscored the necessity for “substantial action to rightsize our costs” despite the positive financial results reported in the third quarter, where the company marked its first quarterly profit in over a year.
While acknowledging the impact on departing staff, Mr. Ek expressed understanding of the “incredibly painful” nature of the decision. He acknowledged the contributions of those affected, stating, “To be blunt, many smart, talented, and hard-working people will be departing us.”
The move comes as a surprise to industry observers, given Spotify’s recent profitability, with a reported profit of €65 million (£55.7 million) in the third quarter. Factors contributing to the positive results include price increases and a rise in subscriber numbers.
Spotify, known for its significant investments in business expansion and exclusive content, including high-profile podcasts featuring figures like Michelle and Barack Obama, as well as the Duke and Duchess of Sussex, has experienced both successes and challenges in this arena. The company’s Chief Executive, Mr. Ek, previously acknowledged in September, “The truth of the matter is some of it has worked, some of it hasn’t.”
The decision to streamline its workforce reflects Spotify’s strategic response to economic uncertainties and aims to position the company for sustained financial success in an ever-evolving industry landscape.