Spotify lays off 1,500 people in the third mass cut of the year – 12/04/2023 – Tech

Music streaming giant Spotify announced on Monday (4) that it will lay off around 1,500 employees, or 17% of its staff, to reduce costs, after cutting 600 people from its team in January and another 200 in June.

In a letter to employees, Spotify chief executive Daniel Ek said the company hired more in 2020 and 2021 due to lower capital costs, and while its production increased, much of it was tied to having more resources.

Spotify has invested more than $1 billion to develop its podcast business, signed celebrities such as Kim Kardashian, Prince Harry and Meghan Markle, and expanded its market presence in most countries around the world to reach one billion users by 2030. Currently , the company has 601 million users, compared to 345 million at the end of 2020.

In the third quarter, the company turned a profit, helped by price increases on its streaming services and subscriber growth in all regions, and the company predicted that the number of monthly listeners will reach 601 million in the fourth quarter.

“By most indicators, we were more productive but less efficient. We need to be both,” Ek said.

Spotify will begin informing employees affected by the cuts this Monday. Workers will receive around five months of severance pay, vacation pay and health coverage during the layoff period.

“We discussed the possibility of making smaller reductions throughout 2024 and 2025,” Ek said. “However, considering the gap between our financial target status and our current operating costs, I decided that substantial action to reduce our costs was the best option to achieve our objectives.”