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On Monday Spotify announced that it would be cutting 6% of their staff down. That comes to around 600 employees being laid off, after the company went on a spending spree during the pandemic.
Spotify is the latest company to join the wave of tech layoff. The industry is currently recalibrating after growing exponentially over the past few months. These layoffs were made ahead of a potential recession.
Spotify Chief Executive, Daniel Ek said in a letter to employees “Over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough”. He added, “So while it is clear this path is the right one for Spotify, it doesn’t make it any easier.”
Spotify’s spokeswoman shared that 600 out of the company’s 9,808 full-time employees have been laid off. These employees worked across departments within the company and no particular department was targeted for the layoffs. Last year Ek said that the company would slow down hiring more people but did not mention anything about layoffs.
On Monday he shared, “In hindsight, I was too ambitious in investing ahead of our revenue growth”. He further added, “I take full accountability for the moves that got us here today.”
Recently all tech companies are announcing major cuts due to the economic turbulence after increasing their employee count. Many companies are cutting some of their recent additions and avoiding long-term projects.
Ek says that Spotify’s operating expenses were twice the size of their revenue. He says the layoffs were a difficult but necessary decision. He said, “Like many other leaders,I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us.” The company is one of the most popularly used streaming services for music in the world. In October, they reported having 456 million monthly active users.
Ek said the employees laid off would be provided with five months of severance pay. He even spoke about a few top tier changes which included Spotify’s chief content officer Dawn Ostroff leaving the team.
Ostroff played an important role in the growth of the company, especially in the podcast space. She signed deals with high profile figures like Joe Rogan, Michelle Obama and Kim Kardashian.She even helped strike one the podcast industry’s biggest licensing deals by bringing Joe Rogan’s podcast exclusively to Spotify for over 100 million USD.
Last year the company outlined its plan for growth even with concerns from investors about the limited opportunities in the audio-market. They also have plans to increase prices for their premium service in 2023.
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