Aiming to enhance productivity and efficiency, music streaming giant, Spotify has eliminated approximately 1,500 jobs, constituting 17% of its workforce.
This marks the third round of layoffs for the company this year, as it strives to scale through the economic challenges ahead.
In a communication addressed to employees on Monday, Spotify founder and CEO Daniel Ek emphasized the necessity of right-sizing the workforce to overcome the hurdles brought about by slow economic growth and escalating capital costs. Ek acknowledged the impact on many talented individuals who have contributed significantly to the company’s success.
The decision, according to Ek, stems from the need to address the gap between the company’s financial goals and current operational costs. The note, subsequently published on the company’s blog, revealed that Spotify, with approximately 8,800 employees, would notify those affected later in the day.
This latest wave of layoffs follows previous cuts of about 6% in June and an additional reduction in workforce in January. Despite a robust performance in user growth and exceeding Wall Street’s expectations in operating income, Spotify faces challenges, particularly in the North American market, where premium subscriber growth has been modest.
Ek acknowledged the scale of the reduction in light of recent positive earnings reports and strong performance. He revealed that alternatives, such as smaller reductions over the next few years, were debated but ultimately decided that a substantial action was necessary to align costs with the company’s objectives.
The move by Spotify is part of a broader trend, with industries globally witnessing significant layoffs totaling over 225,000 employees this year. The tech sector, including firms like Amazon, Google, Meta, Twitter, and Netflix, has also faced notable cutbacks, contributing to growing economic unease among employees.