Spotify To Axe 1,500 Jobs In Cost-Cutting Drive

Music streaming service Spotify has said it plans to lay off some 17 percent of its workforce, or about 1,500 of its 9,000 staff worldwide, as it seeks to “rightsize” costs.

The move, which comes after the Swedish firm reported its first quarterly profit in more than a year, was a “difficult” decision due to economic growth slowing “dramatically”, said chief executive Daniel Ek in a message to staff on Monday morning.

“I recognise this will impact a number of individuals who have made valuable contributions,” Ek wrote.

“To be blunt, many smart, talented and hard-working people will be departing us.”

‘Substantial’ reduction

He said Spotify had considered making smaller cuts in 2024 and 2025 but had decided instead that a more “substantial” reduction right away was necessary for the firm to achieve its goals.

“Considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives,” Ek wrote.

In October the New York-listed company said cost-cutting measures and price rises had helped it report a third-quarter profit of 65 million euros (£55.7m), its first quarterly profit in more than a year.

Ek acknowledged on Monday that the cuts would “feel surprisingly large” for many people given the recent “positive” results.

Profits

He said the company was facing new economic challenges, including a higher cost of capital, meaning it needed to become more efficient and return to its “core principle of resourcefulness”.

Spotify has added tens of millions of subscribers over the past few years, but has struggled to return consistent profits.

The company has recently moved away from an expensive foray into podcasts that it began during the Covid-19 pandemic as an effort to create original content that did not require expensive payments to rights holders, and which has added to its cost-cutting pressure.

Other recent efforts have included a move into audiobooks, an area in which it competes with the likes of Amazon’s Audible.