Spotify, the popular music streaming service, has disclosed plans to cut 17% of its global workforce in its third round of layoffs this year.
According to a message from CEO Daniel Ek, the decision is part of a broader strategy to reduce costs and prioritize profitability.
While the blog post did not specify the exact number of job cuts, a spokesperson confirmed that around 1,500 employees would be affected by the restructuring.
Reasons for Workforce Reduction:
The message from Daniel Ek highlighted a “strategic reorientation,” prompting the need for a leaner structure.
Spotify, which previously utilized inexpensive financing to expand its business, faced challenges as central banks began raising interest rates, impacting economic growth.
The company acknowledged investing significantly in employees, content, and marketing in 2020 and 2021, but the evolving economic environment necessitated a reassessment of its cost structure.
Financial Context:
Spotify reported a net loss of 462 million euros (approximately $500 million) for the nine months leading up to September.
The company’s recent efforts to cut costs were deemed insufficient, leading to the decision to implement a more substantial restructuring to ensure sustained profitability.
Previous Layoffs and Industry Trends:
This announcement marks Spotify’s third round of layoffs in 2021. Earlier in January, the company announced a 6% reduction in its workforce.
In June, an additional 2% reduction, affecting about 200 employees, was focused mainly on the podcast division.
The music streaming giant’s move aligns with broader trends in the tech industry, where companies such as Amazon, Google, Microsoft, Meta, and IBM have also announced substantial job cuts throughout the year.
Future Outlook:
Daniel Ek emphasized that the streamlined structure resulting from the layoffs is essential for Spotify’s ongoing profitability.
The company aims to navigate the evolving economic landscape while maintaining its position in the highly competitive music streaming market.
