Spotify is cutting more than 1,500 jobs as part of a bid to cut rising costs inside the company.
In a public statement, the company’s CEO, Daniel Ek, said "economic growth has slowed dramatically and capital has become more expensive." The job cuts amount to around 17 percent of the streaming platform’s total workforce.
Ek added that the job cuts were part of Spotify’s bid to become a "sustainable business" and that they were being made now in anticipation of increasing costs in the years ahead. "I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance," he said. We debated making smaller reductions throughout 2024 and 2025. Yet, 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."
Noting that the company had expanded significantly across 2020 and 2021 across various sectors, Ek said: "We now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big."
The average employee, Ek said, will be given five months severance pay, while "immigration support" will also be provided to employees "whose immigration status is connected to their employment."
This is the latest round of layoffs at Spotify after the company made six percent of its workforce redundant in January of this year. The streaming platform increased the price of Spotify Premium in July, and also revealed that it had seen a three percent rise in subscribers on a quarterly basis.
It was recently reported that Spotify was planning to make significant changes to its royalties model, with one proposal meaning that songs would require a minimum number of streams to generate a royalty payout. Those plans have since been confirmed by Spotify.
