Music streaming company, Spotify announced on Monday that it would be cutting about 17 per cent of its workforce – about 1,500 workers – in an effort to save costs in the face of “dramatically” slower economic growth.The announcement follows a 26 per cent increase in active users to 574 million during the third quarter, which led to an unusual quarterly net profit of €65 million in October as opposed to a loss of €166 million during the same period last year.According to Spotify, about 1,500 employees will leave the company.After a spike during the Covid pandemic lockdowns, the tech sector announced a series of layoffs that resulted in the loss of tens of thousands of jobs.CEO Daniel Ek, sent a letter to staff that was seen by AFP, stating, “I realised that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance.” In 2020 and 2021, he claimed, the Swedish company “took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals.” “However, we now find ourselves in a very different environment,” stating that “economic growth has slowed dramatically and capital has become more expensive.”According to Ek, Spotify—which is traded on the New York Stock Exchange, was “more productive but less efficient” in 2022 and 2023. We must possess both qualities.”
Since its inception in 2006, Spotify has made significant investments to support its growth through market expansions and, subsequently, the addition of exclusive content like podcasts which has made more than $1 billion in podcast investments alone.
