Spotify to Trim 6 Percent of Workforce in Latest Tech Layoffs

Smartphone in front of a screen projection of the Spotify logo. April 1, 2018. (Dado Ruvic/Illustration/Reuters)

Music streaming service Spotify said on Monday that it will cut six percent of its workforce, or about 600 jobs, joining a growing list of technology companies in announcing job cuts to lower costs.

CEO Daniel Ek announced the restructuring in a message to employees that was also posted on the company’s blog.

“Over the last few months we’ve made a considerable effort to rein in costs, but it simply hasn’t been enough,” Ek said.

The company’s operating costs last year grew at twice the speed of its revenue growth, a gap that would be “unsustainable long-term” in any economic climate, but even more difficult to close with “a challenging macro environment,” he said.

“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth,” he added.

Spotify’s announcement comes at a time when technology companies are facing downturn after two years of pandemic-driven growth during which they had hired aggressively.

The Swedish company had 9,808 employees globally at the end of the third quarter, according to an earnings report.

“While we have made great progress in improving speed in the last few years, we haven’t focused as much on improving efficiency,” Ek said. “And in a challenging economic environment, efficiency takes on greater importance.”

The company is offering laid-off employees an average of five months of severance pay and health care coverage, Ek said.

Spotify is expected to incur at least 35 million euros in severance-related charges.

The company also announced that chief content and advertising business officer, Dawn Ostroff, was leaving Spotify as part of the broader reorganization. Alex Norström, chief business officer, and Gustav Söderström, chief research and development officer, will take on roles as co-presidents of the company.

Spotify’s layoffs make it the latest technology company to be cutting staff to keep expenses under control ahead of a potential recession. Last week, Alphabet, which owns Google, laid off 12,000 employees, and Microsoft let go of 10,000.

The Associated Press contributed to this report.