Spotify to cut 600 jobs

The Swedish music streaming service Spotify announced a 6% cut of its roughly 10,000-strong workforce. Bloomberg reports.

Looking back, I understand that I was too ambitious investing on the expectation of growth in our revenue. And for this reason today we are cutting the workforce by about 6%,” said Spotify’s Chief Executive Daniel Ek.

The executive took responsibility for the decision.

Ek added that in the coming hours “one-on-one conversations would be held with all affected employees.”

The company did not specify which departments would be affected by the layoffs.

In 2017 Spotify employed around 3,000 people. By the end of 2022 this figure had more than tripled.

Against the backdrop of the announcement, Spotify shares trading on the New York Stock Exchange rose by more than 4.5%.

In recent years the company has invested heavily in tapping new markets and developing exclusive content. Spotify spent more than $1 billion on podcasts and caused a storm of controversy last year when it signed a multi-year contract worth $100 million with the controversial podcaster Joe Rogan.

Despite success in the online-music market, the company continues to incur losses. According to Ek, Spotify’s operating expenses outpace revenues by a factor of two.

That would be unsustainable in the long run under any climate, but in challenging macroeconomic conditions, narrowing the gap is even harder,” he said.

The company’s annual revenue in 2021 reached €9.6 billion ($10.4 billion).

During the earnings presentation for the third quarter of 2022, Spotify reported 456 million monthly active users, of whom 195 million are paid subscribers. They account for the majority of the company’s revenue.

By 2030, Spotify plans to increase its user base to 1 billion.

“While I believe this decision is the right one, I understand that, given our historical focus on growth, many of you will view this as a shift in our culture,” Ek said.

Alphabet previously announced mass layoffs.

As reported in January 2023, Microsoft said that would lay off 10,000 employees.

In the same month, Amazon announced a cut of 18,000 people.

In November 2022, Meta announced layoffs of 11,000 employees.

Subscribe to ForkLog’s Telegram news: ForkLog AI — all the news from the AI world!