Spotify to lay off 1,500 employees
Standard Entertainment
By
VOA
| Dec 05, 2023
Spotify says it is planning to lay off 17% of its global workforce, amounting to around 1,500 employees, following layoffs earlier this year of 600 people in January and an additional 200 in June.
The music streaming giant is continuing its effort to cut costs and work toward becoming profitable, said Spotify CEO Daniel Ek in a prepared statement.
"By most metrics, we were more productive but less efficient," he said. "We need to be both."
The layoffs come following a rare quarterly net profit of about $70.3 million in October. The company has never seen a full-year net profit.
"I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance," Ek said. "We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal ... and our current operational costs, I decided that a substantial action to right-size our costs was the best option to accomplish our objectives."
With the new layoffs, the company now expects to see a fourth-quarter loss between $100 million to $117 million after previously anticipating a $40 million profit.
A majority of the charges will go toward severance for laid-off employees, who will get about five months' pay, vacation pay and health care coverage for the severance period.
Spotify did not clearly state when the layoffs would become financially beneficial but said that they would "generate meaningful operating efficiencies going forward."
Spotify is following many companies in the tech industry trying to cut costs after growth in the industry slowed following a surge during the COVID pandemic.
Tech giants including Meta, Microsoft, Amazon and Google parent company, Alphabet, all have plans to cut 10,000 or more people this year.
Spotify began informing affected employees on Monday.