The world’s number one audio platform, Spotify, announced on Monday, December 4, the layoffs of 1,500 people, which represents “around 17%” of its workforce. This is the third wave of layoffs since the Swedish group had already announced 600 job cuts in January and 200 in June in its podcasts division.
“I am aware that, for many, a reduction of this magnitude may seem surprising given the recent positive earnings report and our performance,” wrote CEO Daniel Ek in a letter to employees seen by the France Media Agency. In the third quarter, the group generated a net profit of 65 million euros, compared to 166 million a year earlier, against a backdrop of a 26% increase in the number of its active users, to 574 million.
Wave of layoffs in tech
“Despite our efforts to reduce costs last year, our cost structure to achieve our objectives is still too high,” argued Mr. Ek, highlighting “economic growth which has slowed considerably”. These layoffs should thus make it possible to “align Spotify with [its] future objectives and [to] ensure that [the company is] well sized for the challenges to come,” he explained in this mail. The company “has too many people in support roles (…) rather than contributing to opportunities with real impact,” according to Mr. Ek.
In 2017, the company had some 3,000 employees, a number that has more than tripled to around 9,800 people by the end of 2022. Since its inception, the platform has never posted a net profit on the throughout the year and only occasionally makes quarterly profits, despite its success in the online music market.
This new wave of layoffs comes against a gloomy backdrop for global tech since the start of 2023. In the United States, Meta and Microsoft have announced plans to reduce at least 10,000 people each. In January, Amazon also announced the elimination of more than 18,000 positions and Google’s parent company, Alphabet, around 12,000 positions.
