Spotify is laying off 17 percent of its employees in an effort to cut costs CEO Daniel Eck made the announcement to employees today. Based on the total headcount of 9,241 disclosed during its last earnings release, the cuts are expected to affect 1,500 people.
In a memo to employees, Eck attributed the cuts to slowing economic growth and rising costs, which he said would make Spotify a leaner company. “Today, we have too many people dedicated to supporting work and working around work, rather than contributing to opportunities with real impact,” Eck wrote. “As we’ve grown, we’ve moved far away from this resource principle,” he said later.
“As we’ve grown, we’ve moved far away from this basic principle of resourcefulness.”
The layoffs come after Spotify’s workforce grew significantly during the pandemic, almost doubling its workforce over the past three years. The Wall Street Journal Notes. In his memo, Eck defended his decision to grow the team during that period, but said “we’re in a very different environment now.”
Employees affected by Spotify’s recent layoffs will receive severance pay for about five months, according to Ek’s memo, during which time the company will continue to provide their health care.
Spotify has generally prioritized growth over quarterly profits throughout its history, but WSJ It indicates that investors have been making huge profits over the past year. At an investor day last year, Eck said Spotify should be profitable by 2024. Although the company posted a quarterly profit in its last earnings release, WSJ It indicated a loss of 462 million euros (about $502 million) in the first nine months of the year.