While Everyone Is Posting Their Spotify Wrapped, the Company Is Laying Off Nearly 1,600 Workers
It’s that time of the year when everybody is proudly posting who and what they’ve been listening to the past year Spotify Wrapped is the annual product from the global music streaming service that condenses users’ listening habits to figure out such things as most played artists, songs, genre and podcasts. It’s arguably the best way for people to figure out whether their musical taste is cool or not.
However, on Monday (December 4), in the midst of Spotify Wrapped season, the company developed in Sweden announced that it is laying off a total of 17 percent of its workforce, translating to nearly 1,600 workers. In a statement released on its website, Spotify CEO Daniel Ek company blamed an anemic economy and higher borrowing costs for the decision to cut jobs.
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“Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business—one designed to achieve our goal of being the world’s leading audio company and one that will consistently drive profitability and growth into the future,” Ek said. “While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”
This is the third and so far largest round of job layoffs for Spotify in 2023. It first announced redundancies in January (six percent) and then again in June (two percent). The company reported having a global headcount of 9,400 at the end of the third quarter this year.
“In 2020 and 2021, we took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals,” Ek said. “These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year. However, we now find ourselves in a very different environment.
“And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big,” he added. “Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact. More people need to be focused on delivering for our key stakeholders – creators and consumers. In two words, we have to become relentlessly resourceful.”
Spotify made a high-profile pivot into podcasting in the past couple of years, betting on high-profile celebrities to carry its programming in the space, including Prince Harry and his wife Duchess of Sussex, and Joe Rogan. The company reported strong revenues of $3.6 billion at the end of the third quarter of 2023, an 11 percent increase versus the same period last year. Operating income meanwhile rose just one percent to $34 million. It also reported a total monthly active users of 574 million at the end of the period, with paid subscribers rising 16 percent or six million.
“The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we operate, innovate, and tackle problems,” Ek said. “This kind of resourcefulness transcends the basic definition – it’s about preparing for our next phase, where being lean is not just an option but a necessity.”
Ek said those affected by the layoff will receive an average of five months of severance pay plus accrued an unused vacation leaves.
“This is not a step back; it’s a strategic reorientation. We’re still committed to investing and making bold bets, but now, with a more focused approach, ensuring Spotify’s continued profitability and ability to innovate. Lean doesn’t mean small ambitions; it means smarter, more impactful paths to achieve them.”
