Photo Credit: Spotify
About 10 months after laying off 6% of its workforce, Spotify is trimming another 17% of team members amid a broader push for enhanced efficiency and profitability.
Spotify head Daniel Ek announced the layoffs in a publicly published message today, after signing off on a number of other cutbacks throughout 2022’s second half and this year’s initial 11 months. Citing “dramatically” slowed economic growth as well as a desire to “consistently drive profitability” at Spotify, the 40-year-old disclosed that the latest personnel reduction will specifically decrease “total headcount by approximately 17% across the company.”
“I recognize this will impact a number of individuals who have made valuable contributions,” Ek communicated, albeit without identifying exactly which departments and positions are affected. “To be blunt, many smart, talented and hard-working people will be departing us.”
From there, Ek described in rosy terms the spending spree Spotify embarked on during 2020 and 2021 by taking “advantage of the opportunity presented by lower-cost capital.” But with the price of capital far greater now, and notwithstanding the implementation of different savings measures, “our cost structure for where we need to be is still too big,” the Stockholm native drove home
“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,” proceeded Ek, whose company flipped to profitable during the third quarter and pledged to remain in the black moving forward. “Lean doesn’t mean small ambitions; it means smarter, more impactful paths to achieve them.”
The “average” exiting employee will receive “approximately five months of severance” as well as healthcare during the period, full pay for all unused vacation time, and, for two months, outplacement services.
At the time of this writing, Spotify stock, at $194.95 per share, was up almost 8% from its previous close. The sum marks a nearly 150% increase from early December of 2022 and an even bigger boost from SPOT’s 52-week low of $71.72.
Looking ahead to 2024, it’ll be interesting to see precisely how this “more focused” Spotify operates – especially when it comes to driving additional revenue and deciding whether to renew deals for ultra-popular – and ultra-expensive – podcasts.
As mentioned, though, the newly detailed layoffs represent one component of a wider reduction initiative at Spotify.
August 2022 – Spotify discontinues its Car Thing
October 2022 – Spotify cancels 11 original podcasts
November 2022 – Spotify triggers recruiting layoffs
December 2022 – Spotify cancels multiple live-audio programs
January 2023 – Spotify lays off 6% of its team
February 2023 – Several execs depart Spotify’s podcasting unit
April 2023 – Spotify shuts down music trivia game Heardle after less than one year of ownership and axes its Spotify Live audio offering
June 2023 – Spotify sells Soundtrap back to its founders after nearly six years, announces 200 podcasting layoffs, and opts not to renew a podcast from Meghan Markle and Prince Harry
