Music streaming giant Spotify has unveiled plans to reduce its workforce by 17%, marking the third round of layoffs this year.
CEO Daniel Ek emphasized the need to “rightsize” the company’s financial situation, attributing the decision to overhiring in 2020 and 2021 when capital was more accessible.
This round of cuts, amounting to about 1,500 jobs, comes as part of broader tech industry layoffs, totaling over 250,000 tech workers since the start of the year, as reported by layoffs.fyi. Spotify, with approximately 9,000 employees across 40 global offices, faces a larger reduction than typical for the current circumstances.
The company achieved a $34 million operating income in the third quarter, its first quarterly profit since 2021, with reduced personnel costs contributing to cost savings. Earlier this year, Spotify cut 6% of its workforce (about 600 employees) in January and another 2% (roughly 200 roles) in June.
While raising subscription plan prices and aiming to reach a billion users by 2023, Spotify is diversifying into audiobooks and podcasting. Despite significant investments in these areas, including acquiring podcasting studios and signing exclusive deals, profitability remains elusive.
Departing employees will receive approximately five months of severance pay, healthcare coverage, vacation pay, immigration support, and two months of career-search assistance, according to Ek’s statement. As of Monday morning, Spotify’s shares were up around 5% in premarket trading.
