London
CNN
—
Spotify will lay off round 1,500 staff to cut back prices in a 3rd spherical of job cuts in lower than a yr, CEO Daniel Ek mentioned Monday as he introduced a “important step change” for the music-streaming enterprise.
“Financial progress has slowed dramatically and capital has change into dearer. Spotify is just not an exception to those realities,” Ek wrote in a letter to workers posted to the corporate’s web site.
He mentioned the corporate had debated making smaller cuts subsequent yr and in 2025. “But, contemplating the hole between our monetary objective state and our present operational prices, I made a decision {that a} substantial motion to right-size our prices was the most suitable choice to perform our aims,” he added.
“To be blunt, many good, proficient and hard-working individuals will likely be departing us.”
Ek mentioned one-on-one conferences with impacted workers would happen earlier than the top of the day Tuesday. Staff will obtain round 5 months of severance pay on common.
Spotify (SPOT), which employs greater than 9,000 individuals, laid off greater than 500 staff in January, becoming a member of a slew of tech corporations — together with Microsoft (MSFT) and Amazon (AMZN) — in slashing headcount as the worldwide economic system slowed. And in June, Spotify minimize 200 staff from its podcasting unit.
Main tech corporations went on a hiring spree through the Covid-19 pandemic to maintain up with a surge in demand from households and companies for companies equivalent to on-line buying and videoconferencing. However since then, inflation and rising rates of interest have weighed on client spending, squeezed the provision of debt and fairness funding, and made it costlier, main a lot of them to announce deep job cuts.
Whereas Spotify has loved “strong progress” over the previous yr, the corporate has change into “much less environment friendly” and moved away from the “resourcefulness” that outlined its early days as a tech start-up, Ek mentioned.
Too many individuals are devoted to assist work somewhat than centered on delivering for content material creators and customers, he added.
Regardless of including 6 million subscribers within the June-to-September interval — 2 million greater than the corporate had forecast — Spotify eked out a revenue of simply €32 million ($34.8 million) in that point. That was up from a lack of €228 million ($248 million) in the identical interval final yr. The corporate has 226 million subscribers in whole.
“We nonetheless have a methods to go earlier than we’re each productive and environment friendly… we’ve got to change into relentlessly resourceful,” Ek mentioned.
“This isn’t a step again; it’s a strategic reorientation… A discount of this measurement will make it vital to vary the best way we work, and we’ll share rather more about what it will imply within the days and weeks forward.”