Spotify is reducing its workforce by 17%

 Spotify is reducing its workforce by 17%

Spotify is reducing its workforce by 17%

In an effort to slash expenses, Spotify will fire around 1,500 workers this year, CEO Daniel Ek said on Monday, declaring a "significant" change in the music-streaming company's business plan.

The economy is growing much more slowly now, and capital costs have increased. In a message to staff members that was published on the business website, Ek said, "Spotify is no exception to these realities."

After a big hiring and spending binge helped the firm attract millions of customers, but failed to regularly turn a profit, Spotify is now trying to become more efficient and return to its startup beginnings.

According to one, the business has discussed reducing fewer positions in 2025 and the following year. Nevertheless, I determined that the wisest course of action is to take a significant step to right-size our expenses in light of the disparity between our existing operating costs and our financial goal state."Achieve our goals," he said.

"To put it bluntly, many smart, talented and hard-working people will be leaving us."

One said that talks one-on-one with the impacted staff will occur before Tuesday's end of business. Workers will get severance compensation for an average of almost five months.

More than 9,000 individuals are employed by Spotify (SPOT), which joined a handful of digital firms like Microsoft (MSFT) and Amazon (AMZN) that are hurting the world economy by laying off more than 500 staff in January. It is slowing down and reducing the number of workers. Additionally, 200 workers from Spotify's podcast division were let go in June.

During the COVID-19 epidemic, major IT firms went on a hiring binge in an attempt to meet the spike in demand for services like online shopping and videoconferencing from households and businesses. However, since then, increases in interest rates and inflation have hurt consumer spending, decreased the availability of debt and equity capital, and increased its cost, forcing several of them to announce significant job layoffs.

According to him, while Spotify has had "strong growth" in the last year, the business has become "less efficient" and has abandoned the "resourcefulness" that characterized its early years as a software start-up.

Instead of concentrating on providing services, he said that an excessive number of individuals are committed to promoting the work of customers and content producers.

Even if the corporation added 6 million new users between June and September—2 million more than it had projected— In that period, Spotify only earned a profit of €32 million ($34.8 million). This was higher than the €228 million ($248 million) deficit over the same time frame the previous year. In all, 226 million subscribers make up the corporation.

Someone stated, "We still have a ways to go before we can be productive and efficient...we have to continue to be resourceful."

This is a calculated reorientation, not a step backward.We will provide further information about these changes in the next days and weeks. This downsizing will need adjustments to the way we operate.