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Music streaming giant Spotify on Monday announced it would be cutting down 17 per cent of its workforce in order to set its books in order.
The Sweden-based firm made the announcement in a blog saying it would be shedding nearly 1,600 employees from its workforce. "Being lean is not just an option but a necessity," it said in the blog.
In a message to his employees, Daniel Ek, the founder and CEO of Spotify, explained that it's important for the company to adjust its workforce size to deal with upcoming challenges.
He mentioned reasons like slow economic growth and increasing costs of borrowing for the decision, stating that the company used cheaper funding in 2020 and 2021 to invest in the business.
Ek acknowledged that this move would affect many skilled and hardworking individuals who have made valuable contributions to the company.
Spotify, with about 8,800 employees, will inform those affected later in the day, reported Guardian.
This round of layoffs comes after Spotify cut about 6 per cent of jobs in June and a few hundred more in January.
Despite positive indicators such as strong user growth and surpassing Wall Street's expectations, Ek highlighted challenges in the North American premium subscriber growth and a slight decrease in third-quarter premium revenue per user.
He noted that layoffs have been happening globally across industries, affecting over 225,000 employees this year. The tech sector, including companies like Amazon, Google, Meta, Twitter, and Netflix, has also seen notable cutbacks, contributing to economic concerns among employees.
The retrenchment comes in the wake of some of the big spends by the firm not coming to expected fruition, including them a $20 million podcast deal with Duke and Duchess of Sussex, Harry and Meghan.
Spotify's deal with the couple's Archewell Audio ended in acrimony earlier in the year after only 12 episodes of what was supposed to be a "multi-year" contract amid accusations of non-productivity on part of the Royals.
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