Spotify laid off 17% of its employees vacating almost 1,500 jobs as the company seeks to shrink costs and boost profitability.
Spotify Sees Layoffs as Substantial Action
In a letter to employees, CEO Daniel Ek shared that the downsizing of the company is driven by slowed economic growth and expensive capital. He also explained that the other option is to make smaller reductions from 2024 to 2025, instead of cutting almost 20% of employees.
"Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives," Ek stated.
From 2020 to 2021, the company took advantage of the lower-cost capital and focused on expansion and content enhancement. The impressive results continued until 2023, however, Spotify will need more resources to consistently deliver the same results.
"And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big," he added.
Spotify Pushes Strategic Reorientation
The reduction of the employee population will bring changes to the workflow in the company. Despite that, the CEO remains optimistic about Spotify's new chapter in 2024.
According to Ek, the new structure will allow Spotify to gain more profits through a strategic process and targeted approach. More opportunities are expected to come to the company as they will try to more impactful initiatives.
Meanwhile, the affected employees will be notified through email. Spotify also assured that the employees will receive severance pay, career support, immigration support, and more.
Related Article : Spotify is Making Big Changes on Its Royalty Model
