Spotify has joined the ranks of tech companies opting for workforce reduction as part of cost-cutting measures. In a public memo, Daniel Ek, the co-founder and CEO of the Swedish audio streaming service, revealed plans to cut approximately 17% of the company’s global staff, translating to around 1,500 employees out of a total of 9,241.
This marks Spotify’s third round of layoffs, following earlier reductions of 600 employees in January and an additional 200 from the podcast division in July, coinciding with premium subscription price hikes.
Ek mentioned initial considerations for gradual staff reductions over 2024 and 2025. However, the disparity between financial targets and operational expenses led to the decision for more immediate action.
Despite substantial workforce expansion in 2020 and 2021, with the employee count nearly doubling, Spotify faced challenges in achieving desired efficiency levels despite increased productivity in 2022 and 2023.
Each departing employee will receive a severance package, encompassing approximately five months’ wages, payment for accrued and unused paid time off (PTO), ongoing healthcare benefits during the severance period, and the opportunity to seek new employment two months after departure.
Ek framed these adjustments as steering Spotify toward a more focused strategy, viewing the staff reduction not as a setback but as a strategic shift in direction. The remaining employees are expected to showcase exceptional ingenuity and adaptability in forthcoming operational, problem-solving, and innovative endeavors as Spotify reshapes its approach.