BY: Walker
Published 12 months ago
With all the great new music that was released in 2023, it was a great year to be a Spotify subscriber. 2023 was less awesome, though, for a noteworthy amount of now-former Spotify employees: Throughout the year, the company has had a number of significant layoffs.
via: Rolling Stone
On Monday, CEO Daniel Ek issued an internal memo to staff announcing the impending layoffs, the company’s third and biggest round this year. “I recognize this will impact a number of individuals who have made valuable contributions,” Ek wrote in the memo, which was later published through Spotify’s newsroom landing page. “To be blunt, many smart, talented and hard-working people will be departing us.”
According to Financial Times, Spotify currently employs around 9,000 people, meaning this iteration of cuts will impact up to 1,500 individuals. In January, the company revealed plans to lay off around 600 employees, then followed up with an additional 200 positions in June.
“I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” Ek continued. In a report of the company’s third-quarter performance, Spotify was reported to have reached an 11 percent boost in total revenue to reach $3.6 billion. With $34 million in operating income, it marked the company’s first quarterly profit since 2021.
Additionally, Spotify’s subscriber count reached 226 million, and its monthly active user base increased 26 percent to 574 million. Still, the Stockholm-based company has lost €462 million, or over $500 million, in the first nine months of the year. For reference, by that point in 2022, Spotify had lost around $173 million.
“We debated making smaller reductions throughout 2024 and 2025,” Ek added. “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.”
Spotify employees impacted by the layoffs will, on average, receive a severance package equating to around five months of pay and will continue to receive healthcare benefits for the duration of that period.
For those who remain, Ek is expecting their greatest strides towards Spotify becoming both productive and efficient. “Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact,” the CEO wrote. “More people need to be focused on delivering for our key stakeholders – creators and consumers. In two words, we have to become relentlessly resourceful.”
