Spotify also takes scissors to cuts jobs
February 18, 2023
On January 23, the world leader in audio platforms, announced a 6% cut in its workforce, or about 600 jobs, following a wave of layoffs among technology giants. It should be noted that this is the largest job cut in the history of the Swedish company.
Since a week earlier Microsoft and Alphabet announced losses. Alphabet, which owns Google, said it would cut 12,000 jobs, while Microsoft said up to 10,000 employees would lose their jobs.
“In the coming hours, individual interviews will be conducted with affected employees,” the Swedish company’s CEO and co-founder Daniel Ek said in an online message to employees.
Despite its popularity in the online music market, Spotify has been posting losses for several years. Even though it has a rapid growth in the number of subscribers and has a great advantage over its competitors.
Arguably the big driver of these massive layoffs at technology companies is due to a slowdown after two years of pandemic-driven growth during which they had been hiring aggressively. “In the long term it would be unfeasible in any context, but in a difficult environment at the macroeconomic level, it will be even more difficult to plug the hole,” he also stressed.
The Swedish company, which is listed on the New York Stock Exchange which was open that Monday, shares were up 4.6% at $97.91., has invested heavily since its launch, with the intention of boosting its growth with expansions into new markets and even, in later years, Spotify also invested more than 1 billion euros in the podcast sector, of which it became a world leader. But the returns on this investment are still unknown.
It is also worth mentioning that betting on this audio format brought controversy, as when the American star Joe Rogan was accused of spreading fake news in his programs.
At the end of September, the platform had some 456 million subscribers, 195 million of whom pay for the service. For which, Spotify had said in October that it would slow down sign-ups for the rest of the year and until 2023. But according to billionaire Daniel Ek, investments grew twice as fast as its revenue last year.
Its annual revenue reached €9.6 billion in 2021 most of it from paid subscribers and the number of employees increased threefold in five years to 9,800 at the end of September.
While last year, the platform had some 9,800 full-time employees, now the CEO mentioned that he expected to incur at least €35 million in severance-related expenses.
Ek has argued that he hoped the positive effects emanating from the pandemic would last longer and continue to have a balsamic effect on Spotify’s coffers. He has also admitted in an email sent to Spotify employees. “I take full responsibility for the decisions that have brought us to this point.” The company also communicated that Dawn Ostroff, chief content and advertising officer, would be stepping down as part of a broader reorganization.
Separately, earlier this year, Amazon also announced that it planned to cut more than 18,000 jobs due to “the uncertain economy.” And in November, Meta had already announced that it would cut 13% of its workforce, a total of 11,000 employees.