Spotify Technology SA is laying off 6% of its employees as part of broader cost-cutting measures after the streaming company went on a spending spree during the pandemic.
The company’s announcement Monday is the latest in a wave of technology layoffs, as the industry recalibrates after growing rapidly at the start of the pandemic. Tech companies big and small are grappling with economic turbulence after swelling their headcounts over the past few years. Now, many are cutting some of their recent additions and abandoning long-shot projects.
Spotify joins Amazon.com Inc., Google parent Alphabet Inc. and Microsoft Corp. and others that have cut back on staff in recent weeks.
“Over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough,” Spotify Chief Executive
Daniel Ek
said in a letter to employees on Monday. “So while it is clear this path is the right one for Spotify, it doesn’t make it any easier.”
The Stockholm-based company has about 8,600 employees worldwide, according to its website. Mr. Ek had said last year that Spotify would slow hiring but didn’t plan to lay anyone off.
“In hindsight, I was too ambitious in investing ahead of our revenue growth,” he said Monday, adding, “I take full accountability for the moves that got us here today.”
He said Spotify’s operating expenses last year were double its revenue. He called the layoffs a difficult but necessary decision.
“Like many other leaders,” he said, “I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us.”
Spotify is one the most popular music-streaming services in the world. The company reported in October that it had about 456 million monthly active users.
Mr. Ek said laid-off employees will get five months of severance pay. He also announced a few c-suite changes, including that Spotify’s chief content officer,
Dawn Ostroff,
is leaving the company.
The company last year outlined its plans for growth even though investors had been concerned that audio-market opportunities were limited. Mr. Ek said at the time that Spotify was making aggressive investments to grow its business to 10 times its current size.
In 2020, the company struck a $100 million licensing deal with Joe Rogan, bringing his popular podcast exclusively to Spotify.
Write to Alyssa Lukpat at [email protected]
Write to Alyssa Lukpat at [email protected]
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