Spotify is set to cut around 17 percent of its workforce, which amounts to laying off at least 1,500 people, in the latest of multiple rounds from the company in 2023.
Just days after Spotify's biggest publicity push with its year-end Wrapped, founder and CEO Daniel Ek shared news of "organizational changes" with employees and publicly in a blog post on Monday, writing "being lean is not just an option but a necessity."
"To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17 percent across the company," Ek wrote.
"The decision to reduce our team size is a hard but crucial step towards forging a stronger, more efficient Spotify for the future. But it also highlights that we need to change how we work," he added later in the post.
Notably, Spotify's layoffs come just over a month since the company's positive earnings report for Q3, in which Spotify reported its total revenue grew 11 percent year-on-year to €3.4 billion, exceeding guidance, with a gross margin finishing above guidance at 26.4 percent, and a return to profitability, and an operating income of €32 million for the quarter. In other words, the company is doing well, financially.
"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. "We debated making smaller reductions throughout 2024 and 2025. 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's significantly large-scale layoffs are the latest in Big Tech following moves at Meta, Amazon, Microsoft, PayPal, Twitter/X, and more. Spotify itself has had multiple cuts in 2023, including firing two percent of its workforce in June, affecting around 200 employees mostly in podcasting.
In the post, Ek pointed to Spotify's team expansion in 2020 and 2021, when "we took advantage of the opportunity presented by lower-cost capital", but said the company now had "too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact. More people need to be focused on delivering for our key stakeholders – creators and consumers."
Ek told employees that those impacted would receive a calendar invite from HR for a meeting, all of which will take place before the end of Tuesday. Katarina Berg, Spotify's global HR lead and head of the company's Global Workplace Services and Strategy Operations teams, will "provide more detail on the specifics."
In the post, Ek promised baseline severance pay calculated on tenure and notice period requirements "with the average employee receiving approximately five months of severance", pay-outs of unused vacation time, and healthcare for the severance period. For Spotify employees whose visas or immigration status will be affected by the layoffs, Ek said "HRBPs are working with each impacted individual in concert with our mobility team." And for employees eligible for carer support, they'll recieve two months of outplacement services.
Ek encourages employees to "join me on Wednesday for Unplugged to discuss how we move forward together", a meeting in which the company will "share much more about what this will mean in the days and weeks ahead."
What a meeting that will be.
Topics Music
