Spotify will reduce the variety of its workers by round 17%, the music streaming large mentioned on Monday, in a bid to curb prices amid “dramatically” slower financial progress.
The announcement comes on the heels of a uncommon quarterly web revenue of 65 million euros ($70.7 million) in October. It in comparison with a lack of 166 million euros for a similar interval a 12 months earlier and adopted a 26% progress in energetic customers for the third quarter to 574 million.
The layoffs will see round 1,500 individuals leaving the corporate, Spotify mentioned.
It marks the most recent in a collection of cuts introduced within the tech trade slashing tens of hundreds of jobs following a growth throughout COVID-19 pandemic lockdowns.
“I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” chief government Daniel Ek wrote in a letter to workers, which was seen by Agence France-Presse (AFP).
He mentioned that in 2020 and 2021, the Swedish firm “took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing and new verticals.”
“However, we now find ourselves in a very different environment,” noting that “economic growth has slowed dramatically and capital has become more expensive.”
“Despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big,” he added.
Ek mentioned that in 2022 and 2023, Spotify, which is listed on the New York Stock Exchange (NYSE), was “more productive but less efficient. We need to be both.”
The firm had “too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact.”
A leaner construction will “allow us to invest our profits more strategically back into the business,” he mentioned.
Heavy investments
Spotify has invested closely since its 2006 launch to gas progress with expansions into new markets and, in later years, unique content material akin to podcasts.
It invested greater than a billion {dollars} to construct up its podcast business, signed up celebrities akin to Kim Kardashian, Prince Harry and Meghan Markle, and expanded its market presence in most nations on the earth in its quest to succeed in a billion customers by 2030.
In 2017, the corporate had round 3,000 employees members, greater than tripling the determine to round 9,800 on the finish of 2022.
The firm has by no means posted a full-year web revenue and solely sometimes quarterly income regardless of its success within the on-line music market.
In the third quarter, Spotify registered a 16% rise in paying subscribers, which make up the majority of the corporate’s income, to 226 million, regardless of worth hikes.
It at the moment has 601 million customers, up from 345 million on the finish of 2020.
Monday’s layoff announcement was Spotify’s third this 12 months.
In January, the corporate introduced round 600 job cuts, adopted by one other 200 within the podcast division in June.
“We debated making smaller reductions throughout 2024 and 2025,” Ek wrote in his letter.
“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.”
British telecom group BT mentioned in May that it will axe as much as 55,000 jobs by the tip of the last decade.
Tech giants Meta and Microsoft have revealed plans to cut back their workforce by as many as 10,000 workers this 12 months.
In January, on-line retail large Amazon introduced it was slicing over 18,000 jobs worldwide and Google mother or father firm Alphabet introduced cuts of round 12,000 individuals.
Source: www.dailysabah.com