Spotify layoffs: Music streaming giant to cut 17% workforce, says CEO Daniel Ek

Music-streaming giant Spotify is cutting its workforce by 17 per cent, its chief executive Daniel Ek said. He said that these layoffs are part of the company’s plans to turn Spotify “right-sized” as well as to align with the company’s future goals. Economic growth has “slowed dramatically and capital has become more expensive”, said the CEO. 

“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% across the company. I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented and hard-working people will be departing us,” said Ek. 

Seventeen per cent of its workforce is estimated to be around 1,500 employees. Spotify had laid off 600 employees in January, followed by 200 in June. 

In a letter to the employees, Daniel Ek said that they will receive a calendar invite within two hours from HR for a one-on-one conversation. These meetings would take place before Tuesday end of the day. 

Spotify will pay five months of severance, based on local notice period requirement. All accrued and unused vacation will be paid to the laid-off employees. Spotify will continue to cover their healthcare during the severance period. All laid-off employees will be eligible for outplacement services for two months. 

Spotify CEO thanked the employees who would soon be departing from the company for their dedication and hard work. “Thank you for sharing your talents with us. I hope you know that your contributions have impacted more than half a billion people and millions of artists, creators, and authors around the world in profound ways,” said Ek. 

Ek said that despite the recent positive earnings report and Spotify’s performance, there is a gap between their financial goal state and their current operational costs. “ I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives. While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team,” said Ek. 

The Spotify CEO added that in 2020 and 2021 they took advantage of the lower-cost capital and invested in team expansion, content enhancement, marketing and new verticals, but now they find themselves in a very different environment. 

Looking back on 2022 and 2023, which have been “impressive” years, Spotify has been more productive and less efficient, Ek added. “We need to be both. While we have done some work to mitigate this challenge and become more efficient in 2023, we still have a ways to go before we are both productive and efficient,” he said in a note to Spotify employees. 

“Today is a difficult but important day for the company. To be very clear, my commitment to our mission and belief in our ability to achieve it has never been stronger. I hope you will join me on Wednesday for Unplugged to discuss how we move forward together. A reduction of this size will make it necessary to change the way we work, and we will share much more about what this will mean in the days and weeks ahead. Just as 2023 marked a new chapter for us, so will 2024 as we build an even stronger Spotify,” said Daniel Ek. 

Also read: Spotify lays off 200 employees as a move to shift to new podcast strategy