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Spotify is reducing its employee headcount by approximately 17%. The company had 9,241 full-time employees at the end of Q3, so these job cuts will affect about 1,500 people.
Spotify was "more productive but less efficient" in 2022 and 2023, CEO Daniel Ek wrote in a company-wide memo. Spotify considered smaller layoffs over 2024 and 2025, he said, but ultimately decided on a larger round of job cuts given "the gap between our financial goal state and our current operational cost."
"Embracing this leaner structure will also allow us to invest our profits more strategically back into the business. With a more targeted approach, every investment and initiative becomes more impactful, offering greater opportunities for success," Ek said.
The memo is heavy on buzzwords but light on details. Ek points to heavy investment "in team expansion, content enhancement, marketing, and new verticals" in 2020 and 2021. But while "these investments generally worked...we now find ourselves in a very different environment," he says. A number of recent tech layoffs have pointed to missteps with pandemic-era growth, from Amazon to Meta. The CEOs who made those decisions remain in their jobs.
Some of the areas in which Spotify has invested in recent years include podcasts and audiobooks. The latter is now included as a perk on Premium accounts, which got a price hike earlier this year.
Spotify is giving each employee approximately five months of severance pay and healthcare coverage, accrued PTO, immigration and career support.
This 17% reduction is just one of a few staff cutbacks in 2023, although it is the largest so far. The company cut 6% of its staff in January and another 200 employees in June.