• Tue. Jul 23rd, 2024

Spotify to lay off 17% of its workforce

Spotify to lay off 17% of its workforce

Spotify is laying off 17% of its workforce of roughly 9,000, its CEO Daniel Ek said Monday, marking the third round of job cuts at the music streaming giant this year.

Ek said in a companywide email that Spotify was taking “substantial action to rightsize our costs” after it took on too many employees in 2020 and 2021 — when cheaper capital allowed for a hiring frenzy that’s no longer sustainable.

The job cuts are set to impact some 1,500 jobs, CNBC reported, citing unnamed sources.

“Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business…. While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities,” Ek added in the memo, which was also posted to Spotify’s website.

“Being lean is not just an option but a necessity,” Spotify’s 40-year-old billionaire boss added in the 1,000-word note.

Spotify CEO Daniel Ek sent a companywide email to the streaming giant’s staffers notifying them that the third round of layoffs this year will slash the company’s headcount by 17%. AFP/Getty Images

Terminated employees will receive “approximately five months of severance,” accrued and unused paid time off and health insurance during the severance period, according to Ek.

When The Post reached out to Spotify for comment, a company spokesperson declined to say how many positions the latest round of layoffs would be affecting.

The Stockholm, Sweden-based company has become leaner throughout 2023, starting the year with a 6% workforce reduction that bid adieu to 600 staffers, including he company’s chief content and advertising business officer, Dawn Ostroff.

At the time, Ek sent a similar email to staffers notifying them that the company was spending too much money and was struggling to rein in costs despite “a considerable effort” to do so.

Spotify then laid off 2% of staff, equivalent to about 200 roles, in June following Prince Harry and Meghan Markle’s highly-publicized podcasting flop.

The streaming giant reportedly paid the Duchess of Sussex over $18 million for her “Archetypes” podcast launched last summer, though its struggle to nab a top spot on the Spotify charts pushed the company to let a significant number of staffers go due to the error in judgment.

Markle’s multimillion-dollar payday was part of a larger, $1 billion bet on podcasting that has seen top podcasters Joe Rogan, Alex Cooper and Emma Chamberlain bringing in significant windfalls as Spotify has had to lay off staffers behind the scenes in an effort to accommodate its investment.

Spotify also slashed its workforce in January and June, after Meghan Markle’s expensive podcast flop. Rebz Says / Instagram

In an apparent move to boost its profitability, Spotify implemented a $1 price increase across its US plans in July. Its premium single tier now starts at $10.99, duo at $14.99, family at $16.99 and the student plan at $5.99.

It has also been expanding into audio books, and is expected to include access to book recordings in its rumored $20-a-month “Supremium” tier.

According to renowned blogger Chris Messina, Spotify is expected to rollout its priciest monthly subscription option in the coming months, giving listeners access to a “sound capsule” personalized to each user, as well as “24-bit lossless audio” — also known as “high fidelity” or “HiFi.”

Spotify has been struggling to achieve Ek’s goal of reaching profitability by 2024. Earlier this year, it sought to increase profits by implementing a $1 price increase across its US monthly subscription plans. AFP via Getty Images

Users who subscribe to the Supremium tier will also reportedly have the option of listening to 30 hours of audio books per month as well as the ability to sort one’s library by mood, activity, and genre.

The more-expensive subscription option is an evident move to right Spotify’s profits after it reported a $503 million loss in the first nine months of this year.

Last year, during Spotify’s first investor day since going public, Ek announced ambitious growth targets, including that he wants the company to be profitable by 2024, and that he wants to generate $100 billion in revenue by 2030.

Spotify, which is listed on the New York Stock Exchange, was down nearly 3%, to $180.69, in pre-market trading hours on Monday.

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