Spotify is laying off 17 percent of its employees to cut costs, CEO Daniel Ek announced to staff today. Based on the total workforce of 9,241 disclosed in the last earnings release, the cuts are expected to impact over 1,500 people.
In a memo to employees, Ek said slowing economic growth and rising costs were to blame for the cuts, which he said would make Spotify a leaner company. “Today, there are still too many people dedicated to supporting work and even doing work around work rather than contributing to opportunities with real impact,” Ek wrote. “As we’ve grown, we’ve strayed too far from that core principle of ingenuity,” he later added.
“As we’ve grown, we’ve strayed too far from that core principle of ingenuity.”
These layoffs come after Spotify’s headcount increased significantly during the pandemic, nearly doubling in the past three years, the Wall Street Journal notes. In his memo, Ek defended his decision to expand the team during this time, but said, “We are in a very different environment now.”
Employees affected by Spotify’s recent layoffs will receive approximately five months of severance pay, with the company continuing to pay for their health insurance during that time, according to Ek’s memo.
Spotify has generally prioritized growth over quarterly profits throughout its history, but the WSJ notes that investors have increasingly pushed for profitability over the past year. Ek said at an investor day last year that he aims to make Spotify profitable by 2024. Although the company posted a quarterly profit in its last earnings release, the WSJ notes that it reported losses of 462 million euros (about $502 million) in the first nine months of this year.