Spotify will close 2023 with 2,300 fewer employees that it had at the start of the year.
The Swedish music streamer is letting go of 17% of its workforce, nixing just over 1,500 roles. CEO Daniel Ek gave staff the news today (Dec. 4), in a note that Spotify later shared on its blog.
The company has already conducted two rounds of layoffs this year. In January, when Spotify axed 6% of its global payroll, or 600 jobs, Ek took “full accountability,” saying he was “too ambitious in investing ahead of our revenue growth.”
Then in June, 200 employees were fired from the podcast division—a high-investment area on which the company had splurged more than $1 billion, both in production and development. That included exclusive audio rights to podcasts created by Prince Harry, Kim Kardashian, and former US president Barack Obama.
Echoing several tech giants, including Meta, Microsoft, and Amazon—which over-hired during the pandemic and resorted to several rounds of job cuts this year—and itself in the previous two layoffs, Spotify blamed this downsizing on slow economic growth and rising capital costs.
Like Meta’s Mark Zuckerberg, Ek is chasing efficiency. “In Spotify’s early days, our success was hard won,” he wrote. “We had limited resources and had to make the most of every asset. Our ingenuity and creativity were what set us apart. As we’ve grown, we’ve moved too far away from this core principle of resourcefulness.” Ek added that “the Spotify of tomorrow must be defined by being relentlessly resourceful...where being lean is not just an option but a necessity.”
One big number: Layoffs after Spotify’s profitable quarter
€32 million ($34 million): Spotify’s operating profit for the three months ending Sept. 30—its first profitable quarter in more than a year of loss-making. Given this stellar performance, employees may be surprised by the timing of the company’s cost-cutting move, Ek acknowledged, but “considering the gap between our financial goal state and our current operational costs,” it was the best option, he wrote. Instead of delivering more “smaller reductions throughout 2024 and 2025,” Spotify decided to “rightsize” outright. It sounds like there won’t be any more layoffs for two years, but only time will tell.
Quotable: A streamlined, more productive workforce
“When we look back on 2022 and 2023, it has truly been impressive what we have accomplished. But, at the same time, the reality is much of this output was linked to having more resources. By most metrics, we were more productive but less efficient. We need to be both...Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact. More people need to be focused on delivering for our key stakeholders—creators and consumers.”
A brief timeline of other music streaming layoffs in 2023
March: Music streaming platform Pandora’s owner, SiriusXM, lays off 8% of its workforce, amounting to 475 employees. Pandora hasn’t been faring well in the face of stiff competition, losing paid subscribers and active users.
May: To get SoundCloud to profitability, CEO Eliah Seton announces that 8% of its employees—about 40 people—will be let go. The decision comes nine months after the company had already laid off 20% of the staff.
November: Among the 27,000 companywide job cuts at Amazon, some roles in the Amazon Music department face the guillotine.