The audio-streaming company Spotify is laying off approximately 600 employees, or 6% of its workforce, following an economic downturn felt across the tech industry. The company joins Amazon, Alphabet, Microsoft, and others that have laid off staff in the past month.
Spotify spent aggressively during the pandemic, expanding to 178 markets in 2021 and launching a dedicated podcast production company with celebrity hosts such as Joe Rogan, Prince Harry, and Barack and Michelle Obama. As a result, subscriber growth surged in 2022 to a whopping 456 million active monthly users.
However, CEO Daniel Ek confirmed the downsizing in a letter to employees on Monday (Jan. 23), citing a shift in spending priorities in a challenging economic environment.
“In hindsight, I was too ambitious in investing ahead of our revenue growth,” Ek said. “I take full accountability for the moves that got us here today.”
Ek also announced the affected employees would get five months of severance pay. Spotify is expected to raise prices in 2023, following hikes across the streaming industry. The cost of the premium service has been $9.99 since 2011. Spotify (SPOT) was up 2% at the close in New York on news of the layoffs.
January 4: Salesforce, the business software company, announces plans to axe roughly 10% of its global workforce.
January 4: Amazon anticipates job cuts for 3% of its office-based employees, the largest round of layoffs in the company’s history.
January 18: Microsoft says it plans to cut 5% of its workforce by the end of March.
January 20: Alphabet confirms it’s eliminating 12,000 roles globally.
First introduced in 2021, Spotify’s Car Thing (yes, that’s really its name) hit the market, promising to be the industry standard streaming device for listening to music in a car. In July of 2022, Spotify quietly took it off the market, burying the announcement deep in their second fiscal quarter’s earnings report.
“Based on several factors, including product demand and supply chain issues, we have decided to stop further production of Car Thing units,” a spokesperson for the company told TechCrunch. “Existing devices will perform as intended. This initiative has unlocked helpful learnings, and we remain focused on the car as an important place for audio.”
Critics panned the hardware when it was first released, arguing that it was trying to replicate a service that was already standard in virtually every car on the market. Much like many new innovations by big tech: it was redundant.