Spotify has become the latest tech giant to announce major layoffs with the streaming giant’s CEO Daniel Ek announcing that around 1,500 staff are being cut due to its growth slowing ‘dramatically.’
The Swedish company currently has a staff of around 9,000 with Ek saying in a memo that cuts will ‘rightsize our costs’ while conceding that it would be ‘incredibly painful for our team.’
‘I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented and hard-working people will be departing us,’ Ek said.
In October, Microsoft laid off nearly 700 people from its social media site LinkedIn, bringing the total layoffs this year to nearly 11,000 for the company.
Since August 2022, there have been mass layoffs at Twitter, where 7,500 jobs were shed as part of Elon Musk’s takeover, another 11,000 people were axed at Facebook while Google let go 12,000 people and Amazon meanwhile served notice to around 18,000 workers. Around 225,000 tech jobs were lost in total in 2023 so far.
Last January, Spotify cut around six percent of its workforce, Monday’s announcement dwarfs that. Ek said the company hired more in 2020 and 2021 due to the lower cost of capital and while its output has increased, much of it was linked to having more resources.
Spotify CEO Daniel Ek, shown here, said that he understood that the cuts would be ‘incredibly painful’ for the company
This follows the company axing six percent of its workforce earlier this year
According to the Financial Times, Spotify execs have been trying to cut costs since the company’s ‘expensive push into podcasting’ which ‘tried investors’ patience.’
In July, Harry and Meghan announced that they had parted away from Spotify after they signed a $20 million exclusive podcast deal in 2020.
In the third quarter the company swung to a profit, aided by price hikes in its streaming services and growth in subscribers in all regions, and the company forecast that its number of monthly listeners would reach 601 million in the holiday quarter.
On Monday, he said a reduction of this size will feel large given the recent positive earnings report and its performance.
‘By most metrics, we were more productive but less efficient. We need to be both,’ Ek said.
‘I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance.. We debated making smaller reductions throughout 2024 and 2025,’ Ek said.
‘Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives.’
According to Business Insider, artists make around $.003 and $.005 per stream, though Spotify itself does not pay per stream.
Instead, they pay per ‘streamshare,’ a figure that is determined by adding up how many times music owned or controlled by a particular rights holder is streamed, divided by the total number of streams in the market it is streamed in each month.
Last month, Spotify announced a new policy regarding royalty payments, eliminating payment for songs with less than 1,000 annual streams starting in 2024.
This news comes as many Spotify users enjoy their Spotify Wrapped annual breakdown of what they listened to over the last year.
In a message to fans who streamed him regularly, comedian Weird Al Yankovic joked: ‘It’s my understanding that I had over 80 million streams on Spotify this year. So, if I’m doing the math right that means I earned $12.’