Spotify Trims 6% of Workforce in Latest Round of Layoffs
On Monday, Spotify Technology SA announced that it will be reducing its workforce by 6% and incurring a charge of up to $50 million as a result. This is part of a larger trend in the tech sector, where companies are making cuts in anticipation of a potential economic downturn.
As a result of the pandemic, the tech industry experienced a surge in growth and hiring, but now companies like Meta Platforms Inc and Microsoft Corp are laying off thousands of employees.
“Recently, we’ve attempted to control expenses with great effort, but unfortunately it has proven insufficient,” CEO Daniel Elk mentioned in a statement revealing the significant reduction of around 600 jobs. He went on to say, “I had overestimated the investments before our income increased,” reflecting a similar sentiment shared by other technology leaders in recent times.
Spotify’s spending increased at twice the rate of its income in the past year, as the streaming service heavily invested in its podcast sector, which is more desirable for advertisers because of the higher level of participation.
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As the economy faced pressure from rising interest rates and the impact of the Russia-Ukraine conflict, businesses decreased their advertising expenditures on Spotify, similar to what was observed at other companies such as Meta and Alphabet.
In response, Spotify is undergoing a restructuring effort to reduce costs and adapt to challenging economic conditions. As part of this effort, Dawn Ostroff, the head of content and advertising, is leaving the company after a tenure of over four years.
Ostroff played a key role in the development of Spotify’s podcast offerings and navigated controversy surrounding Joe Rogan’s show and misinformation about COVID-19. The company has named Alex Norström, head of the freemium business, and Gustav Söderström, head of research and development, as co-presidents.
As of September 30, Spotify employed around 9,800 full-time staff.