Spotify fails to turn tide, fires 17% of its workforce

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Life

Daniel Ek, Spotify

5 December 2023

Music streaming giant Spotify is laying off 17% of its employees, about 1,500 people. CEO Daniel Ek announced this in an internal e-mail, which the Swedish company also shared with the outside world. Spotify’s costs were rising rapidly, despite a previous favorable financial situation.

In October, the company posted a quarterly profit of €65 million – it’s first in a year. Spotify was also able to bring in more users after it followed Netflix’s lead and started a ban on password sharing.

Therefore, the forced departure of some 1,500 employees comes as a surprise, even CEO Daniel Ek admits. It was a choice between smaller layoffs each time in 2025 or a major restructuring now, Ek wrote.

At the same time, Spotify’s costs remained high. The company ValueAct warned about it back in February, buying shares in the company to force reforms.

“Given the gap between our current financial goal and and our current operating costs, I decided that substantial action to straighten out our costs was the best option to meet our goals,” Ek said.

At the beginning of 2023, Spotify announced the cutting of 600 jobs, followed by a further 200 in the summer.

The departures weren’t enough to turn the tide. Despite many millions of subscribers, the it made strategically wrong choices such as betting on audiobooks and expensive podcast deals.

According to the Financial Times podcast deals with Barack and Michelle Obama and Prince Harry and Meghan Markle reportedly cost $25 million for just 12 episodes.

Ek said the deals “generally worked, contributed to Spotify’s increased output and robust growth of the platform,” but admitted that the cost had become too large.

“By most standards, we were more productive but less efficient. We need to be both. In two words, we have to become relentlessly resourceful.”

Read More: Spotify streaming services

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Life. Daniel Ek, Spotify. 5 December 2023. Music streaming giant Spotify is laying off 17% of its employees, about 1,500 people. CEO Daniel Ek announced this in an internal e-mail, which the Swedish company also shared with the outside world. Spotify’s costs were rising rapidly, despite a previous favorable financial situation. In October, the company posted a quarterly profit of €65 million – it’s first in a year. Spotify was also able to bring in more users after it followed Netflix’s lead and started a ban on password sharing. Therefore, the forced departure of some 1,500 employees comes as a surprise, even CEO Daniel Ek admits. It was a choice between smaller layoffs each time in 2025 or a major restructuring now, Ek wrote. At the same time, Spotify’s costs remained high. The company ValueAct warned about it back in February, buying shares in the company to force reforms. “Given the gap between our current financial goal and and our current operating costs, I decided that substantial action to straighten out our costs was the best option to meet our goals,” Ek said. At the beginning of 2023, Spotify announced the cutting of 600 jobs, followed by a further 200 in the summer. The departures weren’t enough to turn the tide. Despite many millions of subscribers, the it made strategically wrong choices such as betting on audiobooks and expensive podcast deals. According to the Financial Times podcast deals with Barack and Michelle Obama and Prince Harry and Meghan Markle reportedly cost $25 million for just 12 episodes. Ek said the deals “generally worked, contributed to Spotify’s increased output and robust growth of the platform,” but admitted that the cost had become too large. “By most standards, we were more productive but less efficient. We need to be both. In two words, we have to become relentlessly resourceful.” Read More: Spotify streaming services.