Swedish music streaming giant, Spotify has sacked as many as 600 employees or 6% of its workforce. As per the company’s regulatory filing, Spotify has 9,800 employees as of September 30, 2022.
"To bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees. To offer some perspective on why we are making this decision, in 2022, the growth of Spotify’s OPEX outpaced our revenue growth by 2X," Daniel EK, chief executive officer of Spotify, says in a blog post.
"That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap. As you are well aware, over the last few months we’ve made a considerable effort to rein in costs, but it simply hasn’t been enough. So while it is clear this path is the right one for Spotify, it doesn’t make it any easier—especially as we think about the many contributions these colleagues have made," EK adds.
Dawn Ostroff, the company’s chief content and advertising officer, has also decided to part ways with the music-streaming giant. "Dawn has made a tremendous mark not only on Spotify but on the audio industry overall. Because of her efforts, Spotify grew our podcast content by 40x, drove significant innovation in the medium and became the leading music and podcast service in many markets. These investments in audio offered new opportunities for music and podcast creators and also drove new interest in the potential of Spotify’s audio advertising. Thanks to her work, Spotify was able to innovate on the ads format itself and more than double the revenue of our advertising business to €1.5 billion," says EK.
To the impacted employees, the company will offer severance pay for five months, will pay out accrued and unused vacation, and will continue to cover healthcare for employees during their severance period. The company said that for employees whose immigration status is connected with their employment, it is working with each impacted individual in concert with the company’s mobility team.
The development comes amidst mass layoffs by the big tech organisations over the past few months, amidst the dwindling macroeconomic trends. Last week, Google decided to slash 6% of its total workforce or 12,000 employees globally. The layoffs will affect Google's teams across the company i.e. from engineering to product to corporate and recruiting verticals. Jeff Bezos-led Amazon also recently announced layoffs of over 18,000 workers, starting January 18, 2023. A majority of role eliminations are in Amazon Stores and People, Experience, and Technology (PXT) organisations. Before this, the Seattle-based online retailer sacked staff across its devices and books businesses.
Social media behemoth Meta last year sacked 11,000 employees or 13% of its workforce last year. Microblogging platform Twitter, which is now owned by Tesla CEO Elon Musk, sacked 50% of its workforce and is planning to slash its workforce further. Snap, the parent company of the social media platform Snapchat, sacked 20% of its staff. HP Inc. also said it is planning to axe 4,000-6,000 jobs by the end of fiscal 2025 as the computer maker looks to cut costs by reducing its global headcount. Software major Salesforce fired around 1,000 employees due to the economic downturn.