Music streaming application Spotify, on Monday, announced to let go of 6% of its workforce, adding to the ongoing layoffs in the tech sector. The move will impact nearly 600 employees.
“Over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough,” the company’s chief executive Daniel Elk said. “I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today.”
The company announced five months of severance pay to all affected employees along with other benefits like healthcare, immigration, and career support. Further, Spotify announced the departure of Dawn Ostroff, the Chief Content and Advertising Officer at the company. Additionally, Spotify’s Chief Freemium Business Officer Alex Norström and Chief Research and Development Officer Gustav Söderström are now appointed as co-presidents.
Previously, Bloomberg reported that Spotify will trim its workforce without specifying the number of affected employees. According to the company’s third-quarter earnings report, as of September 30, Spotify has 9,800 full-time employees.
With this job cut, the Stockholm-based company joined several other multinational tech giants like Alphabet, Microsoft, Meta, and Twitter who have trimmed their workforce amid a shaky economic outlook. Apart from this, Reuters reported that Spotify’s operating expenses doubled its revenue in 2022.
This is because of the company’s aggressive investment in its podcast business, which attracted more advertisers to the platform due to higher user engagement. Companies, on the other hand, pulled back on ad expenses due to the grim economic outlook.