Spotify to lay off 6% of global workforce

The development was confirmed by co-founder and CEO Daniel Ek in a note about the company’s organisational changes, citing the aftereffects of the COVID-19 pandemic for the decision. 

Spotify is the world’s leading music streaming service, boasting more than 456 million monthly active users. In October last year, the company posted a gross profit of €750m ($815m), with a €228m operating loss in its 2022 Q3 financial performance report.

“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” Ek said. “In hindsight, 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.”

Spotify will pay up to $65.5m in severance to the affected workers, covering approximately five months calculated on local notice period requirements and employee tenure, payouts for all accrued and unused vacation time, extended healthcare for the same period as the severance pay, immigration support for employees whose immigration status is connected with their employment, and outplacement services and career support for the next two months. 

Ek also confirmed that chief content and advertising business officer Dawn Ostroff would be leaving the company, adding that Ostroff will assume the role of senior advisor to the company to help facilitate the transition.

Spotify’s latest reorganisation efforts will see current chief freemium business officer Alex Norström and chief research and development officer Gustav Söderström assume added roles as co-presidents of the company.

On the way forward, Ek said Spotify had accomplished all its goals for 2022, stressing that this year “marks a new chapter”, with the company better poised for the future as a result of the lay-off decision.

“We’ve come a long way in our efforts to build a comprehensive platform for creators of all levels, but there’s still much to be done … I’m confident that 2023 will be a year where consumers and creators will see a steady stream of innovations, unlike anything we have introduced in the last several years. I will share more about these exciting developments in the coming weeks.

Spotify is not the only digital service provider to cut its workforce in recent months. In August last year, SoundCloud confirmed that it was laying off approximately a fifth of its global workforce due to a “challenging economic climate.”