Spotify is the latest tech company to lay off employees as a cost-cutting measure. According to a public memo from the Swedish audio streaming platform’s co-founder and CEO, Daniel Eck, approximately 17% of the workforce will be cut.
A quick calculation based on the latest quarterly report shows that this is about 1,500 out of 9,241 employees worldwide.
This is the third time Spotify has laid off workers due to rising prices on its premium subscription service. 600 people were released in January, and 200 more from the Podcasts section appeared in July.
The executive has discussed making small cuts in 2024 and 2025, but the gap between the financial goal situation and the current operating costs leads to the current decision.
Spotify’s headcount will increase “significantly” in 2020 and 2021, the note said. The Wall Street Journal reported that the company plans to increase its content, marketing and “new verticals” and nearly double its workforce. The following 2022 and 2023 were more successful, but Spotify could not be more efficient, pushing Ek and company to drastic measures.
Each employee being let go will receive severance pay of approximately five months’ salary and accrued and unused PTO will be paid. Health care is provided during the vacation, and employees are eligible to work at a new location after two months.
Eck pointed out that this will allow Spotify to have a “more focused approach”, and that the change in personnel is not a backward, but a “strategic reorientation”. The remaining employees must be “soft assets” in any future way the company operates, solves problems, and innovates.