Spotify is the latest tech company to lay off employees due to cost concerns. About 17% of the workforce will be cut, according to a public memo from Daniel Ek, co-founder and CEO of the Swedish audio streaming platform. A quick calculation based on the current quarterly report shows that this represents around 1,500 of the total 9,241 employees worldwide.
This is the third time Spotify has laid off employees, in addition to rising prices for its premium subscription. In January, 600 employees had to leave, followed by 200 more from the podcast department in July. According to the management, smaller layoffs were only being considered in 2024 and 2025 uptil now. However, the gap between the financial goals and the current operating costs ultimately led to the current decision.
The number of Spotify employees increased “significantly” in 2020 and 2021, the memo said. The Wall Street Journal noted that the number of employees almost doubled as the company simultaneously wanted to take content, marketing and “new verticals” to a new level. 2022 and 2023 were more productive. However, Spotify failed to become more efficient, which resulted in drastic measures.
Each exempt employee receives a severance payment equal to approximately five months’ salary. The accrued and unused additional costs are paid out. You also still have health insurance during the severance pay period. But if necessary you can start a new job after just two months.
According to Ek, the measure allows Spotify to focus better again. Therefore, the layoffs are not a step backwards, but rather a “strategic reorientation”. The remaining employees are expected to be “relentlessly resourceful” when it comes to the company’s future operations, problem solving and innovation.