Report: Spotify to Lay Off 17% of Staff

Spotify is preparing to lay off 17% of its workforce or about 1,500 employees, as the company accelerates its profitability push.

The Wall Street Journal reports Chief Executive Daniel Ek announced the job cuts—the Stockholm-based company’s third round of layoffs this year—to staff Monday.

Despite efforts to reduce costs, Ek said Spotify is still spending too much money. The audio streaming company has been squeezed by slower economic growth as well as interest-rate increases that have made it more expensive to borrow, he said.

“The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we operate, innovate, and tackle problems,” he said in a 1,000-word letter to staff. “Being lean is not just an option but a necessity.”

Spotify, like other tech companies, grew in size and scope during the pandemic, with its head count nearly doubling over the last three years to more than 8,000 workers, as a result of hiring and acquisitions. As investors have become more focused on profitability than growth, many streaming-focused companies have aggressively cut costs. 

At Spotify that meant scaling back a $1 billion bet on podcasting, including through layoffs earlier this year. It continues to back top podcasters Joe Rogan, Alex Cooper and Emma Chamberlain, and stopped making a number of other shows such as Meghan Markle’s “Archetypes.” 

Spotify, which reported a 462 million euro loss—equivalent to about $503 million—in the first nine months of the year, is trying to balance investments in emerging areas such as its growing ad business with the need to become consistently profitable. The company also is focused on its audiobooks offering, which rolled out to subscribers in the U.S. last month. 

In Monday’s letter, Ek said substantial cuts were the best option for accomplishing the company’s objectives and thanked laid-off employees for their help growing the company. 

A leaner structure will change the way Spotify employees work and allow the company to invest profits more strategically back into the business, Ek said.