Spotify lays off about 1,500 people, or 17% of its workforce, due to slowing growth and rising costs
Music streaming service Spotify announced on December 4, 2023 that it will lay off approximately 17% of its employees. Spotify cited a 'dramatic slowdown in economic growth' and 'increased cost of capital' as reasons for the layoffs.
An Update on December 2023 Organizational Changes — Spotify
Spotify cuts 17% jobs amid rising capital costs | TechCrunch
Spotify cuts more than 1,500 jobs amid rising costs | Spotify | The Guardian
https://www.theguardian.com/technology/2023/dec/04/spotify-cut-jobs-amid-rising
On December 4, 2023, Spotify published a memo regarding company organizational changes that CEO Daniel Ek shared with all employees on its official blog. ``Economic growth has slowed dramatically and the cost of capital is higher than ever before,'' CEO Ek said. ``As a result, at Spotify, we are hiring employees across the company to right-size and respond to future challenges.'' We made the difficult decision to reduce this by approximately 17%.' As a result, approximately 1,500 people will be laid off at Spotify, which has approximately 8,800 employees worldwide.
Spotify laid off about 6% of its employees in January 2023, and about 2% of its employees in June 2023. As a result of these efforts, including thorough cost reductions and premium plan price increases , operating income for the third quarter of 2023 was 32 million euros (approximately 5.1 billion yen).
'For many, employee reductions of this size will seem surprisingly large given Spotify's strong financial results,' Ek said. 'After considering the following, we have determined that cost-optimization action by reducing our workforce is the best option to achieve our goals.'
According to CEO Ek, if a company is targeted for employee reduction, the human resources department will send an invitation for a one-on-one conversation within two hours. In addition, terminated employees will receive severance pay consisting of an average of five months' salary and unused holiday pay. 'We understand that these workforce reductions will impact many employees who have made valuable contributions to Spotify,' said CEO Ek. It will be,” he said.
'In the early days, Spotify was an inventive and creative company. As we grew, we became more productive and less efficient. So Spotify used our limited resources to be more efficient and creative. 'By reducing our workforce and creating a leaner structure, we will be able to invest our company's profits more strategically. 'Reductions are tough decisions for the company, but they are also important decisions,' said CEO Ek.
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