What just happened? In a memo posted on Spotify’s website, CEO Daniel Ek said they had made the decision to cut staff by about six percent across the company. Ek said Spotify has made great strides in improving the company’s speed, but added that they also need to work efficiently.
Spotify has become the latest technology company to announce organizational changes that have resulted in significant job cuts.
Like many other representatives of the technology sector, Spotify grew and invested heavily during the pandemic. Last year, Spotify’s operating expenses doubled revenue growth. As Ec noted, this is unsustainable in the long term in any climate, but especially in the current difficult macroeconomic conditions.
Looking back, Ek said he was too ambitious in investing before earnings growth. “I take full responsibility for the actions that brought us here today,” Ek said.
All affected employees will receive severance pay, with the average employee receiving about five months of salary, depending on metrics such as tenure and local notification period requirements. All accumulated and unused vacation time will also be paid, and retiring employees will continue to receive health insurance for the period of dismissal. Moreover, all of them will be eligible for two-month employment services to help find a new job, while those whose immigration status is related to their work will receive support from human resources and mobility groups.
A Spotify representative told The Wall Street Journal that the layoffs will affect about 600 employees and do not concern a specific department.
Ec also announced several management changes. In particular, the director of content and advertising Dawn Ostroff decided to leave the company. Under her leadership, Spotify has increased the number of podcasts by 40 times and more than doubled the revenue from the advertising business.
Despite the job cuts, Eck said he is confident that 2023 will be filled with a steady stream of innovation, unlike anything they have introduced over the past few years. Perhaps Spotify HiFi is finally making its debut?
