Spotify, the popular music streaming service, revealed its decision to cut 17% of its global workforce, marking the third round of layoffs within the same year. The move is part of the company’s cost-cutting strategy aimed at achieving profitability.
CEO Daniel Ek conveyed this decision in a blog post addressed to the employees, terming it a “strategic reorientation.” While the specific number of job cuts wasn’t mentioned in the post, a spokesperson confirmed it would affect approximately 1,500 individuals.
The company had previously made significant investments in expanding the business, employees, content, and marketing during 2020 and 2021, facilitated by accessible financing. However, Ek pointed out that changes in economic conditions, especially the increase in interest rates by central banks, posed unexpected challenges that impacted Spotify.
Ek explained, “We now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”
This restructuring, according to Ek, aims to create a “leaner structure” that will ultimately secure Spotify’s path to continued profitability.
Spotify, headquartered in Stockholm, reported a net loss of 462 million euros (approximately $500 million) for the nine-month period ending in September.
This move isn’t the first for the company this year. In January, Spotify announced a 6% reduction in its total staff. Subsequently, in June, another round of layoffs affected approximately 200 employees, primarily in the podcast division.
The trend of job cuts isn’t unique to Spotify. Several other tech giants, including Amazon, Google, Microsoft, Meta, and IBM, have also disclosed significant job reductions throughout the year.