Mass Layoffs Continue: Spotify Will Cut 6% of the Workforce

On January 23, Spotify Technology SA announced that it had decided to say goodbye to 6% of its employees, even though this would entail a payment of approximately $50 million. Thus, it added to the list of companies that were forced to resort to mass layoffs, preparing for a predicted recession in the industry.

Spotify CEO Daniel Ek stressed in a blog post that over the past few months, management has been doing everything possible to reduce costs, but the measures taken, unfortunately, have not been enough. The company is restructuring and cutting about 600 employees to reduce costs and adjust to the deteriorating economic situation.

In 2022, the company's operating expenses grew at twice the rate of revenue as the company heavily funded its podcast business, which attracted advertisers with higher engagement. Another reason for the increase in the share of expenses as compared to income is the reduction in advertising revenue on the Spotify platform. Against this backdrop, head of content and advertising Dawn Ostroff, who helped launch Spotify's podcast business and ran it for over 4 years, decided to leave.

Mass layoffs are a global trend that has affected both Meta and Google's parent company, Alphabet Inc. The tech industry is facing a sharp decline in demand after a two-year period of rapid growth triggered by the COVID-19 pandemic, during which there was a strong recruitment of new employees. As a result, large companies were forced to lay off thousands of their employees.