Music streaming giant Spotify said today that it will lay off around 1,500 employees, or 17% of its workforce, to bring down costs, after letting 600 of its staff go in January, and 200 more in June.
After a round of job cuts at the start of the year by tech companies, some have begun reducing their workforce again, with announcements coming from Amazon to Microsoft-owned LinkedIn.
In a letter to employees, Spotify CEO Daniel Ek said the company hired more in 2020 and 2021 due to the lower cost of capital and while its output has increased, much of it was linked to having more resources.
In October 2022, Spotify announced that it had bought Ireland-based Kinzen, a company that has helped it identify harmful content on the platform.
Kinsen was founded by Mark Little and Áine Kerr.
Asked by RTE News about what impact today's job loss announcement will have an Ireland, Spotify declined to give details.
"We won't be breaking out the amount of people impacted region by region," a spokesperson said.
Spotify will incur about €130m to €145m in charges in the fourth quarter due to the layoffs, the company said, adding that majority of the cash component of the charges will be recorded in the first and second fiscal quarters of 2024.
The firm said it now expects fourth-quarter operating loss between €93m and €108m, compared with its prior forecast of an operating profit of €37m.
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Spotify invested more than $1 billion to build up its podcast business, signed up celebrities such as Kim Kardashian, Prince Harry and Meghan Markle, and expanded its market presence in most countries in the world in its quest to reach a billion users by 2030.
In the third quarter the company swung to a profit, aided by price hikes in its streaming services and growth in subscribers in all regions, and the company forecast that its number of monthly listeners would reach 601 million in the Christmas quarter.
Ek told Reuters at that time the company was still focusing on efficiencies to get more out of each dollar.
He said today that a reduction of this size will feel large given the recent positive earnings report and its performance.
"By most metrics, we were more productive but less efficient. We need to be both," Ek said.
The company will start informing affected employees todau. Employees will get about five months of severance pay, holiday pay, and healthcare coverage for the severance period.
"We debated making smaller reductions throughout 2024 and 2025," Ek said.
"Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives," he added.
