Internet: Spotify is also cutting jobs – Boss: Grown too fast

The music streaming market leader Spotify is the next big company in the tech industry to lay off workers. Around six percent of the employees should go, as the founder and boss Daniel Ek announced on Monday. Around 600 jobs are likely to be affected: as of the previous reporting date of September 30, the Swedish company had a good 9,800 full-time jobs.

Ek pointed out that Spotify needs to become more efficient. Like others, he had hoped that the business tailwind from the corona pandemic would continue. “Looking back, I was overly ambitious on investments that outpaced our revenue growth,” Ek wrote in an email to employees. “I take full responsibility for the steps that brought us here.” Spotify plans to pay between 35 and 45 million euros for severance payments.

Greatly increased workforce during pandemic

Spotify had rapidly expanded the workforce after the boost for the business in the corona pandemic. In the twelve months to the end of September 2022, the number of employees increased by more than 30 percent with over 2,400 additional jobs.

In the past few weeks and months, several heavyweights from the tech industry had already announced layoffs. Just this week, Microsoft announced that it would cut 10,000 jobs. Before that, Amazon announced it was cutting 18,000 jobs and the Facebook group Meta already cut 11,000 jobs in November. They, too, had increased their workforce significantly in the past two years – and after the reduction, they will still have more employees than before the pandemic.

Companies are hit, among other things, by the slowdown in the online advertising market in times of high inflation and a weakening economy. Ek had made advertising a second pillar of the Spotify business alongside music subscriptions. He also resorted to expensive acquisitions in the podcast area. Spotify had 195 million paying subscribers at the end of September and 456 million total customers.