Follow the wave of layoffs in technology: Spotify cuts 6% of its staff

Spotifya global leader in audio platforms, announced on Monday that it will cut 6% of its workforce, or about 600 jobs, thus joining the wave of layoffs among the tech giants.

This is the largest personnel cut in the history of this Swedish company founded in 2006 in Stockholm and which has achieved more than 500 million subscribers. The announcement comes after Microsoft cut 10,000 jobs and Google 12,000.

“In retrospect, I was too ambitious invest faster than our revenue growth,” said company CEO and co-founder Daniel Ek, 39, in an online message to employees.

“For this reason we are reducing our staff by about 6% across the group,” explained its director.

Spotify is listed on the New York Stock Exchange and as of its opening Monday, shares rose 4.6% to $97.91.

“Individual interviews with interested employees will be held in the next few hours,” Ek specified.

Although Spotify has occasionally been profitable, the company had been making losses for several yearsdespite the meteoric growth of its number of subscribers and the advantage it gets over its competitors, such as Apple Music.

The company will publish its annual results on January 31.

“As you know, we have made a major effort in recent months to reduce our costs, but it wasn’t enough“Ek added.

According to the Scandinavian billionaire, Spotify’s investment grew twice as fast as its revenue last year.

“In the long run it would be unattainable in any environment, but in a difficult macroeconomic environment it will be even more difficult to cover the hole,” he stressed.

millionaire investments

In recent years, Spotify has also invested more than one billion euros in the podcast sector, of which it has become the world leader. But the benefits of this investment are still unknown, according to analysts.

Betting on this audio format has also brought him controversy, such as when American star Joe Rogan was accused of spreading fake news on his programs.

At the end of September, the platform had approx 456 million subscribers. One part, 195 million, pays for the service. The group aspires to have one billion users by 2030.

Its annual turnover reached 9,600 million euros in 2021 [10.400 millones de dólares] –mostly from paid subscribers– and the number of employees tripled in five years to 9,800 at the end of September.

Spotify’s announcement follows a series of layoff plans announced by big tech groups in recent weeks.

After layoffs from Amazon, Meta and Microsoft, Google announced on Saturday it would cut 12,000 jobs worldwide, or more than the 6% of his troops. On Wednesday, Microsoft announced it would make 10,000 layoffs by April.

After what Elon Musk buys Twitterin early November 2022, the social network launched a forced layoff plan that affected half of its 7,500 workers.

To finance the $44 billion purchase, the billionaire borrowed heavily from the company, whose accounts were already weak, having posted a significant deficit in the first two quarters of 2022.

The environment is thus shaken by a huge number of employees left out of work.