Spotify joined other giant media and tech companies to announce layoffs as firms pull back after a period of robust growth during the pandemic amid an economic downturn. The Swedish streaming service on Monday said it plans to lay off 6% of its 9,800 employees.
“Over the last few months we’ve made a considerable effort to rein in costs, but it simply hasn’t been enough,” Spotify Technology SA Chief Executive Daniel Elk said.
In announcing the layoffs of more than 600 jobs through a blog statement titled An Update on January 2023 Organizational Changes, Elk wrote, “To offer some perspective on why we are making this decision, in 2022, the growth of Spotify’s OPEX outpaced our revenue growth by 2X. That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap. As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough.”
He added: “I was too ambitious in investing ahead of our revenue growth.”
Other tech companies have expressed similar woes as they shed jobs. Spotify spent twice as much as it took in revenue last year, most of the money going to its advertiser-friendly podcast programming. With rising interest rates and effect of the Russia-Ukraine war squeezing the economy, ad spending dropped across content and social media platforms, including Meta and Alphabet.
Spotify is now in the midst of restructuring its business. As part of the changes, its head of content and advertising Dawn Ostroff, will leave the company after a four-year tenure. She was behind the audio streaming giant’s podcast push, which includes Joe Rogan’s controversial show that promoted alleged misinformation about COVID-19.
Spotify installed new co-presidents with Alex Norström as head of the freemium business and Gustav Söderström helming research and development.