Spotify has announced that it will lay off around 1,500 employees, making up approximately 17 percent of its work force to reduce operational cost.
In an email to its employees on Monday, December 4, the streaming giant through its CEO Daniel Ek stated that it had debated the decision but decided it was crucial.
Notably, this is the third mass layoff the company has done after letting go of 600 employees in January and 200 others in June.
“I have made the difficult decision to reduce our total headcount by approximately 17% across the company. I recognize this will impact a number of individuals who have made valuable contributions.
“To be blunt, many smart, talented and hard-working people will be departing us. For those leaving, we’re a better company because of your dedication and hard work. Thank you for sharing your talents with us,” the notice read in part.
Daniel Ek Gives Reason for the Move
Spotify CEO also noted that the company hired many employees in 2020 and 2021 due to the lower cost of capital.
However, although their output had increased, much of it was linked to having more resources.
“By most metrics, we were more productive but less efficient. We need to be both. We debated making smaller reductions throughout 2024 and 2025,” explained the CEO.
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At the same time, he acknowledged that the move would negatively affect its employees.
He proceeded to explain that the company was spending too much on costs and for the company to grow as projected, they had to significantly reduce that cost.
“In 2020 and 2021, we took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals.
“These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year. Despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big,” added Ek.
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Spotify Profit Projections With layoffs
On the other hand, the streaming giant hiked prices for its streaming services in the third quarter increasing its profits significantly.
Also, it has continued to grow its subscribers worldwide projecting that its number of monthly listeners will grow up to 601 million during the holidays.
In addition, EK noted that the company was still focusing on ways to get more out of every penny they make.
According to him, the reduction in company because of the layoffs will feel large because of the recent positive earnings report and its performance.
“Embracing this leaner structure will also allow us to invest our profits more strategically back into the business. With a more targeted approach, every investment and initiative become more impactful, offering greater opportunities for success.
“This is not a step back; it’s a strategic reorientation. We’re still committed to investing and making bold bets, but now, with a more focused approach,” added the CEO.
