Spotify plans to cut its workforce by 17%

The massive music streaming company Spotify announced on Monday that it will be cutting about 17% of its workforce in an effort to save expenses in the face of “dramatically” slower economic development.

Thanks to a 26% increase in active users for the third quarter, Spotify reported a remarkable quarterly operational profit of 32 million euros in October, up from a loss of 228 million for the same period the previous year.

CEO Daniel Ek sent a letter to staff that was viewed by AFP, stating, “I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance.”

“Took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals,” he said, referring to the company’s 2020 and 2021 investments.

But the atmosphere we’re in now is completely different. Furthermore, our cost structure is still too large for where we need to be, even with our efforts to cut costs over the previous year.

It has made more than $1 billion in podcast investments alone.

The company employed about 3,000 people in 2017. By the end of 2022, that number had more than tripled to over 9,800.

Despite its success in the online music business, the company has never generated a full-year net profit and only sometimes posts quarterly profits.

AFP