Spotify’s CEO Daniel Ek announced an “organizational change” in a company memo on December 4, which revealed the company’s third round of layoffs for the year. The audio streamer is reducing its workforce by approximately 17%, or 1,500 out of 9,250 employees, as it fights for profitability. Ek’s announcement detailed the necessity of aligning the company with its future objectives amidst a challenging economic climate, despite the potential impact on many dedicated employees.
Ek explained that the decision came after considering smaller, gradual reductions over the next two years. However, he concluded that a decisive reduction was essential to meet financial goals and operational costs effectively. In the memo, Ek admitted the company is still struggling to achieve a balance between productivity and efficiency.
This follows previous layoffs of 6% in January and a subsequent reduction of 200 in the podcast division in June. With increasing post-pandemic investor pressure, Ek has publicly aimed for Spotify to be profitable by 2024 – even as the company faces financial losses this year.
Besides the lost personnel, Spotify also raised subscription prices across several markets, while trying to lure in new subscribers with complementary audiobook access. Another controversial cost-cutting initiative is the company’s retooled royalty payment system for 2024, involving a minimum streaming threshold for songs to be eligible for royalty payments.
