The world number one audio platform Spotify announced on Monday a reduction in its workforce by “around 17%”, or around 1,500 people, in order to reduce its costs in a context of a “spectacular” slowdown in economic growth.
This is the third wave of workforce reductions since the Swedish group had already announced 600 job cuts in January and 200 in June in its podcasts division.
These job cuts are part of the wave of layoffs hitting global “tech” since early 2023especially American giants such as Meta, Alphabet, Amazon.
In the third quarter, the group achieved a rare operating profit thanks to a 26% increase in the number of its active users, and a net profit of 65 million euros.
“I realize that for many, a reduction of this magnitude may seem surprising given the recent positive earnings report and our performance“, wrote general manager Daniel Ek in a letter to employees consulted by AFP. These layoffs should make it possible to”align Spotify with our future objectives and (to) ensure that we are well-sized for the challenges ahead“, he explained in this letter.
According to Mr. Ek, in 2020 and 2021, the company “took advantage of the opportunity offered by lower cost capital and invested significantly in team expansion, content improvement, marketing and new vertical markets.
“However, we find ourselves in a very different environment today. And despite our efforts to reduce costs last year, our cost structure to achieve our goals is still too high“, he added.
Spotify has continued to invest since its launch to fuel its growth by establishing itself in new markets and then offering exclusive content, such as podcasts, in which it has invested more than a billion dollars.
In 2017, the company had around 3,000 employees, a number that has more than tripled to around 9,800 people by the end of 2022.
Since its creation, the platform has never posted a net profit throughout the year and only occasionally makes quarterly profits, despite its success in the online music market.