Spotify, the music streaming platform, announced plans to reduce its workforce by approximately 1,500 employees, constituting 17% of its total headcount. This move is aimed at cost reduction, following previous layoffs of 600 staff members in January and an additional 200 in June.
In a communication addressed to the staff, Spotify's CEO, Daniel Ek, explained that the company expanded its workforce in 2020 and 2021, leveraging the lower cost of capital. While the company experienced increased output during this period, a significant portion of the growth was attributed to the availability of additional resources.
He mentioned on Monday that the scale of this reduction might seem substantial, especially in light of the recent positive earnings report and overall company performance.
"By most measures, we exhibited higher productivity but lower efficiency. We aim to excel in both aspects," Ek stated.
The company began notifying impacted employees on Monday, providing approximately five months of severance pay, vacation pay, and healthcare coverage during the severance period.