Spotify cuts 6% of workforce, another cut at a big name on the Net

published on Monday, January 23, 2023 at 3:00 pm.

The world’s number one audio platform, Spotify, announced on Monday a 6% reduction in its workforce, or nearly 600 jobs, the latest episode in a series of major layoffs at the internet giants to cut costs.

The layoff plan is the biggest in the recent history of the half-billion-user Swedish flagship, a start-up founded in 2006 in Stockholm that has become one of Europe’s few big names in technology.

In a message to employees posted online, its 39-year-old boss, Daniel Ek, acknowledged “a culture change” after years of prioritizing growth over profits.

“In hindsight, I was too ambitious by investing faster than our revenue growth,” the Spotify CEO and co-founder admitted.

“For this reason, we are reducing our workforce by around 6% across the group,” explains the boss of the New York-listed group.

Individual interviews will take place with interested employees on Monday, he said. The social plan should cost 35 to 45 million in damages.

At the opening of the New York Stock Exchange, the group’s share recently gained 4.6% to $97.91.

While Spotify has been profitable from time to time, the Stockholm-based group has consistently posted losses for several years, despite a dazzling increase in the number of its subscribers and a lead over competitors such as Apple Music or Amazon Music.

In the third quarter, the group, which will publish annual results next Tuesday, widened its net loss to 166 million euros.

As you know, in recent months we have made a significant effort to reduce costs, but it was simply not enough”, Daniel Ek explained on Monday.

According to the Scandinavian billionaire, Spotify’s investments grew twice as fast as its revenue last year.

– “Unstable” –

“This would be unsustainable in the long term in any context, but in a difficult macroeconomic environment it will be even more difficult to close the hole,” he underlines.

Spotify has also invested more than a billion euros in podcasts in recent years, becoming there also number one in the world. But the financial return has yet to be demonstrated, according to analysts.

The development of the podcast has also brought him controversy, particularly with American star Joe Rogan accused of spreading misinformation on his shows.

The platform, which mixes a subscription model and a free model using ads, had a total of 456 million users at the end of September, including 195 million paying subscribers.

It planned to reach 479 million monthly active users by the end of 2022, including 202 million paid subscribers. The group aims to have one billion users by 2030.

Its annual turnover had reached 9.6 billion euros in 2021 – much of it thanks to paying subscribers – while the number of employees had tripled in five years to reach 9,800 at the end of September.

The Swedish group’s announcement follows a series of redundancy plans at the global network giant in recent weeks, even as its workforce is much smaller.

Following layoffs at Amazon, Meta and Microsoft, Google in turn announced 12,000 job cuts worldwide on Saturday, or just over 6% of its workforce. Microsoft had announced on Wednesday 10,000 layoffs by the end of March.

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