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Spotify Announces Workforce Cutbacks Amid Economic Slowdown

Despite recent profitability, the Swedish music-streaming giant’s CEO emphasised the need for drastic action to enhance the company’s financial outlook.

Spotify, the Swedish music-streaming giant, has declared a significant reduction in its workforce, cutting approximately 1,500 jobs, representing 17% of its employees. The decision, characterised as “difficult” by Chief Executive Daniel Ek, aims to address the challenges posed by a substantial slowdown in economic growth.

Spotify, which currently employs around 9,000 people, had previously implemented staff reductions earlier in the year, but the latest announcement far surpasses those earlier plans. Mr. Ek emphasised the necessity for “substantial action to rightsize our costs” to align with the company’s objectives.

While acknowledging the impact on the departing staff, Mr. Ek expressed understanding of the “incredibly painful” nature of the decision. He acknowledged the contributions of those affected, stating, “To be blunt, many smart, talented, and hard-working people will be departing us.”

Spotify recently reported a profit of €65 million (£55.7 million) for the third quarter, marking its first quarterly profit in over a year. The positive results were attributed to factors such as price increases and a rise in subscriber numbers.

Despite the recent profitability, Mr. Ek emphasised the need for drastic action to enhance the company’s financial outlook. The announcement of significant job cuts was described as surprising, given the positive financial results.

Spotify, since its inception, has invested heavily in business expansion and securing exclusive content, including podcasts featuring influential figures like Michelle and Barack Obama, as well as the Duke and Duchess of Sussex. The latter deal, reportedly costing $25 million (£19.7 million), delivered 12 episodes over two and a half years before concluding in June.

Addressing the challenges in the podcast content arena, Mr. Ek previously stated in September, “The truth of the matter is some of it has worked, some of it hasn’t.” The company’s move to streamline its workforce reflects a strategic response to economic uncertainties and aims to position Spotify for sustained financial success.

Kiki Garba