What just happened? In a note published on on Spotify website, CEO Daniel Eck said they have made the decision to cut staff by about six percent across the company. Eck said Spotify has made great strides in improving the company’s speeds, but added that they also need to work efficiently.
Spotify has become the latest technology company to announce organizational changes resulting in significant job cuts.
Like many other representatives of the technology sector, Spotify has grown and invested heavily during the pandemic. Last year, Spotify’s operating expenses doubled its revenue growth. As the EC noted, this is unsustainable in the long term in any climate, but especially in the current difficult macroeconomic conditions.
Looking back, Eck said he was too ambitious in investing ahead of earnings growth. “I take full responsibility for the actions that brought us here today,” Eq said.
All affected employees will receive compensation, with the average employee receiving about five months’ salary, depending on metrics such as length of service and local notice period requirements. All accrued and unused vacation will also be paid, and retiring employees will continue to receive health insurance for the period of layoff. They will also all be entitled to two months of employment services to help find new work, while those whose immigration status is linked to their work will receive support from human resources and mobility groups.
A Spotify representative said The Wall Street Journal that the layoffs will affect about 600 employees and do not affect a specific department.
Ec also announced several changes to the manual. Notably, director of content and advertising Dawn Ostroff has decided to leave the company. Under her leadership, Spotify increased the number of podcasts by 40 times and more than doubled the revenue from the ad business.
Despite job cuts, Eq said he’s confident 2023 will be filled with a steady stream of innovations unlike anything they’ve introduced in the past few years. Maybe Spotify HiFi is finally making its debut?