Apple Music Competitor Spotify Lays Off Over 1,000 Employees

Spotify CEO Daniel Ek today announced that the company is laying off 17 percent of employees, which equates to more than 1,000 people. Spotify needs to cut costs in an effort to narrow the gap between its current operational costs and financial goal state.

General Spotify Feature

Over the last two years, we've put significant emphasis on building Spotify into a truly great and sustainable business - one designed to achieve our goal of being the world's leading audio company and one that will consistently drive profitability and growth into the future. While we've made worthy strides, as I've shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.

This brings me to a decision that will mean a significant step change for our company. To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company.

According to Ek, Spotify took on too many employees in 2020 and 2021, and while that led to increased output and company growth, it also made Spotify less efficient and increased operating costs. Spotify has too many people "dedicated to supporting work" and "doing work around the work" rather than "contributing to opportunities with real impact."

Spotify employees that are impacted by layoffs will be notified by Tuesday, December 5. Severance will be based on tenure and local notice period requirements, with employees receiving an average of five months of severance.

Going forward, Ek says that Spotify must be "relentlessly resourceful" in how it operates because "being lean is not just an option but a necessity." The cuts will let the company "build an even stronger Spotify" in 2024.

In Q3 2023, Spotify brought in $3.6 billion, up from $3.2 billion in the year-ago quarter. Spotify also added 23 million monthly active users and six million paid subscribers, leading to its first profitable quarter in 2023. Profit was only at one percent, however.

Spotify is Apple Music's main competitor, and the company has long protested the fees that Apple collects through its App Store. Spotify CEO Daniel Ek this year has been urging lawmakers in the United Kingdom to adopt a bill that would regulate competition in digital markets and prevent Apple from offering a platform while also competing on that platform.

Apple and Spotify's most recent tiff happened in late 2022 when Apple rejected a Spotify app update that added audiobook support. Spotify attempted to direct customers to buy books online to listen to in the app, which Apple protested. Spotify was ultimately forced to remove all in-app information about how to purchase an audiobook from the Spotify website to get the app approved.

Tag: Spotify

Top Rated Comments

abatabia Avatar
11 weeks ago
I dislike any company that lays off anyone right before the holidays.
Score: 61 Votes (Like | Disagree)
BGPL Avatar
11 weeks ago
"Spotify employees that are impacted by layoffs will be notified by Tuesday, December 5."

It's always nice learning that your company is RIF'ing a 1000 people from the media, and one of those might be you. Dick move not telling your employees first. Is Bill Lumberg in charge of this reduction in force?
Score: 33 Votes (Like | Disagree)
Fuzzball84 Avatar
11 weeks ago
I mean, business is business but it’s truly sad to see things like this happen just before the holidays. I feel for those people and what they have to go through at such a time of the year.

Don’t companies that do this consider what this does to their reputation? Yes it’s business, but the timing could have been bette… who is consulting them on these decision??? I mean as a customer, it just puts me off them. My opinion is lowered and I’m much less proud to be using their platform.
Score: 33 Votes (Like | Disagree)
Pakaku Avatar
11 weeks ago
I’m guessing none of this improves the rates the artists get paid for having their music streamed
Score: 31 Votes (Like | Disagree)
bmolands Avatar
11 weeks ago
These long-winded layoff memos are just complete smoke and mirrors. Its can always be summed up: "The leadership couldn't have predicted this from happening. The lowest staff take the brunt of the layoffs. The executives will be getting their Christmas bonus"
Score: 27 Votes (Like | Disagree)
Bjojade Avatar
11 weeks ago

I mean, business is business but it’s truly sad to see things like this happen just before the holidays. I feel for those people and what they have to go through at such a time of the year.

Don’t companies that do this consider what this does to their reputation? Yes it’s business, but the timing could have been bette… who is consulting them on these decision??? I mean as a customer, it just puts me off them. My opinion is lowered and I’m much less proud to be using their platform.
Why do 'the holidays' matter? Getting laid off at any time sucks. And with 5 months severance pay, the holidays might actually be pretty bright.
Score: 21 Votes (Like | Disagree)

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