Spotify cuts around 17 percent of its jobs
"I am aware that a cut of this magnitude may seem surprisingly large to many given the recent positive earnings report and our performance," Ek wrote. Spotify had invested "significantly" in 2020 and 2021. "However, we are now in a very different environment." Despite efforts to reduce costs last year, they are still too high.
Spotify has invested heavily since its inception to drive growth by expanding into new markets and, in recent years, through exclusive content such as podcasts. The company has spent over one billion dollars on podcasts alone. Despite its global success, Spotify has never achieved an annual net profit, and positive quarterly results have been the exception so far.
From July to September, the Swedish company posted a profit of 32 million euros. In the same period last year, the company posted a loss of 228 million euros. The number of paying users rose by 16% to 226 million people.
In 2017, the company employed around 3,000 people. By the end of 2022, this figure had tripled to around 9800.
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- Daniel Ek, the co-founder and CEO of Spotify, announced that the company would be eliminating around 17% of its workforce due to high costs.
- AFP reported that Ek acknowledged in a staff memo that the scale of job cuts may appear surprising, given Spotify's recent positive earnings report and strong performance.
- Ek stated in the memo that despite investing significantly in 2020 and 2021, Spotify is now operating in a completely different environment, forcing a need for cost reductions.
- According to Ek, despite efforts to lower costs in 2021, they have remained too high, necessitating the difficult decision to eliminate positions.
- Daniel Ek's tech company, Spotify Inc., has been on a hiring spree since its inception, adding over six thousand jobs within the past five years, but now, due to financial constraints, they are deleting these positions as part of its cost-cutting strategy.
Source: www.stern.de
