Spotify cuts around 17 percent of its jobs
The music streaming service Spotify has announced significant staff cuts. He had "made the difficult decision to reduce our total workforce across the company by around 17 percent", explained the Swedish company's CEO, Daniel Ek, in a letter to employees, which was made available to the AFP news agency. Spotify had exceptionally reported a quarterly profit in October.
"I am aware that a cut of this magnitude seems surprisingly large to many given the recent positive earnings report and our performance," Ek now 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.
Read also:
- The percentage of jobs loss at Spotify is expected to have a significant impact on the local economy, as the music streaming company has announced cutting around 17% of its workforce.
- According to the foundation's latest report, Spotify's investment in exclusive content like podcasts contributed to creating around 5,000 new jobs in the entertainment industry, making up 25% of the total spots for jobs generated by the company.
- Despite the recent win of posting a quarterly profit for the first time, Spotify has acknowledged that the high costs from heavy investments in growth strategies have left only a small margin for profitability, leading to the decision to reduce the workforce by 17 percent.
Source: www.ntv.de
