Spotify cuts hundreds of jobs
Spotify is struggling with higher interest rates and slower economic growth. Despite solid figures this year, the music streaming service has to make savings. The company is therefore now letting go of around 17 percent of its employees.
The music streaming service Spotify has announced significant staff cuts. He has "made the difficult decision to reduce our total workforce across the company by around 17 percent", explained Daniel Ek, CEO of the Swedish company, in a letter to employees. He cited the slowdown in economic growth and the rise in interest rates as reasons.
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 US 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 dismissals at Spotify affect Stockholm, as the Swedish company's headquarters are located there. Due to its focus on streaming services, Spotify is not immune to the effects of the global economic downturn. Despite achieving a quarterly profit in October, Spotify continues to struggle with high costs, leading to the need for cost-cutting measures, such as reducing its staff by 17%. The closure of its offices in Berlin and Ireland, among others, is a result of these measures. Music lovers around the world may see the impact of these changes as Spotify restructures to meet its financial goals.
Source: www.ntv.de
