Spotify is cutting about 1,500 jobs, representing about 17% of its workforce, in its third round of layoffs this year. The move is part of the music streaming giant’s effort to improve productivity and efficiency.
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- What did Spotify announce?
- How many employees will be affected?
- How has Spotify performed this year?
- What about layoffs at other IT giants?
What did Spotify announce?
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Spotify founder and CEO Daniel Ek emphasized the right size of the workforce to address the challenges ahead. Factors such as slow economic growth and rising capital costs were cited as reasons for the job cuts, as the company invested significantly in the business during the lowest cost capital period in 2020 and 2021.
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“I recognize that this will affect a number of people who have made valuable contributions. To be frank, many smart, talented and hard-working people will be leaving us.” expressed in the note published on the company’s blog.
How many employees will be affected?
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Spotify, with approximately 8,800 employees, will inform those affected today. This latest round of layoffs comes after Spotify cut about 6% of its workforce in June of this year and a few hundred additional employees in January.
How has Spotify performed this year?
Despite the workforce reduction, Spotify has reported strong user growth, seeing a significant increase in monthly active users and paying customers in the latest quarter.
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The company exceeded Wall Street expectations for operating income and its fourth quarter guidance indicates a continuation of this positive trend.
While there is overall strength in user and subscriber numbers, Spotify has faced some challenges. North American premium subscriber growth was modest quarter-over-quarter, with a slight year-over-year decline in third-quarter premium average revenue per user (ARPU).
Forecasts for the fourth quarter indicate continued challenges attributed to changes in geographic and product mix, despite management’s assertion that each region exceeded expectations.
“I realize that to many, a reduction of this size will seem surprisingly large given the recent positive earnings report and our performance. We discuss making smaller reductions throughout 2024 and 2025.” wrote Ek.
“However, considering the gap between our financial target statement and our current operating costs, I decided that substantial action to correct our costs was the best option to achieve our targets.”
According to sources, the recent round of layoffs was not unexpected, but occurred earlier and on a larger scale than anticipated. Investors, eager to see more consistent profitability from the company, welcomed the decision.
What about layoffs from other IT giants?
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Global industries witnessed substantial layoffs in 2023, affecting more than 225,000 employees.
This trend is attributed to economic volatility, higher interest rates, and changing consumer behaviors. The technology sector, home to giants such as Amazon, Google, Meta, Twitter and Netflix, has also seen significant cuts, contributing to greater economic uncertainty for workers in the industry.
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Source: vtt.edu.vn