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Spotify is terminating 17% of its workforce, which is equivalent to 1,500 jobs. This latest layoff is the third to hit the company this year.
The Swedish music streaming provider revealed the new round of job cuts after a series of spending for its expansion, including in the field of podcasting. Spotify confirmed on Monday, Dec. 4, that it will eliminate more than a thousand workers as it struggled to earn good profits consistently.
Layoffs to Reduce Costs
As per The New York Times, Daniel Ek, Spotify’s chief executive officer, sent a note to its employees, which was posted on the firm’s official website. He said that they need to overhaul to create a different environment to increase earnings. Ek said they also have to work with just the right size of staff to save while boosting sales at the same time.
He added that the move to trim down the number of employees is part of Spotify’s preparations for the “next phase, where being lean is not just an option but a necessity.” The CEO further explained that economic growth is slowing, but capital is becoming more expensive; thus, reducing the workforce is necessary.
Shares Surged After Workforce Reduction Announcement
While the job cuts are unfortunate events in the business, Spotify’s announcement of its third layoff sent its shares soaring. According to CNBC, the company’s shares went up more than seven percent after confirming the workforce slash.
Meanwhile, Spotify’s CEO also thanked the employees for their services. He also carefully explained why the cuts are happening by saying, “Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”
Ek added, “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. I recognize this will impact a number of individuals who have made valuable contributions to the company.”
Photo by: Heidi Fin/Unsplash
