Spotify to put off 17% of staff, CEO Daniel Ek says


It comes after Spotify reported a 65 million euros ($70.7 million) revenue within the third quarter, citing decrease spend on advertising and personnel.

Spotify raised costs of its subscription plans earlier this yr and has been increasing into podcasts and audio books.

The most recent spherical of redundancies follows successive cuts on the agency, which like different growth-oriented tech corporations has been compelled to chop again on prices within the final yr or so as a result of greater rates of interest and a worsening macroeconomic backdrop.

Staff, 

Over the past two years, we have put important emphasis on constructing Spotify into a really nice and sustainable enterprise – one designed to attain our objective of being the world’s main audio firm and one that can persistently drive profitability and progress into the long run. Whereas we have made worthy strides, as I’ve shared many instances, we nonetheless have work to do. Financial progress has slowed dramatically and capital has change into costlier. Spotify shouldn’t be an exception to those realities.

This brings me to a call that can imply a big step change for our firm. To align Spotify with our future targets and guarantee we’re right-sized for the challenges forward, I’ve made the tough determination to scale back our complete headcount by roughly 17% throughout the corporate. I acknowledge this can influence a lot of people who’ve made invaluable contributions. To be blunt, many good, proficient and hard-working folks will probably be departing us.

For these leaving, we’re a greater firm due to your dedication and exhausting work. Thanks for sharing your abilities with us. I hope you recognize that your contributions have impacted greater than half a billion folks and hundreds of thousands of artists, creators, and authors world wide in profound methods. 

I notice that for a lot of, a discount of this dimension will really feel surprisingly giant given the latest optimistic earnings report and our efficiency. We debated making smaller reductions all through 2024 and 2025. But, contemplating the hole between our monetary objective state and our present operational prices, I made a decision {that a} substantial motion to rightsize our prices was the best choice to perform our targets. Whereas I’m satisfied that is the precise motion for our firm, I additionally perceive it is going to be extremely painful for our group. 

To grasp this determination, I feel you will need to assess Spotify with a transparent, goal lens. In 2020 and 2021, we took benefit of the chance offered by lower-cost capital and invested considerably in group enlargement, content material enhancement, advertising, and new verticals. These investments usually labored, contributing to Spotify’s elevated output and the platform’s strong progress this previous yr. Nevertheless, we now discover ourselves in a really completely different setting. And regardless of our efforts to scale back prices this previous yr, our price construction for the place we should be remains to be too huge.

After we look again on 2022 and 2023, it has really been spectacular what we’ve got achieved. However, on the similar time, the truth is way of this output was linked to having extra assets. By most metrics, we had been extra productive however much less environment friendly. We should be each. Whereas we’ve got executed some work to mitigate this problem and change into extra environment friendly in 2023, we nonetheless have a methods to go earlier than we’re each productive and environment friendly. At the moment, we nonetheless have too many individuals devoted to supporting work and even doing work across the work slightly than contributing to alternatives with actual influence. Extra folks should be targeted on delivering for our key stakeholders – creators and customers. In two phrases, we’ve got to change into relentlessly resourceful.

I do know you’ll all be troubled to listen to the following steps about how this course of will work. If you’re an impacted worker, you’ll obtain a calendar invite throughout the subsequent two hours from HR for a one-on-one dialog. These conferences will happen earlier than the tip of the day on Tuesday, and whereas Katarina will present extra element on the entire specifics, please know the next will apply to all of those bandmates:

  • Severance pay: We’ll begin with a baseline for all staff, with the common worker receiving roughly 5 months of severance. This will probably be calculated primarily based on native discover interval necessities and worker tenure.
  • PTO: All accrued and unused trip will probably be paid out to any departing worker.
  • Healthcare: We’ll proceed to cowl healthcare for workers throughout their severance interval. 
  • Immigration help: For workers whose immigration standing is linked with their employment, HRBPs are working with every impacted particular person in live performance with our mobility group. 
  • Profession Assist:  All staff will probably be eligible for outplacement companies for 2 months.

For the group that can stay at Spotify, I do know this determination will probably be tough for a lot of. Please know we’re targeted on treating our impacted colleagues with the respect and compassion they deserve.

Trying Forward

The choice to scale back our group dimension is a tough however essential step in direction of forging a stronger, extra environment friendly Spotify for the long run. Nevertheless it additionally highlights that we have to change how we work. In Spotify’s early days, our success was exhausting gained. We had restricted assets and needed to profit from each asset. Our ingenuity and creativity had been what set us aside. As we have grown, we have moved too far-off from this core precept of resourcefulness. 

The Spotify of tomorrow should be outlined by being relentlessly resourceful within the methods we function, innovate, and deal with issues. This type of resourcefulness transcends the fundamental definition – it is about making ready for our subsequent section, the place being lean is not only an possibility however a necessity.

Embracing this leaner construction can even enable us to take a position our income extra strategically again into the enterprise. With a extra focused strategy, each funding and initiative turns into extra impactful, providing higher alternatives for achievement. This isn’t a step again; it is a strategic reorientation. We’re nonetheless dedicated to investing and making daring bets, however now, with a extra targeted strategy, guaranteeing Spotify’s continued profitability and talent to innovate. Lean does not imply small ambitions; it means smarter, extra impactful paths to attain them. 

At the moment is a tough however necessary day for the corporate. To be very clear, my dedication to our mission and perception in our potential to attain it has by no means been stronger. I hope you’ll be a part of me on Wednesday for Unplugged to debate how we transfer ahead collectively. A discount of this dimension will make it obligatory to alter the way in which we work, and we’ll share way more about what this can imply within the days and weeks forward. Simply as 2023 marked a brand new chapter for us, so will 2024 as we construct a good stronger Spotify. 

– Daniel

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