Spotify joins top tech companies like Amazon, Google, Microsoft, Meta, and IBM in making hundreds of thousands of job cuts this year. Unfortunately, this leaves many technologically skilled workers unemployed.
Spotify was looking to cut about 1,500 people due to their new plan of “strategic orientation”. This would include about 17% of Spotify’s total global workforce. Daniel Ek, CEO of Spotify, noted that he knows that this announcement is hard for people, yet it is the right thing to do for the company. He also mentioned that even though the company was being more productive by having an increase in outputs and resources, it was less efficient as a whole company. This is the company’s third round of layoffs this year; the company needs to change its focus to be more profitable. Spotfiy publicly announced that it would cut 6% of their total staff in January. Following that, they would cut 2% of only their podcast division in June.
Due to Spotify being the largest music streaming platform, it is still having trouble maintaining economic growth. Their whole issues started when central banks started increasing interest rates. This made it harder for Spotify to reduce its costs, which caused their cost structure to be too big. Unfortunately, during this time, Spotify had a net loss of about $500 million. Ek mentioned that the leaner their structure is, the more profitable Spotify will be. By cutting employees, the company is saving the company from paying bonuses, incentives, and sales commissions.
Since Spotify now not only streams music, but podcasts and audiobooks too, it is attracting more people to download and use the app. Despite its influx of users, the platform still can’t gain enough money to sustain their employees. These job cuts might also cause some backlash on the company as this time of year is supposed to be filled with joy, yet for some, it is filled with unemployment.