Streaming service has to save money
Spotify is cutting hundreds of jobs
December 4, 2023, 11:26 a.m
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Spotify is suffering from increased interest rates and slowing economic growth. Despite solid numbers this year, the music streaming service has to make savings. The group is now parting ways with around 17 percent of its employees.
The music streaming service Spotify has announced significant staff cuts. He “made the difficult decision to reduce our total workforce company-wide by approximately 17 percent,” said the head of the Swedish company, Daniel Ek, in a letter to employees. He cited slowing economic growth and increased interest rates as reasons.
Spotify exceptionally reported a quarterly profit in October. “I am aware that a cut of this magnitude may seem surprisingly large to many given the recent positive earnings report and our performance,” Ek now wrote. Spotify invested “significantly” in 2020 and 2021. “But now we are in a very different environment.” Despite efforts to reduce costs last year, they remain too high.
Since its inception, Spotify has invested heavily to drive growth through expansion into new markets and, in recent years, through exclusive content such as podcasts. The company spent over $1 billion on podcasts alone. Despite its global success, Spotify has never achieved an annual net profit, and positive quarterly results have so far been the exception. From July to September, the Swedish company recorded a profit of 32 million euros.
Last year there was a loss of 228 million euros in the same period. The number of paying users rose by 16 percent to 226 million people. In 2017, the company employed around 3,000 people. By the end of 2022, this number tripled to around 9,800.