Spotify cuts 1,500 more jobs as CEO Daniel EK says it must be leaner.

Daniel Ek, the CEO, said he had to make the “difficult” choice since the economy was “dramatically” slowing down. About 9,000 people work at Spotify, and according to Mr. Ek, the firm needs to take “substantial action to rightsize our costs” to achieve its goals. He continued, saying he knew the cuts would cause “extremely painful suffering for our team.” I recognize this will impact several individuals who have made valuable contributions”, said Mr. Ek. “To be blunt, many smart, talented, and hard-working people will be departing us.” Although Spotify announced layoffs earlier this year, new plans dwarf those statements. Thanks to price increases and an increase in subscribers, Spotify revealed in its most recent figures that it made a profit of €65 million (£55.7 million) for the three months ending in September. This was the company’s first quarterly profit in almost a year. The tech giant has been growing globally to reach one billion users by 2030. By the end of 2020, there were 345 million of them; by now, there are 601 million. Mr. Ek stated that many individuals “will feel surprisingly large” about the job cuts that have been revealed, especially in light of the recent “positive” results. According to him, Spotify had thought about reducing staff in 2024 and 2025 but ultimately determined that more significant measures were required to strengthen the company’s financial position.

Since its inception, Spotify has invested a significant amount of capital in expanding the company and acquiring unique content, including podcasts produced by the Duke and Duchess of Sussex, Michelle Obama, and others. Just 12 episodes were produced during the two-and-a-half years of the Harry and Meghan contract, which was reportedly worth $25 million (£19.7 million) before it expired in June. In September, Mr. Ek made the following statement to the BBC on podcast content: “The truth of the matter is some of it has worked, some of it hasn’t.”On Monday, the corporation will begin alerting the impacted employees. During the severance period, employees will get healthcare coverage, holiday compensation, and approximately five months of severance pay. For workers whose immigration status is related to their jobs, Spotify will also provide immigration support.

These employment losses are the most recent in a string of layoffs reported in the tech sector, which has eliminated tens of thousands of positions after a boom during the lockdowns caused by the Covid epidemic. By the end of the decade, British telecom giant BT plans to cut up to 55,000 jobs. This was announced in May. Microsoft and Meta, two of the biggest IT companies, also disclosed that they want to lay off up to 10,000 workers this year. The parent firm of Google, Alphabet, announced layoffs of almost 12,000 employees, while online retailer Amazon revealed it was eliminating nearly 18,000 jobs globally.

Due to cuts announced by both Yahoo and LinkedIn this year, smaller businesses have also been negatively impacted. Apple, on the other hand, appears to have defied the trend, revealing that it will be adding some employees to its AI team.

Citation-

https://www.bbc.co.uk/news/business-67611361

https://www.wired.com/story/spotify-layoffs-music-streaming-future/