Spotify lays off 600 employees, admits CEO Ek: “We invested before our revenue grew, there is no long-term efficiency”

Spotify also licenses. About 6% of its global workforce is being cut from the music streaming company. In its latest press release, the company said Spotify has 9,808 full-time employees. The cuts will affect 600 people. The Covid pandemic has something to do with it. When streaming services literally exploded during the lockdown, it was believed that even once normalcy returned, some digital services acquired during the Covid restrictions could no longer be dispensed with. It’s not, and Spotify’s CEO frankly admits it to his employees.

“Like many other leaders, I expected to defend the strong benefits of the pandemic and believed that our global business and lower risk of impact from an advertising slowdown would insulate us,” Daniel Ek said in a note sent to his employees .

“In retrospect, I was too ambitious to invest before our income growth. Because of this, today we are reducing our workforce by approximately 6% across the company. I take full responsibility for the movements that have brought us here today,” he added.

Ek further states that Spotify is not efficient enough to ensure the company’s long-term success.

“We still spend too much time synchronizing with slightly different strategies, which slows us down. And in a difficult economic environment, efficiency becomes more important,” he said.

According to Ek, the company had to make layoffs because Spotify’s current trajectory was not sustainable in the long term. “To give you an idea of ​​why this decision was made, Spotify’s growth in 2022 exceeded its revenue growth by 2x. As you know, in recent months we have made considerable efforts to contain costs, but not ‘enough has been’, wrote Ek.

Interested Spotify employees will be invited to individual interviews in the next few hours. they will receive severance pay which will vary according to local notice requirements and duration. On average, employees will receive five months of severance pay.

Accrued and unused vacation time will be paid and medical coverage will continue to be provided during the layoff period. In a document, the company estimates that it will support approx 35-45 million euros of expenses related to the termination of the employment relationship. Spotify will also offer immigration and career support.

In the last year, Spotify shares down 50%, up to $97.91 per share. Shares are currently trading at $104 in premarket trading, up 6.22% from Friday’s closing price.

What’s happening with big tech? It is a time of transition for the digital giants. Spotify is not the only digital company facing cutbacks and looking to restructure its business. Last week Microsoft has announced the layoff of 10,000 peoplewhile the parent company of Google said it would cut 12,000 jobs. In recent weeks Amazon, Meta, Salesforce and many other smaller companies have announced a slew of layoffs.

Source : IL Messaggero

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