Spotify, a company that allows users to listen to music online, has said it would lay off around 6% of its worldwide personnel. The firm reported 9,808 full-time workers in its most recent financial report. About 600 workers will be affected by today's changes.
In a memo to workers, Spotify co-founder and CEO Daniel Ek wrote, "Like many other executives, I hoped to preserve the strong tailwinds from the epidemic and felt that our large global company and lesser risk to the effect of a slowdown in advertisements would cushion us."
"Looking back, I was foolish to put our investment goals ahead of our company's sales development. In light of this, we have decided to lay off around 6% of the company's workforce today. What we have now is all due to my actions, and I accept full responsibility for those actions," he said.
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More About The Layoff Statement
Compared to previous internal letters notifying layoffs, Ek's letter is lengthy. He claims Spotify isn't efficient enough to guarantee the company's long-term success, so he's making this revelation in addition to the bad news.
Time still needs to be spent trying to synchronise minor strategic differences, which is a major bottleneck. The value of efficiency increases in a difficult economic climate, he said.
Company leadership has also seen various changes. Chief content and advertising business officer Dawn Ostroff is leaving the firm. Alex Norström, formerly Spotify's chief freemium business officer, has been promoted to chief business officer.
More than a decade into his role as chief product officer, Gustav Söderström will remain with the firm to continue leading the organisation's engineering and product development efforts. There don't seem to be any new developments in this regard.
In Ek's view, Spotify's present trend could have been more sustainable; thus, the firm had to lay off employees. To put this choice in context, in 2022, Spotify's [operation expenditures] grew by a factor of 2 faster than our revenue grew [...] Ek said, "As you are aware, we have made a great effort to bring in expenditures over the previous six months, but it just hasn't been enough."
What Will Happen Next?
Affected Spotify staff members will be asked to one-on-one meetings over several hours. Severance pay will be provided to them, the amount of which will be based on their length of service and the applicable notice period in their jurisdiction. On average, severance pay will be paid out to workers at a rate of five months.
During the severance period, you will get paid for any vacation time earned but not utilised and continued health insurance coverage. It was reported that the business expects to pay between €35 and €45 million in severance costs. Spotify will also assist with immigration and finding employment.
Spotify's share price has decreased by 50%, to $97.91, in the last year. In trading before the stock market's opening on Monday, shares were trading at $104, a gain of 6.22 per cent over Friday's close.
Microsoft said last week that it would be cutting off 10,000 employees, while Google's parent firm announced 12,000 layoffs the same week. Several corporations, including Amazon, Meta, Salesforce, and a slew of smaller firms, have announced layoffs in recent weeks. Unfortunately, Spotify is now part of this pattern.
Featured image: Spotify
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