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This follows the company laying off six percent of its workforce earlier this year.
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Spotify has become the latest tech giant to announce major layoffs, with the streaming giant’s CEO Daniel Ek announcing that around 1,500 employees will be eliminated as its growth is slowing “dramatically.”
The Swedish company currently has a workforce of around 9,000 people and Ek said in a memo that the cuts would “tailor our costs”, although he admitted it would be “incredibly painful for our team”.
‘I recognize that this will affect a number of people who have made valuable contributions. To be frank, many smart, talented and hard-working people will leave us,” Ek said.
‘I recognize that this will affect a number of people who have made valuable contributions. To be frank, a lot of smart, talented, hard-working people will leave us,” he added.
Last January, Spotify cut about six percent of its workforce, but Monday’s announcement dwarfs that figure. Ek said the company hired more in 2020 and 2021 due to the lower cost of capital, and while its production increased, much of it was related to having more resources.
Spotify CEO Daniel Ek, shown here, said he understood the cuts would be “incredibly painful” for the company.
This follows the company laying off six percent of its workforce earlier this year.
In October, Microsoft laid off nearly 700 people from its social networking site LinkedIn, bringing the total of layoffs this year to nearly 11,000 for the company.
Since August 2022, there have been mass layoffs at Twitter, where 7,500 jobs were cut as part of the Elon Musk acquisition, another 11,000 people were laid off at Facebook, while Google laid off 12,000 people and, meanwhile, Amazon notified about 18,000 workers.
According financial time, Spotify executives have been trying to cut costs since the company’s “expensive push into podcasting” that “tested investors’ patience.”
In July, Harry and Meghan announced that they had parted ways with Spotify after signing a $20 million exclusive podcast deal in 2020.
In the third quarter, the company turned a profit, helped by price increases in its streaming services and subscriber growth across all regions, and the company forecast its monthly listener count would reach 601 million in the holiday quarter. .
On Monday, he said a reduction of this magnitude would feel big given the recent positive earnings report and its performance.
‘By most metrics, we were more productive but less efficient. We need to be both,” Ek said.
“We discussed making minor reductions throughout 2024 and 2025,” Ek said. “However, considering the gap between our financial target statement and our current operating costs, I decided that substantial action to correct our costs was the best option to achieve our objectives.”
According Business Insider, Artists earn between $0.003 and $0.005 per stream, although Spotify does not pay per stream.
Instead, they pay for ‘streamshare’, a figure determined by adding how many times music owned or controlled by a particular rights holder is streamed, divided by the total number of streams in the market in which it is streamed each month.
Last month, Spotify announced a new policy regarding royalty payments, eliminating payments for songs with fewer than 1,000 annual streams starting in 2024.