The world number one audio platform Spotify announced on Monday a reduction in its workforce by “around 17%”, or around 1,500 people, in order to reduce its costs in a context of a “spectacular” slowdown in economic growth. In the third quarter, the group achieved a rare operating profit thanks to a 26% increase in the number of its active users, and a net profit of 65 million euros.
“I am aware that for many, a reduction of this magnitude may seem surprising given the recent positive earnings report and our performance,” CEO Daniel Ek wrote in a letter to employees. These layoffs should make it possible to “align Spotify with our future objectives and (to) ensure that we are well sized for the challenges to come,” he explained in this letter.
According to Daniel Ek, in 2020 and 2021, the company “took advantage of the opportunity provided by lower-cost capital and invested significantly in team expansion, content improvement, marketing and new vertical markets. “However, we find ourselves in a very different environment today. And despite our efforts to reduce costs last year, our cost structure to achieve our objectives is still too high,” he added.
Spotify has continued to invest since its launch to fuel its growth by expanding into new markets and then offering exclusive content, such as podcasts, in which it has invested more than a billion dollars. In 2017, the company had around 3,000 employees, a number that has more than tripled to around 9,800 people by the end of 2022. Since its inception, the platform has never posted a net profit across the board. year and only occasionally turns quarterly profits, despite its success in the online music market.