The streaming music production and distribution platform Spotify has today announced a new workforce adjustment that will affect 1,500 people, 17% of its workforce. This is the third round of layoffs that the company has undertaken, after laying off 600 people at the beginning of the year and another 200 last June.
The platform has assured that its cost structure “is still too large”, despite efforts to reduce them in the last year. Added to this is the slowdown in growth and the increase in the cost of capital due to the rise in interest rates. “We discussed making smaller reductions throughout 2024 and 2025. However, considering the gap between our financial target state and our current operating costs, I decided that substantial action to correct our costs was the best option to achieve our objectives,” explained Daniel Ek, CEO of Spotify.
The staff cut occurs despite the fact that the platform, based in Stockholm, managed to leave the ‘red numbers’ in the third quarter thanks to obtaining 65 million euros of net profits, a figure that contrasts with the losses of 166 million recorded in the same period of the previous year. Likewise, income increased by 10% between July and September, up to 3,357 million euros. However, from January to September the company recorded losses worth 462 million.
The improved results in the third quarter are attributed to the decision to raise the prices of its streaming services and subscriber growth in all regions. Specifically, the platform experienced a 25.8% increase compared to a year ago in the number of users, which in total amount to 574 million, of which less than half – 226 – are paid.
In 2017, the company had around 3,000 employees, a figure that has more than tripled to reach around 9,800 people by the end of 2022. Since its creation, the platform has never made annual net profits and has only managed to be profitable in some quarters, mainly due to the fact that the payment of copyrights eats up a good part of their profit.
In addition to Spotify, other technology companies have announced layoffs this year, including US giants Meta, Alphabet and Amazon.
