Spotify Cutting 1.5K Workers

Facts

• Music streaming platform Spotify on Monday announced it’s laying off 17% of its workforce — approximately 1.5K workers.¹
• In a letter to employees posted on Spotify’s blog, CEO Daniel Ek called the cuts part of a “strategic reorientation.”²
• Ek also explained that the company was too aggressive in its hiring in 2020 and 2021, so it would be taking 'substantial action to rightsize' its costs.³
• These cuts come despite Spotify posting a quarterly profit for the first time in a year and a half during the quarter that ended Sept. 30. Spotify made approximately $70M in three months, with the number of monthly active users increasing by 26%.⁴
• Spotify earlier this year also raised its monthly subscription rate by $1, which it says boosted premium subscription revenue by 10 percent.⁴
• The cuts — which follow the company letting go of 600 staffers in January and 200 in June — sparked Spotify’s US-listed shares Monday to jump 11% in early trading.⁵

Sources: ¹USA Today, ²Associated Press, ³Business Insider, ⁴Forbes and ⁵Reuters.

Narratives

• Narrative A, as provided by The New York Times. Spotify is no different than the other major tech firms — including Amazon and Meta — who have had to make cuts now that pandemic-era demand has died down. Investors know there was too much redundancy in Spotify's staffing, and now the platform has shown it's serious about consistently making a significant profit after years of focusing on just user totals.
• Narrative B, as provided by Daily Mail. Spotify has been mismanaged for years. While barely compensating the artists it relies on for content, it spent way too much on high-profile podcasts — a decision that cost Spotify financially and also courted controversy. All the while it's barely eked out a profit and now it's had its third staff cut of the year.