Spotify to axe 1,500 jobs amidst cost-cutting measures

Spotify, the Swedish music-streaming giant, has declared a significant reduction in its workforce, slashing 1,500 jobs, which accounts for approximately 17% of its employees. The decision, termed "difficult" by CEO Daniel Ek, came from the company's aim to curtail expenses amidst a notable slowdown in economic growth.

Expressing the necessity for substantial cost-saving measures, Ek acknowledged the impactful nature of the decision, recognising the contributions of the departing individuals. He said, "To be blunt, many smart, talented, and hard-working people will be departing us, and this will be incredibly painful for our team."

While Spotify had previously downsized its staff, these new plans vastly surpassed those earlier announcements. Despite recording a profit of EUR 65m (£55.7m) in its most recent quarterly results, the first in over a year, supported by increased subscriber numbers and raised prices, the company deems it essential to streamline costs for attaining its objectives.

Having expanded its global reach, with a current user base of 601 million, Spotify aims to hit a billion users by 2030. Ek noted that despite recent positive financial results, the impact of these job cuts would be substantial for many employees.

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The decision to execute more immediate and significant layoffs was made after considering smaller reductions across 2024 and 2025. Spotify's financial restructuring aims to rectify past overspending, notably on business expansion and securing exclusive content, such as podcasts featuring prominent personalities like Michelle and Barack Obama and the Duke and Duchess of Sussex.

Affected employees will receive about five months of severance pay, holiday pay, and healthcare coverage for the severance period. Furthermore, Spotify pledges immigration support for employees whose immigration status is linked to their employment.

This move by Spotify mirrors a trend in the tech industry, with several major players announcing substantial job cuts in recent times. From telecom groups like BT to tech giants like Meta and Microsoft, the wave of layoffs reflects a shift following a surge during the Covid-19 pandemic.