Spotify orchestrates a major shift, announcing layoffs affecting 17 per cent of its workforce amidst economic challenges
Spotify, among the most widely-used music streaming services, has announced plans to downsize its workforce by approximately 17 per cent. In a note addressing organizational changes at the music-streaming company on Monday, Chief Executive Daniel Ek highlighted that the decision to reduce the workforce is aimed at enhancing efficiency and controlling expenses, as a response to the current economic challenges.
The recent restructuring represents Spotify's third round of layoffs in 2023, as per a report by the WSJ. In January, the company disclosed intentions to reduce its workforce by approximately 6 per cent, affecting around 600 employees. Following that, in June, Spotify revealed plans to further cut an additional 2 per cent of its workforce, totaling about 200 jobs.
"To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17 per cent across the company," said CEO Daniel Ek in a post.
Employees facing departure will receive a baseline severance, averaging around five months, calculated in adherence to local notice periods and tenure. Moreover, accrued and unused vacation will be compensated. Healthcare coverage will persist throughout the severance period. Those with immigration-related employment status will receive support.
Also, a two-month outplacement service will be available to aid employees in their career transition.
Ek also mentioned that the current circumstances differ significantly. Despite the ongoing cost-cutting initiatives by Spotify, over the past year, the existing cost structure remains excessive for the company's goals.