A recent workforce reduction at Spotify led to the dismissal of 17% of its workforce. Spotify CEO Daniel Ek announced that the decision to make the cuts was attributed to the desire to streamline costs, as he acknowledged that the previous workforce expansion in 2020 and 2021 (when capital was more accessible) was excessive. The move to reduce the Spotify workforce occurred within a broader shift in American economics as capital expenses increased and the economy slowed down. Even though Spotify reported 70.7 million dollars of profit in the third quarter, it aims to realign with its future goals, bridge the gap between financial targets and operational costs, and enhance efficiency.
In an internal memo to workers, Ek thanked the departing employees and emphasized the need for the company to be productive and efficient. Moreover, in the memo, he outlined severance packages, the continuation of health coverage throughout the severance period, and outplacement services for employees who may be working on a visa. He also emphasized the need for a leaner structure within Spotify as it posited itself for future success and underscored a return to resourcefulness for the remaining employees. These layoffs follow the 2022 Spotify layoffs, when 6% of employees were cut at the beginning of the year, and an additional 2% were cut in June.