Spotify, the Swedish music streaming giant, announced that it will be cutting 6% of its workforce, which is about 600 employees, citing the need to improve efficiency.
The company’s CEO, Daniel Ek, stated that in hindsight he was too ambitious in investing ahead of the company’s revenue growth.
Despite its popularity in the online music market, Spotify has yet to post a full-year net profit. This announcement comes after similar news from tech giants Microsoft and Alphabet, with the latter announcing that it would be shedding 12,000 jobs, and Microsoft announcing that up to 10,000 employees would be losing their jobs.
As part of the restructuring, Spotify’s Chief Content and Advertising Business Officer, Dawn Ostroff, will also be departing.
Spotify’s heavy investments leads to job cuts for efficiency
Spotify, the leading music streaming company, announced that it will be cutting 6% of its workforce, or around 600 jobs, in an effort to improve efficiency.
The company, which had about 9,800 full-time employees last year, stated that it expects to incur at least €35 million in severance-related charges. Despite being listed on the New York Stock Exchange, Spotify has yet to post a full-year net profit, despite heavy investments in new market expansions and exclusive content such as podcasts.
The company had announced in October that it would be slowing down hiring for the rest of the year and into 2023. This announcement comes at a time when technology companies are facing downturns after two years of pandemic-driven growth during which they had hired aggressively. Many companies, including some of the sector’s biggest names, have revealed redundancies in recent weeks.