…I was too ambitious, says CEO
Spotify, the online music streaming platform, has revealed plans to cut about 6% of its employees, or around 600 employees, joining a slew of technology companies from Amazon.com Inc. to Meta Platforms Inc. in announcing job cuts to lower costs.
The tech industry is facing a demand downturn after two years of pandemic-powered growth during which it had hired aggressively. That has led firms from Meta Platforms Inc to Microsoft Corp to shed thousands of jobs.
The Chief Executive Officer, Spotify, Daniel EK, disclosed this in a statement on Monday, Daniel Ek, saying the cut represents six percent of its general workforce.
He said Dawn Ostroff, the company’s chief content and advertising business officer, will depart as part of a broader reorganisation.
According to Ek, the decision to reduce the number of employees was “difficult, but necessary”.
Further giving reasons for the job cut, the CEO said Spotify’s operating expenses outpaced its revenue growth by two-fold.
“That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap,” he said.
“I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us.
“In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6 percent across the company. I take full accountability for the moves that got us here today.
“My focus now is on ensuring that every employee is treated fairly as they depart.”
The company’s move to retrench workers comes at a time when tech companies are facing a demand downturn.
In the third quarter (Q3) last year, Spotify reported ad-supported operating revenue at 19 percent higher than in 2021. Its paid subscriber base also rose 13 percent, reaching 195 million.
However, share prices fell afterwards, citing wider industry concerns.
Spotify’s lay off is it the latest job cut in the global tech ecosystem.
Last week, Google’s parent firm, Alphabet also said it would fire about 12,000 of its staff members.
International conglomerates like Amazon, Microsoft and Goldman Sachs have resorted to sacking workers to cope with global economic shocks.