Music streaming service Spotify, announced it will layoff around 6% of its global workforce due to its unsustainable current trajectory.
The move which will impact around 600 employees worldwide, was made known yesterday in a note sent by Spotify co-founder and CEO Daniel Ek.
“Like many other leaders, 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% across the company. I take full accountability for the moves that got us here today,” he said.
“To offer some perspective on why we are making this decision, in 2022, the growth of Spotify’s [operating expenses] outpaced our revenue growth by 2X. As you are well aware, over the last few months we’ve made a considerable effort to rein in costs, but it simply hasn’t been enough,” Ek added.
Spotify employees who are impacted will be invited to one-on-one conversations over the next few hours. They will receive severance pay that will vary depending on local notice period requirements and employee tenure. On average, employees will receive five months of severance. Accrued and unused vacation will be paid out and healthcare coverage will continue during the severance period.