Music streaming giant Spotify said Monday it will reduce the number of its employees by around 17% in a bid to cut costs amid “dramatically” slower economic growth.
In October, Spotify reported an uncommon quarterly operating profit of 32 million euros, a notable improvement from the 228 million-euro loss during the same period the previous year, attributed to a 26% increase in active users in the third quarter.
“I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” chief executive Daniel Ek wrote in a letter to employees, which was seen by AFP.
He explained that in 2020 and 2021, the company seized the opportunity of lower-cost capital to make substantial investments in team expansion, content enhancement, marketing, and new verticals.
“However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”
Since its inception, Spotify has made significant investments to drive growth, expanding into new markets and venturing into exclusive content like podcasts, with over one billion dollars invested in podcasts alone.
In 2017, the company had approximately 3,000 staff members, a number that more than tripled to around 9,800 by the end of 2022.
Despite its success in the online music market, Spotify has never posted a full-year net profit and has only occasionally reported quarterly profits.
