Spotify said on Monday it will cut 6% of its global workforce to cut costs, joining tech companies like Amazon and Microsoft in cutting staff as the global economy slows.
In a letter to employees posted on the company’s website, CEO Daniel Ek took full responsibility for the job cuts, which he called “difficult but necessary”.
“Like many other leaders, I expected to sustain the strong tailwinds of the pandemic and believed that our large global businesses and lower risk of the impact of an advertising slowdown would insulate us. In hindsight, I was overly ambitious in investing before our revenue growth,” he says.
The Stockholm-based streaming music business had around 9,800 employees globally as of September 30.
In recent months, major tech companies have quickly reversed a pandemic hiring spree that saw them employ thousands of workers to keep up with increased demand from homes and businesses for services like online shopping and video conferencing.
The same companies have recently made deep cuts to their workforces as inflation weighs on consumer spending and rising interest rates squeeze funding. Demand for digital services during the pandemic has also declined as people return to their offline lives.
In the past three months, Amazon, Google, Microsoft and Facebook – Meta – have announced plans to cut more than 50,000 employees from their collective ranks.
The recent cuts, in most cases, represent a relatively small percentage of each company’s overall headcount, essentially wiping out last year’s earnings for some, leaving them with huge workforces.
Spotify’s decision to eliminate about 590 jobs is part of a broader reorganization to improve efficiency and “accelerate decision-making,” according to Ek. As part of the changes, engineering and product work will be centralized. Chief content officer Dawn Ostroff has also decided to leave the company, Ek said.
Spotify reported a loss of 228 million euros ($248 million) in its most recent financial quarter to Sept. 30 as operating expenses soared 65%, according to a company presentation to investors.
In 2022, operating expenses grew twice as much as the company’s revenue, said the CEO.
“This would have been unsustainable in the long term in any climate, but with a challenging macroeconomic environment, it would be even more difficult to close the gap,” he told employees in Monday’s letter. “As you are well aware, over the last few months we have made considerable effort to contain costs, but it simply has not been enough.”
Source: CNN Brasil
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