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Spotify has announced a major reduction in its workforce: 17% of its employees have been laid off

Spotify has announced a major reduction in its workforce: 17% of its employees have been laid off

CEO Daniel Ek announces the abolition of more than a thousand jobs, urging the need to address the company’s financial situation.

Despite Daniel Ek’s positive announcement 32 million eurosThe CEO himself stated that the company is now facing a phase of slowing economic growth and an increase in capital costs.

This situation has made it necessary for the company to take measures aimed at reducing operating costs.
Spotify has planned a headcount reduction that will affect about 1,500 employees.

This reduction represents 17% of the company’s 9,000 global employees, including 4,300 employees in the United States.
Daniel Ek explained that this decision was taken with the aim of addressing the current challenges arising from the economic and financial context in a timely and meaningful manner.

Guidance from above

The company experienced adverse conditions in the first two quarters of 2024
The company experienced adverse conditions in the first two quarters of 2024

Daniel EK explained, in an official communication, that after studying possible smaller cuts in 2024 and 2025, the discrepancy between financial targets and current operating costs made a significant reduction in expenditures necessary as the most appropriate solution to achieve the previously set goals.

In a 1,000-word letter sent to employees, Eck also outlined the broad outlines Spotify’s future visionThis underscores the importance of the company constantly maintaining an innovative approach to operational processes, innovation, and managing challenges.
He also highlighted that dynamism is not a simple choice, but a prerequisite.

Similar to other tech companies, Spotify has seen growth during the pandemic, with headcount growth nearly doubling over the past three years, outpacing… 8000 workers Thanks to recruitment and acquisitions.

Ek confirmed that severance pay, payment for unused vacation time, and health care will be provided during the transition period.

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Seat changes

In early 2022, Spotify surpassed 182 million paid subscribers worldwide for the first time.
In early 2022, Spotify surpassed 182 million paid subscribers worldwide for the first time.

despite of Positive results Achieved in the third quarter, the decision to reduce headcount was identified as a critical step to shape a stronger and more efficient entity for the future.
This simplification is designed to allow Spotify to reinvest revenues more strategically within its operating scope.

Spotify, which despite recent agreements with Google, announced a loss 462 million euros In the first nine months of the year, it is currently undertaking a careful process of balancing investments targeting growing sectors, such as its booming advertising business, with the need to achieve consistent profitability.
Special focus is devoted to developing Audiobook platformwas recently launched to subscribers in the United States.

Outlining future prospects, Ek expects that 2024 will represent an important chapter for Spotify, helping to further strengthen the platform and direct it more towards achieving tangible results.

At the beginning of the year, the company announced its decision to lay off approximately 600 employees, equivalent to 6% of its total employees.
Later, in June, additional plans were announced to cut another 200 jobs, or 2% of the workforce.
These cuts also led to major changes at the executive level, with former content CEO Dawn Ostroff, a key player in Spotify’s expansion into audio streaming, leaving the company.

The reorganization carried out saw responsibilities assigned to Gustav Söderström and Alex Norström, both co-chairs.