Spotify to lay-off 1,500 employees to “reduce costs”

Spotify is laying off around 1,500 employees in an attempt to “reduce costs”, its CEO Daniel Ek has announced.

In a memo shared to Spotify’s website yesterday (4th December), Ek said he had made the “difficult” decision to streamline the company’s workforce with economic growth slowing “dramatically.”

“To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company,” Ek’s statement reads.

“Considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to right-size our costs was the best option to accomplish our objectives,” he added. “To be blunt, many smart, talented and hard-working people will be departing us.”

The news comes as part of a “significant” strategy shift for the music-streaming company, which currently employs around 9,000 people. Despite enjoying “robust growth” in the past year, and reporting quarterly profits of €65m (£55.7m), the company has become “less efficient” and moved away from the “resourcefulness” that defined its early days as a tech start-up, Ek said.

One-on-one meetings with impacted staff would take place before the end of the day on Tuesday, the memo notes. Employees will receive around five months of severance pay on average, alongside holiday pay, and healthcare coverage for the severance period.

This is Spotify’s third major round of layoffs conducted this year. In January, the company announced it would be laying off 6 percent of staff, or roughly 600 employees, followed by the dismissal of a further 200 roles from its podcast division in June.

Read the full memo sent to Spotify staff here.

Earlier this month, the streaming giant announced it will scrap artist royalties for tracks under 1,000 streams, in an attempt to tackle what it describes as “payments lost in the system.”

Last month, details of Spotify's Super Premium subscription service were leaked.