Spotify Jobcut News: Music streaming company Spotify To Cut 17% Of Its Workforce

Music streaming company Spotify will lay off 17% of its workforce in a bid to save costs. Earlier, in January the company laid off 6% of this staff citing higher costs.

Impacted employees will reportedly be notified today and meet with human resources by the end of the day on Tuesday, said the music streaming company in a statement according to media reports.

The company will provide five months of severance pay to the departing employees, including healthcare support.

Last month, Spotify said it will change how it pays artists in 2024. The company announced that from early 2024, the music streaming app will require a minimum of 1,000 streams over 12 months before paying out royalties.

In the latest third quarter, the company swung to a profit helped by price hikes in its streaming services and growth in subscribers in all regions, and forecast that its number of monthly listeners would reach 601 million in the holiday quarter.

On Monday, Chief Executive Officer and founder Daniel Ek said in a note that was later posted on the company website, "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. I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented, and hard-working people will be departing us."

"I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance. We debated making smaller reductions throughout 2024 and 2025.

Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives. While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team," said the Spotify founder.

This is the company's second round of layoffs this year, after sacking 6% of its workforce in January, citing a difficult economic environment. In October 2022, the company retrenched 38 staffers from its Gimlet Media and Parcast podcast studios.

After the pandemic, the year 2022 proved to be challenging for tech firms globally as rate hikes by the US Federal Reserve made investors shy away from investing in growth stocks including tech stocks.

Spotify shares last closed 2.39% lower at $180.69 per share on Friday.