Spotify, the renowned Swedish music-streaming platform, has disclosed plans to reduce its workforce by 17%, equating to approximately 1,500 jobs, in a bid to streamline operational costs. CEO Daniel Ek, acknowledging the difficulty of this decision, attributed it to a significant slowdown in economic growth.
With a current employee base of around 10,000, Ek emphasized the necessity of taking “substantial action to rightsize our costs” to align with the company’s objectives. In a blog post, he expressed his understanding of the profound impact these cuts would have on the team, acknowledging the pain associated with such decisions.
“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,” he said.
The rationale behind these job cuts, as outlined by Ek, includes the considerable deceleration in economic growth and the surge in capital costs. He pointed out that Spotify had seized the opportunity of lower-cost capital in 2020 and 2021 to make substantial investments in the business.
This recent wave of layoffs follows Spotify’s prior reduction of approximately 6% of its workforce in June of the current year, along with additional job cuts earlier in January. Ek acknowledged the substantial nature of these reductions, especially in light of the company’s positive earnings report and performance. While alternatives of smaller reductions were debated for the years 2024 and 2025, Ek concluded that a significant course of action was the most effective means to address the gap between financial goals and current operational costs.
“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,” said Ek.
“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.”
In its latest financial results, Spotify reported a profit of €65 million (£55.7 million) for the three months ending in September. This marked the platform’s first quarterly profit in over a year, attributed to factors such as price adjustments and an increase in subscriber numbers. In Q3 2023, Spotify’s premium subscribers grew 16% year-over-year to 226 million.