Recently, although Spotify has seen significant growth in users and revenue, the company suddenly announced global layoffs, accounting for about 17% of the total number of employees, and about 1,500 people will be affected. Spotify CEO Daniel Ek said that while the company has started to make a profit in recent months, streamlining the team has become a necessary move in the current context of slowing economic growth and rising capital costs.
EK acknowledged that despite the company's earnings report, the layoffs were still a shock to employees. He explained that Spotify had previously hired heavily in the early days of the pandemic due to lower capital costs, but now had to cut costs. He stressed that the company needs to be leaner and more efficient in the future.
Retrenched employees will receive an average of five months of severance pay and medical insurance for the duration of the term. The layoffs are another large-scale personnel adjustment for Spotify, following two rounds of layoffs earlier this year and in June. At the same time, Spotify has also boosted its ad-free subscription plan**.
Spotify isn't the only company making layoffs after experiencing a hiring spike. Companies such as Amazon, Nextdoor, and LinkedIn have also laid off large numbers of employees in recent months. LinkedIn, for example, made layoffs despite announcing a 5% increase in its fiscal fourth-quarter annual revenue. In September, Epic Games also laid off hundreds of employees and took out its streaming service, Bandcamp.