Spotify will lay off some 6% of its 6,600-strong workforce as the streaming giant is the latest tech firm to undertake cost-cutting measures to cope with a struggling economy.
The Sweden-based company will shed some 400 employees who will be paid an aggregate of between $38 million and $48 million in severance, according to Bloomberg News.
Spotify also announced the departure of Dawn Ostroff, the company’s chief content and advertising business officer. Ostroff leaves amid a company-wide reorganization.
A Spotify spokesperson referred The Post to a statement by company CEO Daniel Ek, who said that the firm was seeking to “improve efficiency.”
“As part of this effort, and to bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees,” Ek said.
Spotify has announced the departure of Dawn Ostroff, chief content and advertising business officer.The Hollywood Reporter via Getty
The CEO said that management will initiate “one-on-one conversations” with “all impacted employees.”
“As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough,” Ek said.
“So while it is clear this path is the right one for Spotify, it doesn’t make it any easier — especially as we think about the many contributions these colleagues have made.”
Terminated employees will receive approximately five months severance, accrued and unused paid time off, and health insurance during the severance period, according to Ek.
Spotify, a publicly traded company listed on the New York Stock Exchange, has seen its share price dip from an all-time high of $364 in the winter of 2021 to just $98 as of early Monday morning.
Daniel Ek, the CEO of Spotify, said the layoffs were necessary to “improve efficiency.”Bloomberg via Getty Images
Shares of Spotify are up by more than 4.6% in pre-market trading as of 8 a.m. Eastern time on Monday.
The company is scheduled to announce its fourth quarter earnings report next week.
Spotify missed its earnings per share targets in both the second and third quarter of this fiscal year, though it barely beat revenue estimates as it saw a growth in the number of paid subscribers.
As of October, the streaming service reported that it had 456 million monthly active users for the third quarter — a year-over-year increase of 20%.
The Sweden-based streaming giant reported disappointing third quarter earnings this past October.AFP via Getty Images
Spotify also counted 195 million paid subscribers, which is up 13% from the same period last year.
The announced layoffs come days after Google’s parent company, Alphabet, said that it would be culling some 12,000 jobs — or 6% of its workforce — from its payrolls. The search engine employed some 187,000 people worldwide as of late last year.
Last week, Amazon began notifying its employees that it would be reducing headcount by 18,000 workers.
Microsoft also said that it would be downsizing its workforce by some 5% by laying off 10,000 people.
In the last year, an estimated 70,000 tech workers have been laid off from companies including Tesla, Robinhood, Snap, Netflix, Stripe, Shopify, Coinbase, Salesforce, Twitter, and Meta.
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