Spotify axes 1,500 jobs as bloodbath in the tech industry continues
Spotify will cut nearly a fifth of its workforce as the tech industry's job carnage continues.
The music streaming giant has said it will cut about 1,500 staff – or about 17 percent of its workforce – as it battles to cut costs.
This is the third round of layoffs the group has announced so far this year.
Spotify CEO Daniel Ek said he made the “difficult” decision because growth is slowing “dramatically.”
The Swedish company has suffered under an era of high interest rates and cost of living pressures, forcing households to rein in their spending.
Streaming sensation: Last week, singer Taylor Swift was crowned the most listened to artist worldwide on Spotify
Spotify benefited from cheap loans during the pandemic as central bankers cut interest rates in response to Covid.
But Ek said: 'We are in a very different environment now. Economic growth has slowed dramatically and capital has become more expensive.
Spotify is no exception to this reality.” The update contrasts with Spotify's recent results.
The group made a profit of £55.7 million for the three months to September – its first quarterly profit in more than a year – as it benefited from recent price rises for subscribers.
And even Ek acknowledged that job losses will “feel surprisingly large” for many people because of this backdrop.
The company – which has around 9,000 employees worldwide and just under 1,000 in Britain – has traditionally struggled to turn a profit due to rising content costs, an advertising slowdown and fierce competition.
Spotify cut about 6 percent of its workforce in January and another 200 podcast jobs in June. It's not alone.
Silicon Valley's biggest names have also slashed their workforces this year, with mass layoffs at Amazon, Facebook owner Meta and Google.
Dan Ives, technical analyst at asset manager Wedbush, said: “Spotify has had to rip off the band-aid as subscriber growth remains a challenge and the big, expensive bet on podcasts has been lackluster.”
Ek has previously admitted the company made mistakes during its £1 billion-plus spend on podcasting, including heavy investment in Harry and Meghan's Archetypes series.
And the music offering is still his bread and butter, which also proves to be lucrative for artists.
Last week, singer Taylor Swift was crowned the most listened to artist worldwide on Spotify.
Estimates suggest she will make more than $100 million from Spotify streams alone by 2023