Spotify is slashing 17% of it’s workforce affecting 1,500 workers in the second round of cuts this year after months of layoffs at Microsoft, Amazon and Alphabet

Spotify has become the latest tech giant to announce major layoffs, with the streaming giant's CEO Daniel Ek announcing around 1,500 employees will be laid off as growth slows 'dramatically'.

The Swedish company currently employs approximately 9,000 employees. Ek said in a memo that cuts would “correct our costs,” while conceding it would be “incredibly painful for our team.”

“I recognize that this will impact a number of individuals who have made valuable contributions. To put it bluntly, many smart, talented and hardworking people will leave us,” Ek said.

In October, Microsoft laid off nearly 700 people from its social media site LinkedIn, bringing the company's total layoffs this year to nearly 11,000.

Since August 2022, there have been mass layoffs at Twitter, where 7,500 jobs were lost as part of Elon Musk's takeover, another 11,000 people were laid off at Facebook, while Google let go of 12,000 people and Amazon furloughed about 18,000 employees in the meantime. In total, approximately 225,000 jobs will be lost in the technology sector by 2023.

Last January, Spotify cut about six percent of its workforce, but Monday's announcement dwarfs that. Ek said the company hired more people in 2020 and 2021 due to lower capital costs. While production has increased, much of that has been related to having more resources.

Spotify CEO Daniel Ek, pictured here, said he understood the cuts would be 'incredibly painful' for the company

This follows the company's layoff of six percent of its workforce earlier this year

According to the Financial Times, Spotify executives have been trying to cut costs since the company's “expensive move into podcasting,” which “tested investors' patience.”

In July, Harry and Meghan announced they had parted ways with Spotify after signing an exclusive $20 million podcast deal in 2020.

In the third quarter, the company posted a profit, helped by price increases for its streaming services and subscriber growth across all regions. The company predicted monthly listeners would reach 601 million in the holiday quarter.

On Monday, he said a reduction of this magnitude will feel large given its recent positive earnings report and performance.

“By most measures we were more productive, but less efficient. We have to be both,” Ek said.

“I realize that to many, a reduction of this magnitude will feel surprisingly large given the recent positive earnings report and our performance. We have discussed making smaller reductions in 2024 and 2025,” Ek said.

“Nevertheless, given the gap between our financial target and our current operating costs, I determined that a substantial action to correct our costs was the best option to achieve our objectives.”

According to Business insider, artists earn between $.003 and $.005 per stream, although Spotify itself does not pay per stream.

Instead, they pay per “stream share,” a figure determined by adding the number of times music owned or controlled by a particular rights holder is streamed divided by the total number of streams in the market on which it is streamed every month.

Last month, Spotify announced a new policy regarding royalty payments, eliminating payment for songs with fewer than 1,000 annual streams starting in 2024.