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Music streaming service Spotify will cut staff by 'approximately 17%'

The announcement comes despite Spotify posting a rare quarterly operating profit of €32 million in October.

LAST UPDATE | Dec 4th 2023, 12:33 PM

MUSIC STREAMING GIANT Spotify said today it will reduce the number of its employees by around 17% in a bid to cut costs amid “dramatically” slower economic growth.

This equals around 1,500 posts that will be axed.

In a statement to The Journal, Spotify said it would not be disclosing the regional impact of these job losses.

It is also not known how many people in Ireland are employed by the music streaming service. 

In its latest annual report for 2022, Spotify said it employes 1,294 people across 23 countries, including Ireland.

In October, Spotify posted a rare quarterly operating profit of €32 million, compared to a loss of €228 million for the same period a year earlier, on the back of 26% growth in active users for the third quarter.

“I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” chief executive Daniel Ek wrote in a letter to employees.

He said that in 2020 and 2021, the company “took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing and new verticals.”

“However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”

Spotify has invested heavily since its launch to fuel growth with expansions into new markets and, in later years, exclusive content such as podcasts.

It has invested over one billion dollars into podcasts alone.

In 2017, the company had around 3,000 staff members, more than tripling the figure to around 9,800 at the end of 2022.

The latest round of layoffs follows an announcement in January of this year that Spotify was to cut its workforce by 6%.  

The company has never posted a full-year net profit and only occasionally quarterly profits despite its success in the online music market.

Over the summer, Spotify increased the cost of its ad-free, premium services in more than 50 countries, including Ireland.

© AFP 2023