Tue, 31 January 2023
The Daily Ittefaq

Spotify cuts 6% of its workforce amid revenue crunch

Update : 24 Jan 2023, 08:21

The music streaming app has said it needs to cut costs as operating expenses outpace revenues. The cuts are the latest in a string of mass layoffs in the tech world as the pandemic-fueled growth boom comes to an end.

Music streaming giant Spotify announced on Monday it was cutting 600 jobs, or up 6% of its global workforce, joining other tech giants who have been forced to downsize.

The Stockholm-based company, which employs nearly 10,000, intends to reshuffle its management as part of the revamp in an effort to narrow the gap between its operating costs and revenues.

CEO Daniel Ek said last year saw operating costs grow to double the revenues.

"In hindsight, I was too ambitious in investing ahead of our revenue growth." Ek said on Spotify's official blog. "I take full accountability for the moves that got us here today."

Did Spotify grow too fast?
Like many other tech companies, Spotify expanded its workforce to cater to the exponential increase in demand during pandemic lockdowns.

In 2017, Spotify employed around 3,000 staffers. Its workforce more than tripled in the years that followed, reaching some 9,800 by the end of 2022.

Its spending didn't only pour into salaries but also into product investment, as the app spent over a billion dollars to acquire exclusive podcasts.

The gap between the spending and revenue "would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap," Ek said.

In recent months, as the slowed global economy has punished advertising worldwide, tech giants such as Amazon, Meta, Google and Microsoft have also announced sweeping job cuts.

 

More on this topic

More on this topic