Spotify has laid off its third round of workers. Daniel Ek, the company’s founder and CEO, blamed sluggish economic growth and rising capital expenses. Over 1,500 employees will be laid off, receiving five months of severance and two months of outplacement.
Spotify has announced its Round 3 of layoffs. The corporation aims to become “both productive and efficient” by cutting 17% of its workers.
Why is the corporation laying off again?
Spotify founder and CEO Daniel Ek wrote to employees that right-sizing the team is essential to facing “challenges ahead”.
Staff layoffs are due to sluggish economic growth and rising capital expenses, according to Ek. He said in 2020 and 2021, the company invested extensively in the business with lower-cost capital.
He remarked, “I made the painful decision to cut company-wide personnel by 17%. I understand this will affect many contributors. Simply put, many clever, talented, and hardworking people will leave us.”
How many jobs will this layoff affect?
This employment loss will affect approximately 1,500 of Spotify’s 8,800 employees, according to TechCrunch.
Those laid off will receive what compensation?
After the third layoff of 2023, Spotify will set a baseline for all employees, with the average receiving five months of severance. Local notice period requirements and employee tenure will determine this.
Spotify will fund severance workers’ healthcare. Two months of outplacement is required for all employees.
The CEO stated, “I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance. We debated lesser cuts in 2024 and 2025.”
This is the third layoff this year.
Previous 2023 layoffs
In June 2023, the music streaming platform laid off 200 workers, or 2%. Due to a corporate reorganization, the podcast division lost staff.
Additionally, in January 2023, Spotify cut 6% of its global staff, or 600 employees.
Conclusion
Spotify has announced its third round of layoffs to cut 17% of its workforce to boost productivity. Daniel Ek, the company’s founder and CEO, blamed sluggish economic growth and rising capital expenses for the layoffs. Over 1,500 Spotify employees were laid go. Severance pay for laid-off workers will start at five months dependent on local notice period and employee tenure. Spotify will give outplacement and healthcare for two months during severance. The first two layoffs of the year occurred in June and January 2023. Spotify laid off 200 workers in June 2023 and 600 in January 2023. The company’s CEO acknowledged the layoffs’ impact on employees and expressed concerns about future performance.
