Spotify will lay off 6 percent of its workforce worldwide, the company’s CEO Daniel Ek announced in a memo to all employees today. Spotify had just over 9,800 full-time employees as of last earnings report, meaning today’s layoffs affect just under 600 employees. Dawn Ostroff, Head of Content and Ads, who has been instrumental in growing Spotify’s podcasting business, is also leaving the company.
Ek announced the layoffs as part of an organizational restructuring aimed at increasing efficiencies, cutting costs and speeding up decision-making processes. “As part of this effort, and to better align our costs, we have made the difficult but necessary decision to reduce our headcount,” he writes.
Affected employees will be informed “in the next few hours” and will receive an average of five months’ severance pay, during which the company will continue to cover their healthcare costs.
“In hindsight, I was too ambitious to invest ahead of our sales growth”
“Like many other executives, I hoped to sustain the strong tailwinds of the pandemic and believed that our broad global business and reduced exposure to the impact of an advertising slowdown would isolate us,” writes Ek. “In hindsight, I was too ambitious to invest ahead of our sales growth.”
“I take full responsibility for the steps that brought us here today,” said the CEO.
One of the most prominent departures is Dawn Ostroff, head of content and ads business, who credits Ek with increasing Spotify’s podcast content “40x.” Responsibility for content, advertising and licensing now rests with Chief Business Officer Alex Norstrom.
Despite being the world’s largest music streaming service, Spotify has historically focused on growth rather than quarterly earnings. In recent years, it has invested heavily in podcasts and, more recently, audiobooks to attract users to its platform, and at the time of its last earnings release, Spotify had 195 million premium subscribers and 456 million monthly active users.
In its most recent quarterly results, the company reported total revenues of 3 billion euros (about 3.3 billion US dollars, up 21 percent year-on-year), with 2.7 billion euros (about 2.9 billion US dollars) from Premium subscribers and ad-supported revenue came to 385 million euros (about 419 million dollars). It posted an operating loss of 228 million euros (about $248 million) for the quarter.