It was reported yesterday that Spotify was set to announce layoffs this week as a way to cut costs. Not long after this, the music and podcast streaming company has officially confirmed that they are letting go of some of their employees.
In a memo posted on Spotify's website, CEO Daniel Ek announced that the company will lay off about 6% of its workforce. According to Ek, they are making this decision because Spotify's operational expenditures outpaced its revenue growth by 100%. "That 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," he stated.
The CEO also said that while the company made significant efforts to control costs, it still wasn't enough.
"Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth."
Those who are getting the pink slip will be entitled to five months of severance pay, immigration support, healthcare benefits, and outplacement services for two months. Spotify's human resources business partner will also work with laid off employees whose immigration statuses are connected with their employment.
Spotify's dismissal announcement follows the recent wave of layoffs in the technology industry. In November of last year, Meta and Twitter let go of a significant number of their employees. And just this month, Microsoft, Amazon, and Google announced huge layoffs as a way to significantly reduce costs.
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