Spotify said Monday it will cut about a fifth of its workforce, at least the third round of layoffs, as it struggles to become consistently profitable after spending aggressively to expand beyond music streaming into areas like podcasting.
Spotify CEO Daniel Eck wrote A note to staff The company’s website posted that the platform now needs to be “rightsized” to account for a “very different environment”. Spotify will let go of about 1,500 people, or 17 percent of its workforce.
“Economic growth has slowed dramatically and capital has become more expensive,” Mr Eck said. “Despite our efforts to reduce costs last year, our cost structure is still too large for where we need to be,” Mr Eck added.
Despite being the largest music streaming platform, Spotify has long struggled to be profitable because of the terms of its licensing agreements with record labels and music publishers. The company has branched out into new areas such as podcasting, including buying podcast studio Gimlet for $230 million in 2019 and The Ringer for $200 million. In 2020. It has made expensive deals with former President Barack Obama and First Lady Michelle Obama, as well as well-known figures such as Prince Harry and wife Meghan. Recently, the company has expanded in the audiobook.
The changes have helped Spotify attract listeners and subscribers, but not financially. In the first nine months of 2023, Spotify 462 million dollars lostThe loss more than doubled over the same period in 2022.
But the company turned a small profit last quarter, its first in more than a year, in what Chief Financial Officer Paul Vogel called at the time “an important turning point for the business.” Spotify had 226 million paying subscribers at the end of September and is on track to add 30 million for the full year, 50 percent more than expected in early 2023. The company recently raised prices for its membership in more than 50 countries.
Spotify has announced its biggest job cuts this year. In June, Spotify cut nearly 200 jobs, including A lot of podcasting is involved. Another 600 employees were laid off in January.
As part of a package of job cuts announced Monday, Spotify said the average employee will receive about five months of severance pay.
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