The massive music streaming company Spotify announced on Monday that it will be cutting about 17% of its workforce in an effort to save expenses in the face of “dramatically” slower economic development.
Thanks to a 26% increase in active users for the third quarter, Spotify reported a remarkable quarterly operational profit of 32 million euros in October, up from a loss of 228 million for the same period the previous year.
CEO Daniel Ek sent a letter to staff that was viewed by AFP, stating, “I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance.”
“Took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing and new verticals in 2020 and 2021,” he added.
“However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”
Spotify has invested heavily since its launch to fuel growth with expansions into new markets and, in later years, exclusive content such as podcasts.
It has invested over one billion dollars into podcasts alone. In 2017, the company had around 3,000 staff members, more than tripling the figure to around 9,800 at the end of 2022.
The company has never posted a full-year net profit and only occasionally quarterly profits despite its success in the online music market.
