Music streaming giant Spotify announced Monday that it will lay off around 1,500 employees, or 17% of its workforce, in an effort to further reduce expenses. The latest round of job cuts come after the company let go of 600 staff members in January and 200 more workers in June.
Spotify CEO Daniel Ek said in a letter to employees that the company “put significant emphasis” on its growth in 2021 and 2022, as the state of the economy allowed it to do so, but “we now find ourselves in a very different environment.”
“While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities,” Ek said. “This brings me to a decision that will mean a significant step change for our company. To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company.
He added, “I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance. We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives. While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team.”
In the letter, Ek explained that Spotify “took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals,” which resulted in “robust growth” for the company.
During the third quarter, Spotify turned a profit, growing its number of subscribers in all regions.
The streaming platform also benefited from the success of Taylor Swift, who is now a billionaire — a culmination of her immensely profitable Eras tour, several Billboard top-10 albums and her lucrative “Taylor Swift: The Eras Tour” film that was featured at theaters across the country.
After this year’s Spotify Wrapped was announced, Swift was named Spotify‘s top-streamed artist of 2023. She will earn more money than any artist ever has on the platform, Billboard reported.
Spotify announced Wednesday that users have listened to her songs more than 26.1 billion times since Jan. 1. The record-setting streams earned her about $97 million in recorded music royalties, according to Billboard.
The company also forecast its monthly listeners would reach 601 million this quarter alone.
Despite this growth, Ek said the economy has declined and that “capital has become more expensive.”
He also said the extra personnel helped achieve higher profits but struggled to maintain efficiency in the number of dollars spent.
“By most metrics, we were more productive but less efficient. We need to be both,” Ek said in the letter.
“We debated making smaller reductions throughout 2024 and 2025,” he continued. “Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives.”
Spotify’s cuts come as other tech companies also saw reductions in their workforce this year, including Google, Amazon, Microsoft and Meta.
Reuters contributed to this report.