Spotify cuts (again) its workforce, penalized by a “spectacular” economic slowdown

2023-12-04 09:28:00

To face the future, Spotify must cut staff. The number one audio platform announced this Monday a reduction of “ environ 17%” of these, or some 1,500 people. The cause is the slowdown ” spectacular “ of economic growth.

“To align Spotify with our future goals and ensure we are well-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company”thus justified the general director Daniel Ek in a letter to the group’s employees, consulted by AFP.

Strong increase in the number of subscribers

And yet, the platform has continued to invest since its launch to fuel its growth. It expanded into new markets, then offered exclusive content, such as podcasts, in which it invested more than a billion dollars. If in 2017 it had around 3,000 employees, this number has more than tripled to reach around 9,800 people by the end of 2022.

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Not to mention that it continues to gain new users. According to the latest figures announced on October 24, their number had increased by another 26% in the third quarter. The group thus had 574 million active users at the end of the quarter, or 23 million more over one year, which represents “its second strongest progression” of its history, according to the press release. He therefore hoped to exceed the mark of 600 million active users by the end of the year.

The number of paying subscribers increased by 16%. However, it is the latter which constitute the bulk of its turnover, at 226 million. This had also, during this period, increased by 11% to 3.4 billion euros and its operating profit had reached 32 million euros, compared to a loss of 228 million a year earlier. . It is “a truly exceptional quarter. We are improving step by step”welcomed Daniel Ek on X (formerly Twitter).

“I am aware that for many, a reduction of this magnitude may seem surprising given the recent positive earnings report and our performance”wrote the general director in his letter to employees.

“A very different environment”

According to Daniel Ek, in 2020 and 2021, the company “took advantage of the opportunity presented by lower cost capital and invested significantly in team expansion, content enhancement, marketing and new verticals.”

“However, we find ourselves in a very different environment today. And despite our efforts to reduce costs last year, our cost structure to achieve our goals is still too high”he added.

Especially since, since its creation, the platform has never posted a net profit for the entire year and only occasionally makes quarterly profits. At the beginning of June, it had already announced the elimination of around 200 positions in its podcast activities, or 2% of its workforce, following a first wave of 600 job cuts at the start of the year.

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(With AFP)