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Layoffs continue as music streaming platform Spotify announces that 6% of its 9,808 full-time staff will be let go.
Speaking on the need for speed and efficiency, as well as the essence of having a balance between both, Daniel Ek, CEO at Spotify, said: “As part of this effort, and to bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees.
Over the next several hours, one-on-one conversations will take place with all impacted employees. And while I believe this decision is right for Spotify, I understand that with our historic focus on growth, many of you will view this as a shift in our culture. But as we evolve and grow as a business, so must our way of working while still staying true to our core values.”
Shedding some light on the reason behind this move, the CEO said the growth of Spotify’s OPEX outpaced the company’s revenue growth by 2X. “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 said.
“As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough. So while it is clear this path is the right one for Spotify, it doesn’t make it any easier—especially as we think about the many contributions these colleagues have made.”
“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. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today.”
Spotify provides music and podcasts to entertain everyone via phones, computers, tablets and more with millions of tracks and episodes for every moment. The digital music service provider has entered into several partnerships with companies like Samsung, Salesforce and others to enhance its offerings to users.
The company has assured to compensate affected employees with the following:
- Severance pay: The company will start with a baseline for all employees with the average employee receiving approximately 5 months of severance. This will be calculated based on local notice period requirements and employee tenure.
- PTO: All accrued and unused vacation will be paid out to any departing employee.
- Healthcare: The company will continue to cover healthcare for employees during their severance period.
- Immigration support: For employees whose immigration status is connected with their employment, HRBPs are working with each impacted individual in concert with our mobility team.
- Career Support: All employees will be eligible for outplacement services for 2 months.
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