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The massive music streaming company Spotify announced on Monday that it will be cutting about 17% of its workforce to save costs in the face of "dramatically" slower economic growth.
Thanks to a 26% increase in active users for the third quarter, Spotify reported a remarkable quarterly operating profit of 32 million euros in October, up from a loss of 228 million for the same period the previous year.
“I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” chief executive Daniel Ek wrote in a letter to employees, which was seen by AFP.
He said that 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 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.”
Since its inception, Spotify has made significant investments to support growth through market expansions and, in later years, the addition of exclusive content like podcasts.
It has made more than $1 billion in podcast investments alone.
The company employed about 3,000 people in 2017. By the end of 2022, that number had more than tripled to approximately 9,800.
Despite its success in the online music market, the company has never posted a full-year net profit and only occasionally posted quarterly profits.
