Swedish audio streaming and media services provider Spotify has announced plans to reduce its workforce by 6% as it battles macroeconomic factors.
The company which currently has about 9,800 employees, with its proposed layoff plan of 6%, will see about 600 of its employees impacted.
Reports disclose that one-on-one conversations with affected employees will commence over the next hours. The company’s CEO Daniel Ek who wrote in a note published on the company’s website disclosed that the macro environment was what spurred the company to reduce its workforce by 6%.
The note read in parts,
“As part of our effort 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 most of our way of working while staying true to our core values.
“Like many other leaders, I hoped to sustain strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown 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”.
Investors King understands that the music streaming giant added to its headcount during the pandemic, but was forced to make significant reductions in response to a reduction in its advertising revenue and the current economic downturn.
Last year, the company was faced with an unfriendly period as it witnessed a 66 percent drop in share prices, also failing to provide investors with returns on investment.
Meanwhile, laid-off employees will receive approximately 5 months of severance which will be calculated based on local notice period requirements and employee tenure. Also, the company will continue to cover healthcare for employees during their severance period, and they will be eligible for outplacement services for 2 months.