Daniel Ek, CEO of Swedish music streaming service Spotify, in 2016. On Monday, Ek introduced Spotify would layoff 17% of workers.

Toru Yamanaka/AFP by way of Getty Photographs

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Toru Yamanaka/AFP by way of Getty Photographs

Daniel Ek, CEO of Swedish music streaming service Spotify, in 2016. On Monday, Ek introduced Spotify would layoff 17% of workers.

Toru Yamanaka/AFP by way of Getty Photographs

The music streaming large Spotify has introduced it is reducing 17% of its workforce in a dramatic transfer aimed toward slashing prices.

In a memo addressed to workers, CEO Daniel Ek mentioned it was crucial that the corporate “rightsize” its monetary scenario after hiring too many individuals in 2020 and 2021, when capital was cheaper.

“The Spotify of tomorrow have to be outlined by being relentlessly resourceful within the methods we function, innovate, and deal with issues,” Ek wrote. “This type of resourcefulness transcends the fundamental definition — it is about making ready for our subsequent part, the place being lean is not only an possibility however a necessity.”

This newest spherical of cuts — the third this 12 months — equates to about 1,500 jobs, in keeping with a CNBC supply that mentioned the Swedish firm at the moment employs about 9,000 individuals throughout greater than 40 world workplace places.

Throughout the tech trade, tens of 1000’s of positions have been minimize within the final 12 months as a pandemic-era boon continues to fade. Based on the tech job tracker layoffs.fyi, greater than 250,000 tech employees have been laid off because the begin of the 12 months.

Nonetheless, the scale of the Spotify cuts might really feel “surprisingly massive” for the second, Ek wrote.

The corporate posted $34 million in working earnings throughout its third-quarter earnings name, its first quarterly revenue since 2021. Decrease personnel prices, pushed by two smaller rounds of cuts, was one of many components cited for saving prices.

The corporate minimize 6% of its workforce, about 600 workers, in January. It laid off one other 2% of workers, roughly 200 roles, in June.

On the similar time, Spotify raised costs on its subscription plans and set a lofty purpose to succeed in a billion customers by 2023. It at the moment has over 570 million of them — rather less than double the variety of listeners the platform attracted in 2020.

The corporate has additionally shared its imaginative and prescient to transcend music and develop in audiobooks and podcasting, an area that is feeling a monetary pressure and steep competitors for each listeners and advertisers.

Since 2019, Spotify has spent near a billion {dollars} shopping for up podcasting studios, signing unique offers with celeb hosts and, most just lately, investing in generative AI for advert creation.

However all this funding has include high-profile complications — and nonetheless failed to show a revenue. The corporate’s layoffs in June had been particularly centered on downsizing its podcast division.

As of 8:30 a.m. on Monday, Spotify’s shares had been up about 5% in premarket buying and selling.

Departing workers will probably be supplied roughly 5 months of severance pay plus healthcare protection, trip pay, immigration assist and two months’ price of career-search help, in keeping with Ek’s assertion.