Music-streaming service Spotify to cut 6 percent of staff after chief executive admits being ‘too ambitious’ with spending during pandemic
Popular music-streaming service Spotify has said it plans to cut about 6 percent of its workforce, or 600 jobs, as its chief executive became the latest tech boss to admit the firm had expanded too rapidly during the coronavirus pandemic.
Chief executive Daniel Ek said in a blog post message to staff that he had been “too ambitious”.
“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,” Ek wrote.
“In hindsight, I was too ambitious in investing ahead of our revenue growth.”
Stockholm-based Spotify expanded its spending at twice the rate of its revenue in 2022, Ek wrote, as it invested heavily in its podcast business.
Ek said Dawn Ostroff, the head of content and advertising, would be leaving the firm after more than four years. Ostroff had been responsible for the podcast unit.
Spotify is less exposed than some tech companies to falling advertising revenues, as about 85 percent of its revenues come from subscriptions to its premium service, with the rest from the ad-supported service.
But the company said in October it would slow hiring through the rest of the year and into 2023.
“Over the last few months we’ve made a considerable effort to rein in costs, but it simply hasn’t been enough,” wrote Ek.
“I take full accountability for the moves that got us here today,” he added.
In spite of its popularity Spotify has never posted a full-year net profit.
Commenting on the Alphabet cuts on Friday, Wedbush analyst Dan Ives said the cuts in Silicon Valley were the result of “hypergrowth” during the pandemic.
“The reality is tech stalwarts overhired at a pace that was unsustainable,” he said.