Spotify will lay off about 1,500 employees, or one-sixth of its workforce, to downsize after a period of aggressive spending on podcasts and audiobooks, the company announced this morning (December 4). The latest round of cuts is the third of the year, as the company fails to curb a pattern of financial losses amounting to hundreds of millions of dollars annually, as The New York Times reports. “Economic growth has slowed dramatically and capital has become more expensive,” co-founnder and CEO Daniel Ek said in the company statement. “Despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”
The move follow some 800 job cuts earlier this year, part of a strategy that Ek described in his statement as “preparing for our next phase, where being lean is not just an option but a necessity.” Spotify’s shares jumped about 10 percent in early trading, The New York Times noted this morning; the bump had leveled to roughly 7 percent by the afternoon. The share price has more than doubled this year, restoring some value lost since its peak in early 2021.
As it seeks new cost-cutting methods, Spotify faces continued criticism of its payout model, including a recent announcement that it would eliminate payments for songs with less than 1,000 streams. Last week, “Weird Al” Yankovic recorded a Spotify Wrapped video mocking the meager payouts, joking that his 80 million streams had earned him enough for “a nice sandwich at a restaurant.”