Music streaming giant Spotify Technology SA said yesterday that it would reduce its number of employees by about 17 percent in a bid to cut costs amid “dramatically” slower economic growth.
Spotify in October posted a rare quarterly operating profit of 32 million euros (US$34.79 million), compared with a loss of 228 million euros for the same period a year earlier, on the back of 26 percent growth in active users for the third quarter.
“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.
Photo: Reuters
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,” he said.
“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,” Ek said.
Spotify has invested heavily since its launch to fuel growth with expansions into new markets and, in later years, exclusive content such as podcasts.
It has invested over US$1 billion into podcasts alone.
In 2017, the company had abount 3,000 staff members, more than tripling the figure to about 9,800 by the end of last year.
The company has never posted a full-year net profit and only occasionally posts quarterly profits, despite its success in the online music market.
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