Spotify lays off 6% of workforce, loses content chief

Posted:
in iPod + iTunes + AppleTV edited January 23
Leading music streamer Spotify is cutting 600 staff in a "difficult but necessary" move to reduce costs, and in a restructure is losing Dawn Ostroff, head of content and advertising.




Following layoffs at Google, Microsoft, Amazon and most recently Apple retail, Spotify has announced redundancies as it "fundamentally" changes how it operates.

The announcement came in a blog post by Spotify CEO Daniel Ek. Initially, Ek says in the blog post that, "personally, these changes will allow me to get back to the part where I do my best work."

Ek then Dawn Ostroff has decided to leave. "Because of her efforts, Spotify grew our podcast content by 40x," he wrote, "drove significant innovation in the medium and became the leading music and podcast service in many markets."

"That brings me to the second update," he continues. "As part of this effort, and to bring our costs more in line, we've made the difficult but necessary decision to reduce our number of employees."

"To offer some perspective on why we are making this decision, in 2022, the growth of Spotify's OPEX outpaced our revenue growth by 2X," wrote Ek. "That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap."

"As you are well aware, over the last few months we've made a considerable effort to rein-in costs, but it simply hasn't been enough," he continued.

The staff affected are to receive on average five months of severance pay, plus pay for any accrued or unused vacations. They will also continue to receive healthcare benefits during their severance period.

Spotify is the most successful music streaming service. Recently, it and a consortium of other companies wrote to the EU asking for "decisive action" against alleged antitrust behavior from Apple Music.



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Comments

  • Reply 1 of 15
    CEOs don't choose to lay off employees because it's "difficult". They do it because it's easy. It's the fastest way to make the numbers look better. Notice that Ek is trying to spin it like the higher number of employees was holding him back from doing his best work. Completely ridiculous. 
    muthuk_vanalingamwilliamlondonFileMakerFellerOferlolliverwatto_cobraravnorodom
  • Reply 2 of 15
    lkrupplkrupp Posts: 10,341member
    Well, at least we know what that rant the other day was about, don’t we.
    williamlondonFileMakerFellerwatto_cobra
  • Reply 3 of 15
    larryjwlarryjw Posts: 967member
    The least important person in most organizations is the CEO. 
    Oferuraharawatto_cobra
  • Reply 4 of 15
    genovellegenovelle Posts: 1,435member
    CEOs don't choose to lay off employees because it's "difficult". They do it because it's easy. It's the fastest way to make the numbers look better. Notice that Ek is trying to spin it like the higher number of employees was holding him back from doing his best work. Completely ridiculous. 
    Of course it’s Apple’s fault that he chose to add employees at 2X the revenue growth. On the other hand Apple, the company that could more easily have afforded to do so, remained conservative with their hiring. Any logical person would have known the pandemic volume was temporary and would not continue indefinitely. 
    FileMakerFellerwilliamlondonlolliverwatto_cobra
  • Reply 5 of 15
    sbdudesbdude Posts: 183member
    The company that pays the smallest amount in royalties happens to be the least profitable. How does that work?
    Oferlolliverwatto_cobra
  • Reply 6 of 15
    danoxdanox Posts: 1,527member
    It’s Apple fault. :smile: 
    watto_cobra
  • Reply 7 of 15
    stompystompy Posts: 396member
    If 600 employees = 6% of their workforce, Spotify employed 10, 000.   

    wow
    watto_cobra
  • Reply 8 of 15
    stompy said:
    If 600 employees = 6% of their workforce, Spotify employed 10, 000.   

    wow
    Wow. How do you know? In the article there was never a number 10,000. 
  • Reply 9 of 15
    davidwdavidw Posts: 1,742member
    sbdude said:
    The company that pays the smallest amount in royalties happens to be the least profitable. How does that work?
    That's because nearly all of Spotify revenue comes from streaming music and podcast. I doubt that just streaming music and podcast is profitable for Apple, Google and Amazon, either. Not at the current price of a subscription. But at least with Apple, Google and Amazon, they have other sources of revenue to sustain any loss and can produce revenue from other benefits derived from their music streaming service, other than depending on revenue from subscriptions. Apple Music might help hardware sales, Google YouTube Music can provide personal data for targeted ads and Amazon Music and Amazon Music Unlimited is use to boost subscriptions to Prime. (Amazon Music is free for Prime members and Prime members gets a discount on Amazon Music Unlimited.)    
    watto_cobra
  • Reply 10 of 15
    davidwdavidw Posts: 1,742member

    genovelle said:
    CEOs don't choose to lay off employees because it's "difficult". They do it because it's easy. It's the fastest way to make the numbers look better. Notice that Ek is trying to spin it like the higher number of employees was holding him back from doing his best work. Completely ridiculous. 
    Of course it’s Apple’s fault that he chose to add employees at 2X the revenue growth. On the other hand Apple, the company that could more easily have afforded to do so, remained conservative with their hiring. Any logical person would have known the pandemic volume was temporary and would not continue indefinitely. 
    That's not what happened. It was OPEX (operating expense) that was outpacing revenue growth by 2x. Most likely from the added expense of starting their podcast service. And in order to bring that down OPEX, they laid off employees. With labor cost being one of  biggest contributor to OPEX, in most businesses. 

    "To offer some perspective on why we are making this decision, in 2022, the growth of Spotify's OPEX outpaced our revenue growth by 2X," wrote Ek. "That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap."

    Now i could be wrong and maybe "OPEX" means something other the "operating expense" in the EU. It's usually expressed as "OpEX" (with a lower case P).  
    muthuk_vanalingamwatto_cobraravnorodom
  • Reply 11 of 15
    larryjw said:
    The least important person in most organizations is the CEO. 
    I would say that depends on the CEO.
    watto_cobra
  • Reply 12 of 15
    urahara said:
    stompy said:
    If 600 employees = 6% of their workforce, Spotify employed 10, 000.   

    wow
    Wow. How do you know? In the article there was never a number 10,000. 
    9.800, to be more precise: https://www.fortuneindia.com/enterprise/spotify-lays-off-6-employees-globally/111273
    Also, the 6% are mentioned in the headline.

    Edit: Also, they grew quite significantly ob er the last years, if the source is to be believed:

    Interactive chart of Spotify Technology (SPOT) annual worldwide employee count from 2018 to 2022.
    • Spotify Technology total number of employees in 2021 was 6,617, a 81.24% increase from 2020.
    • Spotify Technology total number of employees in 2020 was 3,651, a 17.12% decline from 2019.
    • Spotify Technology total number of employees in 2019 was 4,405, a 20.65% increase from 2018.
    • Spotify Technology total number of employees in 2018 was 3,651, a 23.34% increase from 2017
    edited January 24 xyzzy01watto_cobraravnorodom
  • Reply 13 of 15
    xyzzy01xyzzy01 Posts: 111member
    larryjw said:
    The least important person in most organizations is the CEO. 
    Hardly. Would you say that about Steve Jobs, to give another example? Daniel Ek founded Spotify, and thus streaming as we know it today. 
    muthuk_vanalingamwilliamlondon
  • Reply 14 of 15
    MadbumMadbum Posts: 436member
    Service is crap and gone down hill

    Spotify will disappear soon 
    watto_cobra
  • Reply 15 of 15
    danoxdanox Posts: 1,527member
    larryjw said:
    The least important person in most organizations is the CEO. 
    Not with a pharmaceutical company a tech company or anything that involves engineering, manufacturing, or medical, and there are many more companies that require specialized knowledge 99% of the time at the top in short it can’t be run by just a MBA, Salesman, Accountant, or Lawyer.
    watto_cobra
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