Spotify To Layoff 17% Of Workforce: 'Being Lean Is Not Just An Option But A Necessity' Says CEO Daniel Ek

Spotify’s SPOT CEO, Daniel Ek revealed a major restructuring plan for the company which will result in a workforce reduction of around 17%.

What Happened: The announcement came to light earlier today when Ek issued a note to all employees. Ek stressed that for Spotify to grow as a sustainable business and align with future goals, the company needs to make tough decisions in the face of a challenging economic environment.

“To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company,” Ek stated.

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Ek rationalized the workforce reduction as a necessary step to bridge the gap between Spotify’s financial aspirations and its current operational costs. Despite the company’s cost reduction efforts over the past year, Ek highlighted that the cost structure is still too large.

“This kind of resourcefulness transcends the basic definition – it's about preparing for our next phase, where being lean is not just an option but a necessity,” he said.

This decision follows Spotify’s significant investments in team expansion, content enhancement, marketing, and new verticals throughout 2020 and 2021. Although these investments have facilitated Spotify’s growth, they have also necessitated greater efficiency.

In his note, Ek outlined the next steps for affected employees, which include severance pay, payout of accrued and unused vacation, healthcare coverage during the severance period, immigration support, and career support services.

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