This is a move I just don’t understand. We are officially in December. Thanksgiving is behind us and folks are just doing their best to not only make ends meet, but trying to have a decent holiday season. So, I guess it’s a good a time as any to slash jobs. Or at least that’s what’s going through the minds of the powers that be at Spotify.
Too big and failed
Today, Spotify has announced that it will be laying off 17 percent of its workforce. This came via a press release from CEO Daniel Ek. Apparently, there are “challenges ahead” and chose to just make a swift cut as opposed to moving slowly over time. You know, let’s give everyone a needed permanent Christmas vacation instead of making sure people could enjoy the holidays.
I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance. We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to right-size our costs was the best option to accomplish our objectives. While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team.”
Excerpt from press release written by Spotify CEO Daniel Ek
The justification for this was because money was easy to come by during the pandemic. Instead of doing things organically, companies were grabbing all this cheap capital hand over fist. Then, when all the capital dried up, it was time to go lean again. Cuts were made in 2023. Six percent were cut early in the year and another two percent in May. Spotify’s “cost structure for where we need to be is still too big,” Ek said.
These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year.”
Excerpt from press release written by Spotify CEO Daniel Ek
To “soften the blow”, Spotify is paying around five months severance, covering healthcare, and providing immigration or career support.
Of course, Ek stated that “being lean is not just an option but a necessity.” I guess this also goes for the smaller artists, too.
It is infuriating to see the employees bear the brunt of these decisions that didn’t need to be made in the first place. This goes to show that everything that happened over the past three years was centered around money. It’s just odd to see a CEO admit it.
It still doesn’t matter, though. While the folks up top make all the terrible decisions, their jobs are safe.
Source: Engadget
