Spotify has announced plans to reduce its workforce by approximately 17%, resulting in at least 1,500 employees losing their jobs. The decision, described as a "difficult" but necessary step, was shared by founder and CEO Daniel Ek in a blog post.
"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 percent across the company", Ek wrote.
A tough decision amid growth
The layoffs come shortly after Spotify’s year-end Wrapped campaign and just over a month after the company reported positive financial results for the third quarter of 2023. In that report, Spotify highlighted an 11% year-on-year increase in total revenue, reaching €3.4 billion, and a return to profitability with operating income of €32 million. Despite these achievements, Ek emphasized the gap between the company’s financial goals and its operational costs as a driving factor for the layoffs.
"I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance", he stated. "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 rightsize our costs was the best option to accomplish our objectives."
Organizational changes and employee support
Ek acknowledged that Spotify had significantly expanded its team during 2020 and 2021 to capitalize on favorable economic conditions. However, he pointed out that the company now has "too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact." He reiterated the need for the company to shift its focus back to its core stakeholders: creators and consumers.
Affected employees will receive severance packages that include pay calculated based on tenure and notice period requirements, with the average employee receiving around five months of severance. Additionally, Spotify will reimburse unused vacation time, provide healthcare coverage for the severance period, and offer two months of outplacement services for those eligible for career support. For employees whose immigration status is impacted by the layoffs, Spotify’s HR and mobility teams are working with individuals to address their concerns.
Ek shared that impacted employees would receive calendar invites for HR meetings, all scheduled to take place by the end of Tuesday. Further details will be provided by Katarina Berg, Spotify’s Global HR lead and head of Global Workplace Services and Strategy Operations.
Broader industry context and moving forward
Spotify’s decision is the latest in a series of layoffs across the tech industry, following similar cuts at companies like Meta, Amazon, Microsoft, and Twitter. This isn’t Spotify’s first round of layoffs in 2023; the company previously reduced its workforce by 2% in June, affecting around 200 employees primarily in its podcast division.
Ek assured employees of the company’s commitment to navigating this transition and invited them to an internal meeting called "Unplugged" to discuss the path forward. "The decision to reduce our team size is a hard but crucial step towards forging a stronger, more efficient Spotify for the future. But it also highlights that we need to change how we work", he concluded.
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