In a bold move sure to provide cover fire for other streaming companies and technology-media-telecom enterprises, Spotify said Monday that it's laying off 17% of its 9,241-head workforce.
The Stockholm-based subscription music streaming supplier is giving the more than 1,500 affected workers five months of severance, as well as continued healthcare coverage over that span.
But still, the depth of the cuts, coming after two previous smaller rounds of bloodletting, and right before the Christmas holiday, seems a bit shocking. And the context adds to the intrigue: Spotify reported 11% revenue growth for the third quarter, not to mention the addition of 23 million subscribers.
But alas, 19-year-old Spotify is still losing money.
And we can't think of any other layoff round in TMT this year that's been bigger.
In a memo sent to staff Monday morning announcing the cuts, Spotify Co-Founder and CEO Daniel Ek indicated that aggressive expansion by the company during the pandemic, when interest rates were much lower, has resulted in an unwieldy business structure in the here-and-now with the cost of carrying debt much higher.
“Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact,” Ek wrote.
He added, “As we’ve grown, we’ve moved too far away from this core principle of resourcefulness."
Shares of Spotify, which is traded on the New York Stock Exchange, were up more than 8% Monday morning.
