Spotify's chief executive, Daniel Ek, has announced a 17% reduction in its workforce. He stated that the layoffs are part of the company's strategy to "right-size" Spotify and line with the company's future aims. According to the CEO, economic development has "slowed dramatically" and capital has "become more expensive."

"I have made the difficult decision to reduce our total headcount by approximately 17% across the company to align Spotify with our future goals and ensure we are right-sized for the challenges ahead." I recognize that this will have an impact on a lot of people who have made significant contributions. To put it bluntly, many clever, talented, and hardworking people will be leaving us," Ek remarked.

It is estimated that roughly 1,500 employees make up 17% of its workforce. Spotify cut off 600 staff in January, and another 200 in June.  Daniel Ek stated in a letter to staff that they would receive a calendar invite from HR for a one-on-one chat within two hours. These sessions would take place before the end of the day on Tuesday.

Spotify will pay severance for five months, based on the local notice period requirement. The laid-off employees will receive payment for any accumulated and unused vacation time. During the severance time, Spotify will continue to fund their healthcare. For two months, all laid-off employees will be eligible for outplacement assistance.  Spotify CEO praised employees who would be leaving the company soon for their devotion and hard work. "We appreciate you sharing your talents with us." "I hope you are aware that your contributions have had a profound impact on more than half a billion people and millions of artists, creators, and authors around the world," stated Ek. 

Despite the recent excellent profits report and Spotify's performance, Ek stated that there is a disparity between their financial objective state and their actual operational expenditures. " I determined that taking significant action to reduce our costs was the best way to achieve our goals." While I am sure that this is the best course of action for our company, I am also aware that it will be extremely difficult for our team," stated Ek.

According to Spotify's CEO, they took advantage of lower-cost financing in 2020 and 2021 and invested in team development, content enhancement, marketing, and new verticals, but they now find themselves in a different scenario. 

Looking back on the "impressive" years of 2022 and 2023, Spotify has been more productive but less efficient, according to Ek. "We must be both. While we have made progress towards mitigating this difficulty and becoming more efficient in 2023, we still have a long way to go before we are both productive and efficient," he wrote in an email to Spotify workers. 

"Today is a challenging but critical day for the company." To be clear, my dedication to our objective and confidence in our capacity to succeed has never been stronger. I hope you will join me for Unplugged on Wednesday to discuss how we can go ahead together. A decrease of this magnitude will need a shift in the way we work, and we will reveal much more about what this will entail in the coming days and weeks. "Just as 2023 marked a new chapter for us, 2024 will mark a new chapter as we build an even stronger Spotify," Daniel Ek stated.