Spotify axes 6% of workforce on dimming outlook

2023-01-25T08:00:00.0000000Z

2023-01-25T08:00:00.0000000Z

The Manila Times

https://manilatimes.pressreader.com/article/281887302435760

Foreign Business

LONDON: Music streaming service Spotify said on Monday it was cutting 6 percent of its global workforce, or about 600 jobs, becoming the latest tech company forced to rethink its coronavirus pandemicera expansion as the economic outlook weakens. Spotify Chief Executive Officer (CEO) Daniel Ek announced the restructuring in a message to employees that was also posted online. As part of the revamp involving a management reshuffle, “and to bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees,” Ek wrote. Big tech companies like Amazon, Microsoft and Google announced tens of thousands of job cuts this month as the economic boom that the industry rode during the Covid-19 pandemic waned. Stockholm-based Spotify had benefited from pandemic lockdowns because more people had sought entertainment when they were stuck at home. Ek indicated that the company’s business model, which had long focused on growth, had to evolve. The company’s operating costs last year grew at double its revenue growth, a gap that would be “unsustainable long term” in any economic climate, but even more difficult to close with “a challenging macro environment,” he said. Spotify made “considerable effort” to rein in the costs over the past few months, “but it simply hasn’t been enough,” he added. “I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth,” Ek said. The CEO didn’t give an actual number of job losses, but a company spokesman said it was 600, based on 9,808 employees listed in its latest quarterly report. “I take full accountability for the moves that got us here today,” Ek said. After years of heady growth, analysts say tech companies are being forced to slash jobs in preparation for an economic downturn that’s likely to cut demand for their software, products and services, and reduce digital advertising spending. Last week, Google announced it was cutting 12,000 jobs while Microsoft said it would cull 10,000 workers, bringing to at least 48,000 the number of cuts that Big Tech companies announced in January alone. Even with all the recent layoffs, most tech companies are still vastly larger than they were three years ago. Spotify had 4,405 employees in 2019, before the pandemic began, according to that year’s annual report.

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