Count Spotify among the tech giants that are undergoing major changes, as CEO Daniel Elk announced that about 600 employees are being laid off.
This has become an unfortunate reality for the industry since the start of the year, with the likes of Google, Microsoft and Amazon also announcing major staff cuts recently.
Spotify, however, is the first notable music and podcast streaming giant to be hit with layoffs. The company employs around 9,800 people, meaning 6 percent of its workforce will be impacted.
Along with that, Spotify chief content officer Dawn Ostroff will leave as part of the reorganization, per Forbes. She will remain on temporarily as a senior adviser while the company transitions.
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“As we say in our Band Manifesto, change is the only constant. For this reason, I continue to reiterate that speed is the most defensible strategy a business can have,” Elk wrote in a memo to employees. “But speed alone is not enough. We must also operate with efficiency. It’s these two things together that will fuel our long-term success. With this in mind, I have some important news to share today.
“While we have made great progress in improving speed in the last few years, we haven’t focused as much on improving efficiency. We still spend far too much time syncing on slightly different strategies, which slows us down. And in a challenging economic environment, efficiency takes on greater importance. So, in an effort to drive more efficiency, control costs, and speed up decision-making, I have decided to restructure our organization.”
Elk added that “to bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees.”
Many of these tech companies underwent a hiring spree during the pandemic, given the demand, as more people remained at home. But it appears that trend has done an about-face in the previous three weeks alone.
“The company’s stock, which has nearly halved in value over the past 12 months, gained more than 4% in premarket trading in New York,” CNN reported. “Spotify’s share price has risen 24% since the start of the year, Refinitiv data shows.”