After the first corresponding rumors had already arisen over the course of the weekend, Spotify has now officially made its announcement. The music streaming provider from Sweden wants to lay off around 600 employees. According to its most recent annual report, the company had almost 10,000 employees worldwide.
According to company boss Ek, Spotify planned too optimistically
As a result, Spotify is now cutting around six percent of its jobs. The company justifies the job cuts by saying that although it has recently tried to reduce costs internally, it has ultimately not been able to achieve sufficient success. It is therefore now necessary to reduce expenses for employees.
According to Spotify founder Daniel Ek, the background is overly optimistic assumptions when planning for future growth. Investments were too ambitious before the expected growth could materialize. In fact, Spotify’s operating expenses had grown twice as fast as its revenue over the past year, in part because the company had poured huge sums into expanding its podcast business. However, according to other reports, demand for podcasts has plummeted in most countries in recent months after the end of protective measures against the corona virus. Spotify was actually hoping to generate more revenue with this, because advertisers are more interested in marketing spaces in this area due to the higher level of user engagement in podcast formats.
In the meantime, however, the global economic situation has deteriorated significantly as a result of the war waged by Russia against Ukraine, so that many advertising customers have significantly reduced their spending on marketing their products due to their own financial constraints.
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