Spotify plans to cut 6 percent of its workforce — about 600 employees — as part of an overhaul of the business, becoming the latest tech group to cut staff in a bid to stem pandemic-induced hiring.
As part of the restructuring, Dawn Ostroff, the Spotify executive hired in 2018 to drive an ambitious expansion into podcasting, will leave.
Under Ostroff’s watch, Spotify went on a buying spree, spending billions of dollars buying podcasting companies and striking deals with stars like Joe Rogan and Kim Kardashian.
Wall Street initially welcomed Spotify’s podcast gamble, but later lost patience as the company continued to invest heavily at the expense of profits. Spotify reported a net loss of €160 million on revenue of €8.6 billion for the nine months ended September 30.
Chief executive Daniel Eck told staff on Monday that the changes were part of efforts to contain costs and be more efficient during a “more challenging” economic environment.
“I had hoped to maintain strong tailwinds from the pandemic and believed that our broad global business and lower risk of the impact of ad slowdown would insulate us,” Eck said. “In hindsight, I was too ambitious to invest ahead of our revenue growth.”
Spotify shares rose more than 5% in premarket trading. Shares have fallen more than 70 percent from their pandemic peaks, valuing the world’s biggest music streaming company at less than $19 billion.
As part of the restructuring, Alex Norström, Chief Business Officer of Freemium, and Gustav Söderström, Head of Research and Development, will become co-presidents.
Spotify’s leap into podcasts upended the entire nascent industry, sparking a frenzy of deals and higher valuations as Amazon and Apple raced to compete. But podcasting has undergone a correction in recent months, along with other companies in technology and media, resulting in layoffs and cancellations of shows.
Ostroff said last month that the cancellation was “simply a matter of understanding in the TV business, looking at shows that don’t do well and reinvesting in new content.”
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Previously a TV executive behind hit shows like Gossip Girl, Ostroff has been critical of Spotify’s efforts to expand beyond music. “We are extremely grateful for the key role she played and wish her every success,” Eck said.
Spotify estimated it would spend around 35-45 million euros on severance payments for around 600 workers who are leaving.
Other tech groups that have recently cut staff include Microsoft, which said it would cut 10,000 jobs by the end of March, and Alphabet, which is cutting 12,000 jobs.
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