Spotify CEO Daniel Ek Is Still Battling the Side Effect of Covid-Era Hiring Sprees

After two rounds of layoffs this year alone, Daniel Ek said Spotify still has too many employees in non-essential "supporting work."

Spotify CEO Daniel Ek
Spotify cofounder and CEO Daniel Ek. Noam Galai/Getty Images for Spotify

Spotify is wrapping up 2023 with another round of layoffs. Cofounder and CEO Daniel Ek today (Dec. 4) sent a memo to employees saying the music streaming giant plans to cut 17 percent of its staff, around 1,500 jobs. This is Spotify’s third round of layoffs in 2023. In January, Ek cut 600 jobs and another 200 in June. In his latest memo, Ek wrote that the company is still reeling from overspending in 2020 and 2021—when capital was cheap, and many tech companies embarked on hiring sprees—and that the current cost structure is “still too big.” 

Spotify recently reported its first quarterly profit in over a year. The company cited previous layoffs as one of the reasons profits started to bounce back, alongside raising the prices of Spotify’s premium plans and finding relief in the recovering ad market. But today, Ek said those factors were not enough, admitting that the additional cuts would probably come as a surprise to employees. 

“We debated making smaller reductions throughout 2024 and 2025,” Ek said in the memo. “Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives.”   

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Ek’s letter emphasized the idea of Spotify continuing its business with a “lean” structure to “invest our profits more strategically back into the business.” The CEO said too many employees were in “supporting work.”   

The announcement came just a week after more than 570 million Spotify users received their end-of-the-year Spotify Wrapped, an annual feature where users learn their listening stats from the year. Though Spotify didn’t say which departments will see headcount reductions, there is speculation the Spotify Wrapped team might be affected, given that the project involves a lot of manpower across departments. 

More news about Spotify’s plans moving forward should be available on Wednesday (Dec. 6), when Ek asked for memo recipients to join a company meeting to discuss further.

Spotify CEO Daniel Ek Is Still Battling the Side Effect of Covid-Era Hiring Sprees