Spotify cuts 17% jobs amid rising capital costs

Spotify is eliminating about 1,500 jobs, or about 17% of its workforce, in its third round of layoffs this year as the music streaming giant looks to become “both productive and efficient.”

In a note to employees Monday, Spotify founder and chief executive Daniel Ek said right-sizing the workforce is crucial for the company to face the “challenges ahead.”

He cited the slow economic growth and rising capital costs among reasons for the job cuts, saying the firm took advantage of lower-cost capital in 2020 and 2021 to invest significantly in the business.

“I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented and hard-working people will be departing us,” he wrote in the note, which the company later published on the blog.

Spotify employs about 8,800 people and will notify those impacted later in the day. The new wave of layoff follows Spotify cutting about 6% of jobs in June this year and another few hundred employees in January.

Spotify reported strong user growth with a notable rise in monthly active users as well as paid customers in the most recent quarter. It also exceeded Wall Street’s expectations on operating income, and its guidance for the fourth quarter suggests a continuation of this positive trend.

But despite overall strength in user and subscriber numbers, and management’s assertion that every region exceeded expectations, growth in North American premium subscribers was only modest quarter-over-quarter. There was also a slight year-over-year decline in third-quarter premium average revenue per user (ARPU), with fourth-quarter forecasts suggesting ongoing challenges due to shifts in geographical and product mix.

“I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance. We debated making smaller reductions throughout 2024 and 2025,” wrote Ek.

“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.”

Industries globally have seen significant layoffs this year, totaling over 225,000 employees, driven by economic volatility, higher interest rates and evolving consumer patterns. The tech sector, including firms like Amazon, Google, Meta, Twitter and Netflix, faces notable cutbacks, amplifying economic unease among employees.