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Spotify lays off 6% of work force in latest tech cuts

Music streaming platform Spotify is to cut 6% of its 10,000 employee work force, after hiring aggressively over the pandemic period. It is line with other tech companies who have stripped back their workforces.

Spotify will be letting 6% of its work force go after major cuts to improve company ‘efficiency’. CEO Daniel Ek has said that he was ‘too ambitious’ and expanded the company too quickly.

It follows similar setbacks from other tech companies such as Microsoft and Google. Last week, Google said it was shedding 12,000 jobs and Microsoft let roughly 10,000 employees go.

Ek said that he ‘took full accountability for the moves that got us here today’ in a company-wide statement. The company hired twice as quickly as its revenue growth in 2022, leaving a financial vacuum that it is unable to fill, at least for now.

It’s worth noting that Spotify makes 85% of its revenue from its subscription model, with the rest coming from ad revenue. One individual subscription costs £10 GBP a month – it has never increased since it first launched.

Spotify is also an industry titan, boasting 456 million monthly users. The company has never posted a full-year net profit and routinely faces accusations of underpaying artists per stream. Ek himself has a net worth of over $2 billion USD.

News of job losses and down sizing work forces is not all that shocking.

The pandemic saw unprecedented growth for many tech companies, as the world relied more heavily than ever on digital, remote, virtual, and streaming services. Some, like Spotify, responded to this new demand by upscaling, though it may have happened too quickly to be sustainable long-term.

Now that demand has slowed and stabilised, tech firms like Amazon, Google, Microsoft, and more are finding themselves overstaffed. Layoffs are hitting the industry hard.

Of course, this is not to disregard Ek and his ambitions. He is not free from criticism. In fact, Ek has come under fire multiple times for showing a general lack of empathy toward the creative process, prioritising engagement and revenue above artistry. In 2020, he said that it was ‘not enough’ for acts to release new material ‘every three to four years’. This was met with deserved derision.

It’s also hard to avoid Ek’s net worth. The disparity between the head of Spotify’s bank account and the artists making it worthwhile in the first place is perhaps indicative of a wider issue with modern business models. Wealth is not evenly distributed and the creative process takes second place to data, metrics, and user experiences.

Lofty ambitions have caused disruption for thousands at top companies, and we’re only a few weeks into the year. This should be indication that we rely on too few companies to provide products that affect billions of us around the world. When one individual expands too quickly, it causes job losses for thousands.

Is this a fair and balanced system? The risks and inevitable fallout suggest otherwise.

 

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