On Monday, music streaming giant Spotify announced it will lay off 6% of its 9,800 global employees, or about 600 people, joining the ranks of the world’s tech giants in widespread layoffs.
CEO Daniel Ek took full responsibility in a memo, stating he was overly optimistic in investing before revenue growth.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” he admitted.
Each employee will receive an average of 5 months of severance, calculated based on local notice period requirements and tenure. In addition, all accrued and unused vacation will be paid out, and healthcare coverage will be continued throughout the severance period. Outplacement services will be provided for two months.
In October, 11 original podcasts from Spotify’s in-house studios were shut down, resulting in less than 5% of staff being laid off or reassigned to new shows.
The company’s decision to reduce its employee base reflects the massive impact of Covid-19 on the global economy. With layoffs increasing in the tech sector and other industries, Spotify is among those trying to balance losses and maintain financial balance.
Ek expressed his appreciation for the departing employees, noting that the decision to cut staff wasn’t taken lightly.
Less than 5 per cent of the company’s staff on original podcasts were either laid off or reassigned to new shows.
The layoffs come as a blow to Spotify’s employees, but the company is trying to make sure they are taken care of during the transition. Spotify’s severance program includes an average of five months’ salary, accrued and unused vacation pay, and two months of outplacement services. Healthcare coverage is also extended throughout the severance period.
The decision to downsize its workforce is a difficult but necessary move that will help the company stay afloat during the pandemic. Spotify is setting an example for other tech giants to follow – prioritizing the well-being of its employees and taking responsibility for its actions.
Massive Layoffs of 2022 and 2023 January
Several large companies have made significant layoffs in January 2023. Alphabet (Google) made 6% layoff of its workforce, Microsoft and DirecTV did 4-5%, Amazon and Carta 1-2%, and Vimeo did that of 11%. Other companies, including Coinbase, Salesforce, Goldman Sachs, and Stitch Fix also reduced their workforce by more than 10%.
Twenty-two companies, including social media giant Meta, laid off thousands of employees in 2022, ranging from 1% to 50% of their employees. The companies include Cisco (5%) and DoorDash (6%) in December, Candy Digital (33%), Redfin (13%) and Amazon (1%) in November, Meta (13%), Twitter (50%), Zillow (5%), Peloton (12%) and DocuSign (9%) in October, Taboola (6%) and Snapchat (20%) in September, Outbrain (3%), Lyft (2%) and The Mom Project (15%) in July, Opensea (20%), Substack (14%), Ninantic (8%), MasterClass (20%), Bird (23%), Superhuman (22%), Cameo (25%) and Robinhood (9%) in May, Virgin Hyperloop (50%) and Peloton (20%) in February, and Beachbody (10%) in January. The majority of layoffs occurred in the months of June, July, and August, with a total of 10 companies affected.
These layoffs generally demonstrate the impact of the pandemic on the global economy, and the difficult decisions companies are having to make, perhaps, in order to survive. While many of these companies are large and well-established, the data also indicates that even they are not immune to the economic downturn caused by the pandemic. It is unclear what the long-term implications of these layoffs will be, but it is clear that they will have a significant impact on the lives of those affected.