Spotify will cut 17% of its workforce in an effort to reduce costs. CEO Daniel Ek made the announcement in a note to employees on Monday morning.
Executives at the streaming service announced the decision to cut roughly 1,500 jobs in an effort to "rightsize" the company after they say it took on too many employees in 2020 and 2021, when tech companies had more access to capital.
The streamer reportedly plans to raise prices again later this year.
"Despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big," Ek said.
Spotify saw a roughly $70 million profit in the third quarter of 2023, CNBC reported. The Stockholm-based company saw its stock price rise more than 11% on Monday morning in the wake of the announcement.
Ek said the company has accomplished a lot in recent years, but needs to be leaner going forward. "The reality is much of this output was linked to having more resources," the CEO said. "By most metrics, we were more productive but less efficient. We need to be both."
Spotify has had other rounds of layoffs in 2023, but the job cuts announced on Monday morning were much larger.
Ek spoke about what the future may look like for the company's remaining employees: "In Spotify’s early days, our success was hard won. We had limited resources and had to make the most of every asset…. As we’ve grown, we’ve moved too far away from this core principle of resourcefulness. The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we operate, innovate, and tackle problems."
The announcement came after the company's 574 million users received their year-end Spotify Wrapped summaries last week. Spotify also released a list of its most-streamed artists of the year. Taylor Swift nabbed the No. 1 spot with 26.1 billion streams so far in 2023. The Weeknd, Drake, Peso Pluma and Feid rounded out the top 10.
Spotify's most popular song of the year was "Flowers" by Miley Cyrus, and the most popular album was Un Verano Sin Ti by Bad Bunny.
