Jan 23 (Reuters) – Spotify Technology SA (SPOT.N) announced on Monday that it plans to shed 6% of its workforce and impose an associated fee of up to nearly $50 million, adding to the massive Layoffs in the technology sector in preparation contributes to a possible recession.
The tech industry is facing a drop in demand after two years of aggressive hiring due to the pandemic. That has prompted companies from Meta Platforms Inc (META.O) to Microsoft Corp (MSFT.O) to shed thousands of jobs.
“Over the past few months we’ve made significant efforts to contain costs, but it just hasn’t been enough,” Chief Executive Daniel Elk said in a blog post announcing about 600 job cuts.
“I was too ambitious to invest ahead of our revenue growth,” he added, echoing a sentiment expressed by other tech chiefs in recent months.
Spotify’s operating expenses grew twice as fast as its revenue last year as the audio-streaming company aggressively invested money in its podcast business, which is more attractive to advertisers due to higher engagement.
At the same time, companies pulled back their advertising spend on the platform, mirroring a trend seen at Meta and Google parent company Alphabet Inc (GOOGL.O) as rapid interest rate hikes and the aftermath of the Russia-Ukraine war hit the economy put pressure.
The company, whose shares rose 5.8% to $103.55, is now restructuring itself to cut costs and adjust to the deteriorating economy.
Dawn Ostroff, the head of content and advertising, was said to be leaving the company after more than four years. Ostroff helped shape Spotify’s podcast business and guided it through backlash surrounding Joe Rogan’s show for allegedly spreading misinformation about COVID-19.
The company names Alex Norström, head of the freemium business, and R&D chief Gustav Söderström as co-presidents.
Spotify had about 9,800 full-time employees as of September 30.
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Reporting by Eva Mathews in Bengaluru; Edited by Sherry Jacob-Phillips and Shailesh Kuber
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