(Agencies): Swedish music streaming giant Spotify said Monday it was planning to cut 6% of its roughly 10,000 employees, adding to a glut of layoffs in the technology sector as companies prepare for a possible recession.
The company also said its chief content and advertising business officer, Dawn Ostroff, will depart as part of a broader reorganization.
Spotify Chief Executive Daniel Ek announced the restructuring in a message to employees that was also posted online.
“To bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees,” Ek wrote.
“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. In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company,” he said.
Spotify, which had about 9,800 full-time employees as of Sept. 30, said it expects to incur about 35 million euros ($38.06 million) to 45 million euros in severance-related charges.
“I take full accountability for the moves that got us here today,” Ek added.
Shares in the company rose 3.5% in premarket trading.
The Swedish company, which is listed on the New York Stock Exchange (NYSE), has invested heavily since its launch to fuel growth with expansions into new markets and, in later years, exclusive content such as podcasts.
Spotify has never posted a full-year net profit despite its success in the online music market.
Spotify’s move comes at a time when tech companies are facing a demand downturn after two years of pandemic-driven growth during which they had hired aggressively. That has led the likes of Google parent company Alphabet, Facebook-owner Meta, Amazon and Microsoft to announce tens of thousands of job cuts, as the sector faces economic headwinds.
Spotify has seen advertisers pull back on spending, mirroring a trend seen at Meta and Google parent Alphabet, as rapid interest rate hikes and the fallout from the Russia-Ukraine war pressure the economy.
The company had said in October that it would slow down hiring for the rest of the year and into 2023. Its shares more than halved in a dismal 2022 for tech stocks.
