Spotify has announced it is cutting 17% of its staff, with around 1800 jobs expected to be lost in the process. Chief executive Daniel Ek broke the news on Monday, saying in a public memo that the "difficult" decision was made in reponse to economic growth slowing "dramatically."
Ek said "substantial action to rightsize our costs" was required in order for the company to reach its financial targets. He added that he was aware the job losses would be "incredibly painful for our team."
"I recognize this will impact a number of individuals who have made valuable contributions", Ek continued. "To be blunt, many smart, talented and hard-working people will be departing us." He acknowledged that the numbers will "feel surprisingly large" for many employees.
Employees affected by the losses will receive five months of severance pay, holiday pay, and healthcare coverage. Support for employees whose immigration status is connected to their employment will be made available.
In its latest results, Spotify had reported a profit of €65 million ($70 million) for the three months to September, a quarter boosted by a price rise of the Premium tier from $9.99 to $10.99.
Last month Spotify announced changes to its financial model, including a policy requiring tracks to receive at least 1,000 streams a year to qualify for royalties. The changes will come into action in 2024.