Spotify to cut 6% of staff in latest tech cuts

Jan 23 (Reuters) – Spotify Technology SA (SPOT.N) said on Monday it plans to cut 6% of its workforce and incur related costs of up to nearly $50 million, as it prepares for mass layoffs in the tech industry for possible economic recession.

The tech sector is facing a slump in demand after two years of pandemic-fueled growth, during which time the tech industry has been on a hiring spree. That has led to thousands of layoffs at companies ranging from Meta Platforms Inc (META.O) to Microsoft Corp (MSFT.O).

“Over the past few months, we have made considerable efforts to control costs, but it has not been enough,” Chief Executive Daniel Elke said in a blog post announcing the layoffs of about 600 people.

“Until our revenues grow, my investments are too ambitious,” he added, echoing sentiments expressed by other tech bosses in recent months.

Spotify’s operating expenses grew at twice the rate of its revenue last year as the audio streaming company aggressively poured money into its podcasting business, which is more attractive to advertisers due to higher engagement.

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Meanwhile, companies have scaled back ad spending on the platform, mirroring trends from Meta and Google parent Alphabet Inc (GOOGL.O ), as rapid interest rate hikes and fallout from the Russia-Ukraine war weigh on the economy.

The company, which rose 5.8 percent to $103.55, is undergoing a restructuring to cut costs and adapt to a deteriorating economy.

Dawn Ostroff, head of content and advertising, is leaving the company after more than four years, the company said. Ostrov helped shape Spotify’s podcasting business and guided it through the backlash surrounding Joe Rogan’s show for allegedly spreading misinformation about COVID-19.

The company said it would name Alex Norström, head of freemium, and Gustav Söderström, head of research and development, as co-presidents.

As of September 2018, Spotify had approximately 9,800 full-time employees. 30.

($1 = 0.9196 Euros)

Reporting by Eva Mathews in Bengaluru; Editing by Sherry Jacob-Phillips and Shailesh Kuber

Our Standards: The Thomson Reuters Trust Principles.

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