Update on Regulatory Changes December 2023 – Spotify

Earlier today, C.E.O Daniel Eck Share the following note about the company’s organizational changes with all Spotify employees.

a team,

Over the past two years, we’ve been laser-focused on transforming Spotify into a truly great, sustainable company – one designed to deliver on our goal of becoming the world’s leading company. Leading audio company And One that will continually drive profitability and growth into the future. While we have made worthwhile strides, as I have said many times, we still have work to do. Economic growth slowed dramatically, and capital became more expensive. Spotify is no exception to these facts.

This brings me to a decision that will mean big change for our company. To align Spotify with our future goals and ensure we are right-sized to meet the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company. I realize that this will impact a number of individuals who have made valuable contributions. To be honest, a lot of smart, talented, hardworking people are leaving us.

For those who leave, we are a better company because of your dedication and hard work. Thank you for sharing your talents with us. I hope you know that your contributions have impacted more than half a billion people and millions of artists, creators, and authors around the world in profound ways.

I realize that for many, a reduction of this size would be surprisingly large given the recent positive earnings report and our performance. We have discussed making smaller reductions throughout 2024 and 2025. However, given the gap between our financial target status and our current operating costs, I have decided that taking substantial action to reduce our costs is the best option to achieve our goals. Although I am convinced that this is the right course of action for our company, I also realize that it will be extremely painful for our team.

To understand this decision, I think it’s important to evaluate Spotify through a clear objective lens. In 2020 and 2021, we took advantage of the opportunity presented by low-cost capital and invested significantly in expanding the team and improving content, marketing and new verticals. These investments have generally been successful, contributing to Spotify’s increased production and the platform’s strong growth over the past year. However, we now find ourselves in a completely different environment. Although After our cost reduction efforts last year, our cost structure relative to where we need to be is still very large.

When we look back at 2022 and 2023, what we accomplished was truly impressive. But at the same time, the reality is that much of this output was tied to access to more resources. By most measures, we were more productive but less efficient. We need to be both. Although we have done some work to mitigate this challenge and become more efficient in 2023, we still have a way to go before we are productive and effective. Today, we still have too many people dedicated to supporting work and even doing work around work rather than contributing to opportunities with real impact. More people should focus on delivering services to our key stakeholders – creators and consumers. In two words, we have to become The resourcefulness is relentless.

I know you will all be eager to hear the next steps on how this process works. If you are an affected employee, you will receive a calendar invitation within the next two hours from HR for a one-on-one conversation. These meetings will be held before and during the end of Tuesday Katarina We will provide more details on all the details, please know that the following will apply to all of these bandmates:

• Indemnity: We’ll start with a baseline for all employees, where the average employee gets approximately five months of severance pay. This will be calculated based on local notice period requirements and the employee’s length of service.
• External power unit: All accrued and unused leave will be paid to any departing employee.
• health care: We will continue to cover employee health care during their separation from service.
• Immigration support: For employees whose immigration status is tied to their job, HRBPs work with each affected individual in coordination with our Mobility Team.
• Career support: All employees will be eligible for two months of outplacement services.

As for the team that will remain at Spotify, I know this decision will be difficult for many. Please know that we are focused on treating our affected colleagues with the respect and compassion they deserve.

I look forward

The decision to reduce the size of our team is a difficult but critical step towards creating a stronger, more efficient Spotify for the future. But it also highlights that we need to change the way we work. In the early days of Spotify, our success was hard-earned. We had limited resources and had to make the most of every asset. Our ingenuity and creativity are what set us apart. As we grow older, we move further away from this basic principle of resourcefulness.

The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we work, innovate and address problems. This kind of resourcefulness goes beyond the basic definition – it’s about preparing for the next stage, where being agile is not just an option but a necessity.

Adopting this leaner structure will also allow us to invest our profits more strategically into the business. With a more targeted approach, each investment and initiative becomes more impactful, providing greater chances of success. This is not a step backwards. It is a strategic redirection. We remain committed to investing and making bold bets, but now, with a more focused approach, we are ensuring Spotify’s continued profitability and ability to innovate. Lean does not mean small ambitions; It means smarter and more impactful paths to achieve.

Today is a difficult but important day for the company. To be very clear, my commitment to our mission and belief in our ability to achieve it has never been stronger. I hope you’ll join me on Wednesday on Unplugged to discuss how we move forward together. This volume reduction will make it necessary to change the way we work, and we will share more about what this will mean in the coming days and weeks. Just as 2023 marked a new chapter for us, so will 2024 as we build a stronger Spotify.

-Daniel