Spotify, $SPOT, is laying off 17% of its employees in an attempt to cut costs, thereby firing 1,500 people

Spotify, $SPOT, is laying off 17% of its employees in an attempt to cut costs, thereby firing 1,500 people.

"Economic growth has dramatically slowed, and the cost of capital has increased. Spotify is not immune to these economic realities," Ek wrote in a letter to employees posted on the company's website.

Spotify's changes are aimed at making the company more efficient, returning it to its startup origins after a period of significant hiring and spending that helped it amass tens of millions of subscribers but did not consistently translate into profitability.

Ek mentioned that the company had considered smaller job cuts in the coming years, but given the gap between their financial goals and current operational costs, a substantial action to right-size their expenses was deemed the best option.

"To be straightforward, many smart, talented, and hard-working individuals will be leaving us," Ek stated.

He also mentioned that one-on-one meetings with affected staff would occur by the end of the day on Tuesday, and employees would receive an average of around five months of severance pay.

With over 9,000 employees, Spotify had previously laid off over 500 employees in January, joining other tech giants like Microsoft and Amazon in reducing their workforce due to the global economic slowdown. In June, Spotify also cut 200 employees from its podcasting unit.

During the COVID-19 pandemic, major tech companies engaged in a hiring spree to meet the increased demand for online services. However, inflation, rising interest rates, and other economic factors have since impacted consumer spending, leading many companies to announce significant job cuts.