Music streaming giant Spotify will slash 17% of its workforce as the Swedish audio company looks to narrow the gap between its financial goals and current operational costs.

"To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company," Spotify CEO Daniel Ek says in a letter to shareholders.

Economic growth has slowed dramatically and capital has become more expensive, says Ek. Spotify is not an exception to these realities, he says.

"For many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance. We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives," says Ek.

In 2020 and 2021, Spotify took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals. "These investments generally worked, contributing to Spotify's increased output and the platform's robust growth this past year. However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big," he says.

"When we look back on 2022 and 2023, it has truly been impressive what we have accomplished. But, at the same time, the reality is much of this output was linked to having more resources. By most metrics, we were more productive but less efficient. We need to be both. While we have done some work to mitigate this challenge and become more efficient in 2023, we still have a ways to go before we are both productive and efficient. Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact," the Spotify CEO writes.

"In Spotify's early days, our success was hard won. We had limited resources and had to make the most of every asset. Our ingenuity and creativity were what set us apart. As we've grown, we've moved too far away from this core principle of resourcefulness," Ek says, adding that the new leaner structure will allow Spotify to invest its profits more strategically back into the business. "Being lean is not just an option but a necessity."

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