Responding to the massive layoff move, Spotify will grant a severance pay worth $38 million to $48 million for the affected team.
Heaptalk, Jakarta — Following the massive layoff of giant technology companies based in the United States, such as Microsoft, Google, and Amazon, a music streaming platform Spotify also declared to slash its workforce by 6%, with an estimated amount of around 600 people.
Cited in CNN, the CEO of Spotify, Daniel Ek, revealed this step was quite a complex determination. He added, “I expect to retain these fantastic trends of the Covid-19 pandemic and has strong confidence the extensive global business, with a low risk towards the impact of the advertising slowdown, would preserve us. I have realized that I am extremely ambitious in investing first, removing income growth observation,”
Performing the termination step, Spotify Technology SA intends to diminish the company’s operations costs in preparation for a possible global recession. However, to provide worthy severance pay to the laid-off employees, the management team grants compensation worth US$38 million (Rp568 billion) to 48 million (Rp717 billion).
Business performance of Spotify Technology
Refers to the company’s profit report during the third quarter of 2022, Spotify has about 9,800 employees. On the other hand, this audio-streaming company also trimmed several editorial podcast divisions last September 2022. Besides, this technology company based in Sweden also terminated 38 employees in the Gimlet Media and Parcast podcast studio business unit.
In terms of the third quarter overall profits, Spotify Technology’s incomes has risen 21%, attaining US$3.2 billion as of last October 2022. This enhancement was boosted by the paying customer growth, while the advertising revenue has also uplifted by 19%, reaching US$418 million, bolstered by the podcast programs. In contrast, regarding the business loss of the company, Spotify noted a loss of up to threefold, or approximately US$248 million, impacted by the number of employees’ growth and higher advertising expenses.
Meanwhile, this technology company announced to development of a podcast business unit in 2019. As recorded by the company, Spotify Technology SA has expensed over US$1 billion, or nearly Rp15 trillion, to acquire a podcast network, establish software, host service, and have rights to popular events, including The Joe Rogan Experience and Armchair Expert.
Nevertheless, like the other leading technology companies, Spotify’s business operations were under tremendous pressure last year. As it is known, Spotify’s strategic investment is considered to be less too profitable for numerous investors. The company’s shares plummeted to 66% last year, impacting the investors’ hesitation to gain a significant return on this investment. Meanwhile, the company’s executive team claimed the new podcast business unit would be beneficial in the next two years.
