Spotify CEO Surprised at How Negatively 1,500 Layoffs Affected Operations

By: Alyssa Miller | Published: May 01, 2024

After laying off around 1,500 employees in December 2023, Spotify is starting to feel the consequences of working with a smaller team.

In the first quarter of the year, analysts found that the music streaming giant Spotify failed to meet its guidance on profitability and monthly active user growth.

Spotify’s Massive Round of Layoffs 

Despite creating a new deal with Universal Music Group to pioneer a fresh approach to music discovery, Spotify needed to make the streaming service more efficient. One way of achieving this was through the company’s largest round of layoffs.

A woman sitting at a wooden desk with a computer, pieces of paper, and stationary on the desk. A person is handing her a brown cardboard box that says “FIRED” on the side in black capital letters.

Source: master1305/Freepik

HR Grape Vine reports that CEO Daniel Ek let go of 1,500 employees as he endeavored to guide Spotify into a new era of media.

The Impact of the Layoffs

The layoffs seemed to have a positive impact on the music-streaming giant for the first three months of 2024. Between January and March, the streaming service hit record quarterly profits.

A man looks extremely stressed while he holds his head in his hands

Source: Freepik

Revenue grew by double-digit numbers, reaching $3.8 billion in the process. However, this record did not necessarily meet all expectations across the board.

Spotify CEO Blames the Staffing Shortage 

While 2024 has had significant growth compared to 2023’s numbers, failing to make guidance on profitability and monthly active user growth numbers may be a bad look for Spotify.


Source: Kmeron/Vincent Philbert/Flickr

Ek blamed operational difficulties for the failure, stating that a smaller team made operations more difficult to hit target earnings at the start of the year.

Underestimating the Work of 1,500 Employees

Ek seemed to underestimate the importance of 1,500 employees—or 17 percent of the Spotify workforce—when he decided to lay them off.

The logo for the music streaming service Spotify.

Source: Halthem Ferdi/Unsplash

The music streaming service responded to the falling share price by laying off employees and compensating them with a 5-month severance package.

Employees’ Lack of Meaningful Work Contributed to Layoffs

Spotify’s massive round of layoffs occurred because employees weren’t performing meaningful work.

A man collects his belongings after being fired from his job

Source: Freepik

“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,” Ek wrote in an email to employees. “More people need to be focused on delivering for our key stakeholders–creators and consumers. In two words, we have to become relentlessly resourceful.”


Investors Support Spotify CEO’s Decision 

“More people need to be focused on delivering for our key stakeholders–creators and consumers. In two words, we have to become relentlessly resourceful,” Ek said in a memo as he announced he would be cutting his workforce by 17 percent.

Daniel Ek, CEO and Co-founder of Spotify, is interviewed by Andy Serwer at Fortune Brainstorm TECH at the Aspen Institute Campus.

Source: Creative Commons/Wikimedia Commons

Investors reacted well to the news despite the few skeptical voices who questioned if layoffs were a solution to a massive problem.


Spotify Shares Jump After Layoffs

The layoffs did work for Spotify in the long run as shares in the group jumped more than 60 percent.

A laptop sits on a table next to a stack of books

Source: Yorgos Ntrahas/Unsplash

“Although there’s no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipated,” Ek said on an investor call following Spotify’s Q1 earnings release.


Spotify’s Growing Pains

Ek did not elaborate on what aspects of operations the layoffs mostly affected, but he did state that the company has changed operations to compensate for the change in staff.

Spotify banner hangs outside of a building in New York

Source: Spencer Platt/Getty Images

“It took us some time to find our footing, but more than four months into this transition, I think we’re back on track and I expect to continue improving on our execution throughout the year getting us to an even better place than we’ve ever been,” Ek said.


Investors Not Shaken By Missed Goals

The lack of revenue growth and monthly active users has not shaken investors like it had when Tesla announced its latest round of recalls or when Netflix said it would stop sharing subscriber growth numbers.

Two people looking at graphs and charts on an electronic pad. There is a notebook open on the table as well.


Instead, shares in the group jumped up more than 8 percent in the stock market after it opened on April 23.


Spotify’s Growing Pains Are Not Justified

While the tough round of layoffs at Spotify did cut off the excess fat from the company, the music streamer should have been more prepared for the massive change.

A woman in a blue shirt appears stressed from work as she sits at her white desk

Source: Freepik

Whether this massive change came in daily workflows for the remaining staff or an updated prediction for the Q1 earnings, Spotify is a large enough company to prepare for these changes when they happen.


The Season of Layoffs

Spotify wasn’t alone in cutting costs and jobs last year. Nearly 1,200 tech companies downsized their staff, according to

Fired Employee Packing his Things at Office

Source: ANTONI SHKRABA production/Pexels

Among these companies are Amazon, Twilio, Zulily, Chewy, Marvel, and others. Many of these layoffs came right before the winter holidays.