In a major strategic shift, music-streaming giant Spotify is set to cut approximately 1,500 jobs, which accounts for 17 percent of its workforce. This marks the third round of job cuts for the company in 2023, NPR reported.

With a workforce of over 9,000, Spotify had previously initiated layoffs, letting go over 500 employees in January. This move aligned with the trend seen in various tech companies, such as Microsoft and Amazon, as they downsized their staff in response to the global economic slowdown. In June, Spotify carried out another round of layoffs, affecting 200 employees in its podcasting division, NBC News reported.

CEO Daniel Ek cited a slowing economic growth and increased capital costs as factors driving this latest decision.

Ek addressed the situation in a letter to Spotify employees, acknowledging the changing economic landscape. He revealed that the company had contemplated smaller job reductions in the coming years but ultimately opted for a more significant action to align their costs with their financial goals.

Ek emphasized that it was necessary for Spotify to return to its startup roots, streamlining its operations and becoming more efficient.

“Economic growth has slowed dramatically, and capital has become more expensive. Spotify is not an exception to these realities,” Ek wrote in a letter to staff posted to the company’s website.

“Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to right-size our costs was the best option to accomplish our objectives,” he added.

“To be blunt, many smart, talented and hard-working people will be departing us.”

Despite adding six million subscribers in the June-to-September period, Spotify’s profitability remains a challenge. The company reported a profit of $34.8 million during that time, an improvement from a $248 million loss in the same period the previous year, CNN reported.

#UPDATE Music streaming giant Spotify says it will reduce its number of employees by around 17% in a bid to cut costs amid "dramatically" slower economic growth.

"To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the… pic.twitter.com/rgRiPtGnC7

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