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Spotify to cut one in six staff to survive ‘dramatically slower’ growth

Music streaming giant Spotify said on Monday it would reduce the number of its employees by around 17 percent in a bid to cut costs.

Published: 4 December 2023 09:21 CET

Spotify to cut one in six staff to survive 'dramatically slower' growth

Spotify's offices in Stockholm. Photo: Anders Wiklund/TT

Spotify in October posted a rare quarterly operating profit of 32 million euros, compared to a loss of 228 million for the same period a year earlier, on the back of 26 percent growth in active users for the third quarter.

“I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” chief executive Daniel Ek wrote in a letter to employees, which was seen by AFP.

He said that in 2020 and 2021, the company “took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing and new verticals.”

“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.”

Spotify has invested heavily since its launch to fuel growth with expansions into new markets and, in later years, exclusive content such as podcasts.

It has invested over one billion dollars into podcasts alone. In 2017, the company had around 3,000 staff members, more than tripling the figure to around 9,800 at the end of 2022.

The company has never posted a full-year net profit and only occasionally quarterly profits despite its success in the online music market.

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Why you could land a job in Sweden but still leave within a year

Almost ten years ago, Stockholm Akademiska Forum started its Dual Career Network, a network for the partners and spouses of top academics at Swedish universities to help them find work.

“The starting point was actually that one of our biggest universities had problems… they lost top scholars they had finally recruited to Sweden, and almost every time it was because the partner didn’t find a job in Stockholm,” Stockholm Akademiska Forum’s CEO, Maria Fogelström Kylberg, told The Local during a live recording of our Sweden in Focus podcast held as part of Talent Talks, an afternoon of discussions at the Stockholm Business Region offices on how to attract and retain foreign workers in Sweden.

“We thought ‘we’re in a good position representing 18 universities and the city to do something’, there’s strength in numbers,” she said.

To date, the forum has supported around 1,000 people, helped by a collaboration with Stockholm Business Region, which opened the network up to companies recruiting international staff.

In a new report, the forum highlighted the financial benefits for Swedish companies in hiring international talent, calling on Swedish companies to be more open to hiring foreign workers.

“There’s a lot of cost involved when you hire someone from abroad,” Fogelström Kylberg said. “They are often too focused on the person they are employing, but often for more senior roles, it’s a question of the whole family, it’s a family decision to move abroad.”

Companies invest a lot of money in employing someone, she said, but if their partner can’t find a job, they could leave within a year.

“Our numbers show that 88 percent of our members, these partners, have left an ongoing career and they are ready to start working tomorrow… but in Sweden, also for Swedes, it’s quite normal for it to take a year to get a new job,” she added.

‘Reassess your cultural background’: Key tips for foreign job hunters in Sweden

“It’s a complete waste, because the person leaves and also Sweden loses money, because we could be getting income tax from two people,” she said.

It’s not just income tax which Sweden is missing out on, either. Accompanying family consume goods and services in Sweden, contributing towards the economy even if they are not working.

So-called third country students – students from non-Nordic, non-EU countries – often have particular issues with finding a job in order to stay in Sweden, as they only have a short amount of time to secure a position after their studies are complete, Fogelström Kylberg said.

“We’re doing a pilot project now starting in October, called the Stockholm Student Academy, built on the same basis as the Dual Career Network academy, for 250 students, master students from all universities together in a common programme with the same content to get to know Sweden, how the job market is organised, meeting in six different universities, extra social activities together. We need to do something as it’s a really big problem, they cannot stay but they want to. Students are an important resource.”

Laureline Vallée, who moved to Sweden alongside her partner and found a job after five months, describes dual career support as “really important”.

“It’s really challenging for the following partner,” she said. “So they also need to be integrated into society, and if not, the company has a high risk of losing their employee. And it means another move for the family.”

The Dual Career Network run by Stockholm Akademiska Forum is based in the capital, but there are other similar networks available for people based elsewhere in Sweden.

“There’s a similar one in Lund, they have a bigger region, as they have Malmö and Copenhagen too, and they have other challenges,” Fogelström Kylberg said.

“There are also a lot of other good initiatives, like Korta vägen or Yrkesdörren, which can really help. So the situation isn’t hopeless, it’s started and it has to grow, as we don’t want to lose more people.”

Listen to the full interview with Maria Fogelström Kylberg, Amanda Herzog and Laureline Vallée in The Local’s Sweden in Focus Extra podcast for Membership+ subscribers.

Interview by Paul O’Mahony, article by Becky Waterton

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