The move is part of a broader trend as tech companies look for savings amid a slower-than-expected economy.

Spotify has announced a third major round of workforce cuts this year.

The music streaming giant announced Monday that it will lay off about 1,500 employees, or 17 percent of its workforce, to cut costs. The announcement follows the layoffs of 600 employees in January and another 200 in June.

The move fits a growing trend in the technology sector, where economic conditions continue to be slower than expected. After a round of layoffs earlier this year, companies like Amazon and Microsoft-owned LinkedIn have recently announced further cuts.

In a letter to employees, Spotify CEO Daniel Ek said the company hired more people in 2020 and 2021 due to lower capital costs, and that while production has increased, much of that is related to more resources.

Spotify invested more than $1 billion to build its podcast business, signed celebrities like Kim Kardashian, Prince Harry and Meghan Markle, and expanded its market presence worldwide to reach one billion users by 2030.

It currently has 601 million users, up from 345 million at the end of 2020.

Five months severance pay

Ek said the decline will appear large given a recent upbeat earnings report in which the company reported a profit in the third quarter and its continued performance, including early achievement of its audience target of 601 million users.

However, he noted that the gains were mainly due to expanded resources.

“By most metrics, we were more productive but less efficient. We have to be both,” he said.

The company will begin informing affected employees on Monday. You will receive around five months of severance pay, holiday pay and health insurance for the duration of the severance payment.

In addition, the Company offers immigration assistance to employees whose immigration status is related to their employment.

“We have discussed making smaller reductions in 2024 and 2025,” Ek said.

“However, given the gap between our financial goals and our current operating costs, I decided that a comprehensive effort to adjust our costs was the best option to achieve our goals,” he added.

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