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Tag: daniel ek

  • Spotify founder Daniel Ek steps down as CEO to become executive chair

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    Spotify said Tuesday that founder Daniel Ek is stepping down as CEO to become the executive chairman, in an announcement that sent its shares sliding in Tuesday trading.

    The Stockholm-based streaming giant said Ek will be replaced by two lieutenants who will become co-CEOs: Chief Product and Technology Officer Gustav Söderström and Chief Business Officer Alex Norström. The pair, who are also currently copresidents, will transition into their new jobs on Jan. 1 and will report to Ek.

    Spotify said in a press release that the move “formalizes” how Spotify has been operating since 2023, with Söderström and Norström largely leading strategic development and operational execution.

    Ek said that he had already “turned over a large part of the day-to-day management and strategic direction” to the pair.

    “This change simply matches titles to how we already operate,” he said. As executive chairman, Ek said he will focus on Spotify’s “long arc.”

    In an online question and answer session following the announcement, Ek said his new role would not be a ceremonial one that investors with a “U.S. perspective” might expect.

    In Europe, an executive chairman is typically “quite active in the business,” and acts as a representative to “certain stakeholders” such as governments, he said.

    Ek said he still sees growth opportunities, including a “huge part of the world that’s really not accustomed to streaming” stretching from Asia to Africa, as well as new technology including artificial intelligence.

    “I’m gonna keep pushing for us to look around the corner, stay focused on the long term,” he said.

    Since Ek founded Spotify about two decades ago, the platform’s rise has helped transformed the music business and paved the way for modern streaming. Spotify now has more than 700 million subscribers and a library of more than 100 million songs, 7 million podcast titles and 350,000 audiobooks.

    Spotify shares, which have doubled in the past year, fell more than 5% in afternoon trading after the announcement.

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  • Spotify CEO says he's probably 'the least powerful person in the company'

    Spotify CEO says he's probably 'the least powerful person in the company'

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    In the high-stakes world of corporate leadership, Spotify CEO Daniel Ek may seem to occupy one of the most coveted positions—that of a founder CEO.

    Traditionally, these figures assume a quasi-royal role in steering their companies, leveraging their almost mythical status as founders to make bold decisions and commanding the voting power to enforce their leadership.

    On the surface, it’s easy to slot Ek into this category, given his instrumental role in elevating the company from a little-known Swedish entity to the world’s preeminent music streaming platform over 18 years.

    But according to the Spotify boss, that couldn’t be further from the truth. 

    What is the Scandinavian leadership model?

    Speaking at a live recording of the In Good Company podcast in Oslo earlier this month, Ek said he was often forced to correct people when they came to him with requests about the company.

    “I often hear the phrase ‘you should go directly to the CEO’… where a lot of people think that you’re magically going to be able to enact some kind of decision,” Ek said.

    The Spotify boss said there were examples of companies where the CEO did have ultimate control, namedropping Tesla’s Elon Musk.

    But Ek, who according to the group’s last annual financial statement is also Spotify’s largest shareholder, says this is not the case at his streaming group thanks to the Swedish labor model his company employs.

    “It’s more the Scandinavian leadership model, where you delegate decision-making, you allow your leaders to make it. So, in many ways, I’m probably the least powerful person in Spotify and I probably make the least amount of decisions in Spotify.”

    Instead of hyping up the cult of the leader, Ek instead sought to highlight the work of assistants, who he said are usually overlooked.

    “Almost all powerful people have assistants of some kind and they are the ones who decide who this person is meeting or not meeting and can really help shape whatever happens in that person’s day,” Ek said.

    The Scandinavian model of leadership encourages a flat style of management where employees are encouraged to take their own decisions and bosses often delegate tasks.

    Spotify tries to instill several Scandinavian-inspired working models for its employees. The group has a generous parental leave policy and emphasizes flexibility for its staff with a work-from-anywhere policy.

    However, based on the company’s latest filings, Ek’s comments on installing a Scandinavian style of leadership sound more like management rhetoric than being reflective of how Spotify operates in practice. 

    In addition to being the group’s biggest shareholder, Ek has the second-highest voting power at Spotify behind fellow co-founder Martin Lorentzon. The pair control a combined 74% of the company’s boardroom votes.

    A representative for Spotify declined to comment further on Ek’s remarks. 

    Ek facing Spotify challenge

    Still, Ek might have good reason to distance himself from the perception that he has carte blanche to enact his vision at Spotify.

    The streaming giant announced its biggest-ever round of layoffs in December, saying goodbye to 1,500 staffers, equivalent to 17% of the group’s workforce. 

    The CEO disclosed that the company was doing too much “work around the work” and suggested the layoffs would bring efficiency back to the company.

    Not long after, Spotify announced CFO Paul Vogel would be departing. Vogel cashed in $9 million worth of stock in the wake of layoffs that helped the company’s share price soar. 

    Those layoffs and the departure of Vogel came after the company made long-term bets that didn’t fully pay off. 

    Spotify splashed more than $1 billion on its podcast division with big deals for the likes of Barack and Michelle Obama, and Prince Harry and Meghan.

    They have since chosen not to renew deals with some of its major stars, with Ek saying the group would be “very diligent” about future big-money content deals.

    While Spotify says those deals intended to bring in long-term podcast listeners before switching to investment in higher-margin podcasts, it has made the group’s quest for consistent profitability a long one.

    A third-quarter operating profit last year of €32 million ($34.5 million) was the company’s first since 2021. The company has fought with high costs since its inception linked to pricey deals with record labels to acquire streaming rights.

    However, there are signs Spotify is beginning to turn the ship around. 

    While shares are still well below their 2021 peak, the group has doubled in value in the last 12 months as the group managed to push through an increase to its subscription price. 

    Spotify announced an update to its royalties model that would help funnel $1 billion to “legitimate artists,” as the company looks for ways to placate performers who are becoming increasingly frustrated with the group’s revenue distribution model.

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    Ryan Hogg

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  • Spotify to cut 6% of its workforce | CNN Business

    Spotify to cut 6% of its workforce | CNN Business

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    London
    CNN
     — 

    Spotify

    (SPOT)     said Monday that it will cut 6% of its workforce to reduce costs, joining tech companies including Amazon

    (AMZN)     and Microsoft

    (MSFT)     in slashing headcount as the global economy slows.

    In a letter to employees posted on the company’s website, CEO Daniel Ek took full responsibility for the job cuts, which he called “difficult but necessary.”

    “Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth,” he said.

    The Stockholm-headquartered music streaming business had about 9,800 employees globally as of September 30, according to an earnings report.

    The company’s stock, which has nearly halved in value over the past 12 months, gained more than 4% in premarket trading in New York. Spotify’s share price has risen 24% since the start of the year, Refinitiv data shows.

    Over the past few months, major tech companies have swiftly reversed a pandemic hiring spree that saw them add thousands of workers to keep up with a surge in demand from households and businesses for services such as online shopping and videoconferencing.

    The same companies have recently made deep cuts to their workforces, as inflation weighs on consumer spending and rising interest rates squeeze funding. The demand for digital services during the pandemic has also waned as people return to their offline lives.

    Over the past three months, Amazon

    (AMZN)    , Google

    (GOOGL)    , Microsoft

    (MSFT)     and Facebook

    (FB)    -parent Meta have announced plans to cut more than 50,000 employees from their collective ranks.

    The recent cuts in most cases amount to a relatively small percentage of each company’s overall headcount, essentially erasing the last year of gains for some while leaving them with enormous workforces.

    Spotify’s decision to shed about 590 jobs is part of a wider reorganization to improve efficiency and “speed up decision-making,” according to Ek. As part of the changes, engineering and product work will be centralized. Chief content officer Dawn Ostroff had also decided to leave the company, Ek said.

    Spotify reported a loss of €228 million ($248 million) in its most recent financial quarter through September 30, as operating expenses shot up by 65%, according to a company presentation to investors.

    In 2022, operating expenses grew at twice the rate of the company’s revenue, Ek said.

    “That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap,” he told employees in Monday’s letter. “As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough.”

    — Clare Duffy contributed to this report.

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  • Spotify latest tech name to cut jobs, axes 6% of workforce

    Spotify latest tech name to cut jobs, axes 6% of workforce

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    LONDON (AP) — Music streaming service Spotify said Monday it’s cutting 6% of its global workforce, or about 600 jobs, becoming yet another tech company forced to rethink its pandemic-era expansion as the economic outlook weakens.

    CEO Daniel Ek announced the restructuring in a message to employees that was also posted online.

    As part of the revamp involving a management reshuffle, “and to bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees,” Ek wrote.

    Big tech companies like Amazon, Microsoft and Google announced tens of thousands of job cuts this month as the economic boom that the industry rode during the COVID-19 pandemic waned.

    Stockholm-based Spotify had benefited from pandemic lockdowns because more people had sought out entertainment when they were stuck at home. Ek indicated that the company’s business model, which had long focused on growth, had to evolve.

    The company’s operating costs last year grew at double its revenue growth, a gap that would be “unsustainable long-term” in any economic climate, but even more difficult to close with “a challenging macro environment,” he said.

    Spotify made “considerable effort” to rein in the costs over over the past few months, “but it simply hasn’t been enough,” he said.

    “I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth,” Ek said.

    He said that’s why the company is cutting its global workforce by about 6%. Ek didn’t give an actual number of job losses but a company spokesman said it’s 600, based on 9,808 employees listed in its latest quarterly report.

    “I take full accountability for the moves that got us here today,” Ek said.

    After years of heady growth, analysts say tech companies are being forced to cut jobs in preparation for an economic dowturn that’s likely to cut demand for their software, products and services and reduce digital ad spending.

    Just last week, Google announced it was slashing 12,000 jobs while Microsoft said it would cull 10,000 workers, bringing to at least 48,000 the number of cuts that Big Tech companies announced in January alone.

    Even with all of the recent layoffs, most tech companies are still vastly larger than they were three years ago. Spotify had 4,405 employees in 2019, before the pandemic began, according to that year’s annual report.

    In morning trading, shares of Spotify added 3.5% to $101.32.

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