"I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance," Ek wrote. "We debated making smaller reductions throughout 2024 and 2025. 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. While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team."

Ek went on to note that the company expanded considerably in 2020 and 2021 due to the lower cost of capital. "These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year," he said. And despite reductions made last year — the company laid off 6 percent of its workforce early in 2023 and another 2 percent in May — "our cost structure for where we need to be is still too big," Ek said.

Follow those rounds of layoffs, Spotify had around 9,000 employees, so the latest cuts will see around 1,500 employees losing their jobs (4,300 of those jobs were in the US as of 2022). To soften the blow, Ek said Spotify will pay an average of five months severance, cover healthcare during that time and provide immigration/career support.

Ek said that for the company's next phase, "being lean is not just an option but a necessity." Last month, Spotify announced a revamped royalty model, which is supposed to give "working artists" a bigger cut, while reducing fraudulent streams.

Spotify has seen consistent growth since it launch and now counts 574 million monthly active users, up 26 percent over the same period last year. The company has always struggled to make a profit, though with its last quarter being a rare exception. Ek promised more information about what the changes will mean "in the days and weeks ahead" — but all that will be cold comfort to employees suddenly finding themselves unemployed just before the holidays.

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“Turn your ideas into playlists using Al,” the feature’s in-app description reads in the TikTok video (while noting it’s only available in English). Above a chatbot field for custom inputs, it also suggests prompts. These include, “Get focused at work with instrumental electronica,” “Fill the silence with background cafe music,” “Get pumped up with fun, beat, and positive songs” and “Explore a niche genre like Witch House.”

@robdad_ chose the last option. “Here’s your Witch House Exploration playlist,” the bot responded. “Swipe left to remove any songs you don’t want as you continue refining your playlist.” Due to video editing, it’s impossible to tell from the TikTok clip how long Spotify’s AI took to generate the tracks.

The resulting (Grimes-heavy) playlist included “Bloom for Me” by Pearly Drops, “Goth” by Sidewalks and Skeletons, “Pin” by Grimes, “After Dark” by Mr.Kitty, “Suffocation” by Crystal Castles, “Cold Touch” by Kito and GrimesAI and “chain” by Aziya and “Nothing Lasts Forever” by Sevdaliza and Grimes. I’ll leave it to the Witch House experts to determine if the AI did a good job.

In a statement to TechCrunch, Spotify was tight-lipped about whether the general public can expect to see AI playlists. “We routinely conduct a number of tests,” a Spotify spokesperson wrote. “Some of those tests end up paving the path for our broader experience and others serve only as an important learning. We don’t have anything further to share at this time.”

If Spotify eventually launches the feature, perhaps it could include it as a carrot to entice users to pay for a more expensive subscription tier. The company’s premium hi-fi feature, announced nearly three years ago, still hasn’t materialized after rival Apple Music added lossless audio without charging extra. Expanded audiobook access could be another perk to throw into a pricier plan.

Earlier this year, Spotify launched an AI DJ feature (powered by OpenAI tech) that talks you through recommendations. It does so using an AI voice trained on the company’s Head of Cultural Partnerships, Xavier “X” Jernigan.

Like much of the tech industry, the music streamer appears eager to incorporate artificial intelligence into its products. In addition to the AI DJ, Spotify CEO and co-founder Daniel Ek said in a July earnings call that the company could use AI to “contextualize and personalize content.” The Ringer founder Bill Simmons noted in May (first reported by Semafor) that Spotify was developing “a way to use my voice for ads.” The sports analysis podcaster added, “You have to obviously give the approval for the voice, but it opens up, from an advertising standpoint, all these different great possibilities for you.”

Earlier this month, Spotify conducted its third round of layoffs in 2023. It’s only the latest chapter of what’s turned out to be a devastating year of job cuts in the tech industry.

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France’s CNM tax imposes a levy on music services that earn over 20 million euros ($21.9 million) in the country: Spotify, Apple Music and Deezer. (Apple Music and Deezer have opposed the tax but haven’t announced similar price hikes.) The companies pay the new 1.2 percent charge on all streaming revenue generated in the country. Social media companies licensing music, including TikTok and Facebook, are also subject to the tax. The fees will go to the nation’s Centre National de la Musique (CNM), a public institution supporting and promoting the French music industry.

Spotify’s initial response in December was to pull financial support from French music festivals Francofolies de la Rochelle and Printemps de Bourges. The company threatened to pull its services from Uruguay when a similar tax was announced there but ultimately backed down when the Uruguayan government said streaming services wouldn’t have to cover any costs.

Spotify hasn’t made similar threats to exit France, likely because the country is much more crucial to its bottom line. Instead, it’s waging a public pressure campaign, including the music service painting the tax as an unnecessary government money grab that only partially funds the music industry.

“This tax will generate approximately 15 million euros, when the CNM’s administrative budget (office fees, personnel, capital expenditure, media monitoring or professional training etc.) sits at 20.2 million euros,” the company wrote in the public letter. “Our concern is that possibly less than half of its overall 146.9 million euros budget will find its way toward effectively aiding music.”

Other than listing the CNM’s administrative budget, Spotify didn’t provide any evidence that the fees wouldn’t go toward aiding music.

Spotify’s revenue grew 16 percent year-over-year to €3.7 billion ($4.05 billion) in Q4 2023, in what it described as “a very strong quarter.” Its CEO sold $57.5 million in stock in February, following a $64 million stock sale in October 2023.

“As we have long said, we simply can’t absorb any additional taxes,” Spotify wrote. “Even after making the difficult decision to reduce our artist marketing budget and support of French music festivals — which is an essential vehicle for Spotify to continue to drive hundreds of millions of euros to the music industry — it still continues to impede our ability to operate in France. Accordingly, over the coming weeks and months, we’ll need to make changes to our price plan in France.”

Spotify says French subscribers will learn more about the price hike “in the coming weeks.”

Update, March 7, 2024, 3:08 PM ET: The story has been updated to attribute Spotify’s open letter to the company, not CEO Daniel Ek (as the previous version stated).

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